Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, NAGPUR BENCH
Before: SHRI R.S.SYAL & SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER R.S.SYAL, VP:
These five appeals arise out of the orders dated 22-09-2022 &
31-03-2022 passed by the CIT(A) in National Faceless Appeal Centre
(NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also
called ‘the Act’) in relation to the assessment years 2010-11 & 2011-
Since common issues are raised in these appeals, we are,
therefore, proceeding to dispose them off by this consolidated order for
the sake of convenience.
There is a delay of 99 days in the filing of appeals in ITA Nos.
269 to 272/Nag/2022. The condonation applications have been filed.
We are satisfied with the reasons. The delay is condoned and the
appeals are admitted for disposal.
3 ITA Nos.337 & 269 to 272 /Nag/2022 Bank of India
The only issue raised in these appeals is against the confirmation
of the orders passed by the AOs u/s.201(1)/201(1A) of the Act treating
the assessee in default for non-deduction of tax at source u/s 194A on
interest paid/credited to its customers and also non-condonation of
delay by the ld. CIT(A) in presenting the appeals before him.
First of all, we are espousing the issue of non-condonation of
delay by the ld. CIT(A). The facts for ITA No.337/Nag/2022 are that
the order u/s.201(1)/201(1A) of the Act was passed on 21-03-2018.
The assessee preferred appeal on 09-01-2021. The ld. CIT(A) noted
that there was a total delay of 988 days in the filing of the appeal. He,
therefore, called upon the assessee to explain the reasons for such a
delay. The assessee submitted the reasons, as have been reproduced in
the impugned order. Not convinced, the ld. CIT(A) held that even
though the Corona period is excluded, still there was a delay of 688
days. As such, he did not condone the delay. Without prejudice, he
took up the issue on merits as well and rejected the assessee’s
contentions, including, that the order of the AO was time barred.
Similar position prevails in other four appeals, in which the delay in
filing the appeals before the ld. CIT(A) was not condoned. Aggrieved
thereby, the assessee has come up in appeal before Tribunal.
4 ITA Nos.337 & 269 to 272 /Nag/2022 Bank of India
Having heard both the sides and gone through the relevant
material on record, it is seen that the order u/s.201(1)/201(1A) came to
be passed for the failure on the part of the assessee to not deduct tax at
source u/s.194A in respect of interest paid to certain customers, which
amount exceeded the basic amount not chargeable to tax. The question
of failure to deduct tax at source came to light after spot verification in
some branches of the assessee bank in March, 2016, when it was found
that they were paying/crediting interest into their clients’ accounts for a
sum in excess and the maximum amount not chargeable to tax on
receiving Form Nos.15G/15H. The case of the assessee-branches is
that they received notice individually about the default in compliance,
but were not technically equipped to handle the issue. Some branches
appointed consultants at individual level, who also kept on changing.
Thereafter, the Zonal office of Bank of India, Nagpur, took up the
matter for all the branches of Nagpur zone by appointing a centralized
consultant, who filed the appeals for all the branches in coordination
with income-tax department and addressed all the pending disputes
anent to this issue. The delay in presenting the appeals was neither
deliberate nor an act of negligence, but was caused by genuine
difficulty and inability to act promptly at branch level due to reasons
adduced above. Ex consequenti, we hold that there was a reasonable
5 ITA Nos.337 & 269 to 272 /Nag/2022 Bank of India
and sufficient cause for the delay in presenting the appeals before the
ld. CIT(A). We, therefore, condone the delay.
Now we take up the limitation issue assailed lock stock and barrel
on behalf of the assessee. The facts of the lead case taken up for
consideration in ITA No.337/Nag/2022, are that the assessee accepted
Form No. 15G/15H from two persons and paid/credited interest
exceeding the maximum amount not chargeable to tax without
deduction of tax at source. One was Sumita Dilip Pannase to whom
interest of Rs.2,04,054/- was credited and the second was Yashwant
Tulshiram Dhage, who was credited with interest of Rs.2,00,814/-. It
is not disputed that quarter-wise TDS returns in Form No. 26Q were
filed by the assessee in time. Considering the fact that no deduction of
tax at source to the tune of Rs.40,486/- along with interest thereon
totaling to Rs.34,413/- was made, the bank-branch was treated as the
assessee in default u/s.201(1)/201(1A) for a total sum of Rs.74,899/-.
Similar view was taken in other cases under consideration, to the extent
of the germane facts. The ld. CIT(A) did not echo the assessee’s
contention that the orders passed by the AO were time barred, which
has been challenged before the Tribunal.
Section 201(3) deals with the time limit for passing of the order
under section 201. The relevant part of section 201(3), prior to its
6 ITA Nos.337 & 269 to 272 /Nag/2022 Bank of India
substitution by the Finance (No.2) Act, 2014 w.e.f. 01-10-2014, reads
as under :
“No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of—
(i ) two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed;
(ii ) four years from the end of the financial year in which payment is made or credit is given, in any other case :
Provided that such order for a financial year commencing on or before the 1st day of April, 2007 may be passed at any time on or before the 31st day of March, 2011.”
