Ito Tds Hisar v. Union Bank Of India Bhiwani

The Income Tax Appellate Tribunal Delhi Bench C New Delhi Before Sh N K Saini Am And Sh K N Chary Jm Ita No 2310 Del 2015 Asstt Year 2010 11 Ita No 2311 Del 2015 Asstt Year 2011 12 Ita No 2312 Del 2015 Asstt Year 2012 13 I Ta No 2313 Del 2015 Asstt Year 2013 14 Income Tax Officer Tds Hisar Vs Union Bank Of India Loharu Road Bhiwani Appellant Respondent Pan No Rtkuo 0385 A Assessee By Sh Shiv Raj Kumar Batra Adv Revenue By Sh Munish Kumar Gupta Cit Dr Date Of Hearing 19 12 201 7 Date Of Pronounce Ment 22 12 201 7 Order Per N K Saini Am These Are The Appeals By The Depart Ment Against The Consolidated Order Of The Ld Cit A Hisar Dated 30 01 2015 2 Following Common Grounds Have Been Raised In The Se Appeal S 1 The Ld Cit A Has Erred In Law And Facts By Not Appreciating The Observations Made By The A O In Treating The Assessee In Default Since The Provisions To Section 201 Of The Act Has Been Incorporated Prospectively W E F From 01 07 2012 Ita No S 2310 To 2313 De L 2015 Union Bank Of India 2 2 The Ld Cit A Has Erred In Law And Facts By Ignoring The Observations Made By The A O That Deductee Pan Aabch 7770 G Was A Company Registered U S 25 Of The Companies Act And As Such Was Not Eligible To Furnish Declaration In Form 15 G In View Of The Provisions Of Rule 29 C Of The Income Tax Rules 1962 3 The Ld Cit A Has Erred In Law And Facts By Ignoring Board S Circular No 4 2002 Dated 16 07 2002 Which States That There Is No Requirement For Tax Deduction At Source In Case Of Those Funds Or Authorities Or Boards Or Bodies Whose Income Is Unconditionally Exempt U S 10 Who Are Statutorily Not Required To Fil E Return Of Income As Per Section 139 Since The Deductee Is Filing Its Itr And Hence Not Covered Within The Ambit Of This Circular The Deductor Was Not Prevented By Any Reasonable Cause For Not Deducting Tds U S 194 A 4 The Appellant Craves Leave To Ad D Alter Amend And Or Modify Any Of The Grounds Of Appeal At Or Before The Hearing Of The Appeal 3 During The Course Of Hearing The Ld Counsel For The Assessee Submitted That The Issues Raised By The Department Are Covered By The Earlier Order Of T He Itat Delhi Bench E New Delhi In Assessee S Own Case In Ita Nos 1936 To 1940 Del 2015 For The Assessment Years 2009 10 To 2013 14 Copy Of The Said Order Was Furnished Which Is Placed On Record Ita No S 2310 To 2313 De L 2015 Union Bank Of India 3 4 In His Rival Submissions The Ld Dr But Could Not Controvert The Aforesaid Contention Of The Ld Counsel For The Assessee 5 We Have Considered The Submissions Of Both The Parties And Perused The Material Available On The Record In The Present Case It Is An Admitted Fact That An Identical Issue Havin G Similar Facts Was A Subject Matter Of The Assessee S Appeal In Ita Nos 1936 To 1940 Del 2015 For The Assessment Years 2009 10 To 2013 14 Wherein The Similar Issue Has Been Set Aside To The Ao For Fresh Adjudication And The Relevant Findings Have Been Gi Ven In Paras 10 To 13 Which Read As Under 10 We Have Considered The Submissions Of Both The Parties And Perused The Material Available On The Record In The Present Case It Is An Admitted Fact That The Haryana Cricket Association Who Was Having The Fdr S With The Assessee Is Registered U S 12 Aa Of The Act And Its Income Is Exempt U S 11 Of The Act The Said Fact Has Been Admitted By The Ld Cit A Who Mentioned That Income Of The Assessee U S 143 3 Of The Act For The Assessment Year 2010 11 Had Been As Sessed At Nil Considering The Exemption Provided U S 11 Of The Act In The Present Case It Is Noticed That There Was No Finding By The Ito Tds Regarding The Payment Of Tax By The Deductee For The Various Financial Years In The Present Case The Ld Cit A In Paras 7 2 7 3 Has Ita No S 2310 To 2313 De L 2015 Union Bank Of India 4 Clearly Directed The Ito Tds That The Relief For Tax Computed U S 201 1 Of The Act Was Available To The Assessee Subject To The Verification By The Ito Tds About The Tax Liability Of The Deductee For Each Financial Year The S Aid Observation Of The Ld Cit A Is Reproduced Verbatim As Under 7 2 In The Instant Case A Combined Order For Five Financial Years From 2008 09 To 2012 13 Have Been Passed On 07 08 2013 And The Proviso Was Applicable For Consideration For Two Financia L Years However The Appellant Has Relied On The Judgments Of Honble Supreme Court In The Case Of Allied Motors 224 Itr 677 And Alom Extrusions 319 Itr 306 To Emphasize That The Proviso Inserted To Provide Remedy For Unintended Consequences May Be Consid Ered To Be Clarificatory In Nature Having Retrospective Effect Since The Ito Has Passed A Combined Order After Insertion Of Proviso Therefore The Effect Of Proviso Is Considered To Be Extended To All Financial Years Under