The above provision transpires that the order u/s.201(1), deeming a
person to an assessee in default, has two limbs. One where the
statement u/s 200 was filed, which is governed by clause (i) and the
other where the statement was not filed, which is regulated by clause
(ii). We have the first limb applicable before us, where the quarterly
statements were filed by the assessee-bank branch but tax was not
deducted in the above-referred two cases only on the ground that the
customers furnished Form No.15G/Form No.15H in respect of their
claims that the interest was not chargeable to tax in their hands. Going
with the prescription of clause (i), no order u/s 201(1)/(1A) could be
made after the expiry of two years from the end of the relevant
7 ITA Nos.337 & 269 to 272 /Nag/2022 Bank of India
financial year in which the statement was filed. The ld. CIT(A),
though admitted that the quarterly statements in Form No. 26Q were
filed, but he negated such filing on the raison d’etre that if they did
not cover the name of customers which ought to have been included, it
will be a case of non-filing of the statements and hence governed by
section 201(3)(ii) of the Act. The sequitur of his conclusion is that the
bank should file individual client-wise statement and if there is
something amiss in even one of such client’s statement, it would be
treated as a case of non-filing of the statement. Opining so, he held
that the order passed by the AO was within time limit as the case fell
under section 201(3)(ii) of the Act. In our opinion, the ld. CIT(A) has
taken a hyper technical view of the provision, which, in fact,
contemplates only two situations, viz., where the statement is filed and
where it is not filed. Neither the provision provides for filing separate
statement for each client, nor the necessary form permits so. The crux
is that if the statement is filed, the case falls under clause (i). Simply
some mistake, if at all, here and there in the statement does not erase
the filing of the statement. To put it simply, once the statement is filed
by the bank branch, the same has to be treated as a case falling
u/s.201(3)(i) of the Act.
8 ITA Nos.337 & 269 to 272 /Nag/2022 Bank of India
Adverting to the facts of the case, it is seen that the assessee
branches under consideration filed statements in Form No.26Q for the
last quarter of F.Y. 2009-10 in June and July, 2010 and of 2010-11 in
April/May, 2011. The financial years in which the statements were
filed, therefore, end on 31-03-2011 and 31-3-2012. The period of two
years from the end of the relevant financial year comes to an end on
31-03-2013/2014. Thus, the time limit for passing the order for the
financial year 2009-10 and 2010-11, in the facts of the instant cases,
were latest by 31-03-2013 and 31-3-2014. As against this, the orders
u/s 201(1)/(1A) were actually passed in the cases under consideration
much later on 27.3.2017, 21.3.2018 and 26.3.2018, making them time
barred.
The ld. DR vehemently argued that the Finance (No.2) Act, 2014
has substituted sub-section (3) of section 201 w.e.f. 01-10-2014,
dispensing with the classification of statement filed and the statement
non-filed cases having different time limits, and hence the time limit
under the substituted provision should be reckoned for the extant cases.
In our opinion, this argument is devoid of merits. Obviously, the time
limit for the passing of the order u/s.201(1)/201(1A) for the financial
years under consideration came to an end on 31-3-2013 and
31-03-2014. The amendment by the Finance (No.2) Act, 2014 came
9 ITA Nos.337 & 269 to 272 /Nag/2022 Bank of India
into force on 01-10-2014. This shows that on 01-10-2014, the time
limit for passing the order u/s.201(1)/201(1A) had already expired qua
the financial years 2009-10 and 2010-11. A subsequent amendment to
the provision cannot give a new lease of life to the time limit which has
already exhausted. Hence, for the years under consideration, it is only
the sub-section (3) as amended by Finance Act, 2012 with retrospective
effect from 01-04-2010, which shall prevail. Resultantly, the orders
passed by the AO beyond the stipulated time limit are time barred and
hence quashed. In the absence of the existence of any valid orders
u/s.201(1)/201(1A), the proceedings flowing therefrom also get
annulled. We, therefore, overturn the impugned orders holding the
assessees to be in default in terms of section 201 of the Act.
In the result, all the appeals are allowed.
Order pronounced in the Open Court on 23rd August, 2023.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT
पुणे / Pune; �दनांक / Dated : 23rd August, 2023 Satish
10 ITA Nos.337 & 269 to 272 /Nag/2022 Bank of India
आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr.CIT concerned. �वभागीय �!त!न"ध, आयकर अपील�य अ"धकरण, “नागपुर” ब&च, 4. / DR, ITAT, “Nagpur” Bench गाड) फ़ाइल / Guard File. 5. // True Copy // आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपील�य अ"धकरण, पुणे / ITAT, Pune
Date 1. Draft dictated on 21-08-2023 Sr.PS 2. Draft placed before author 23-08-2023 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *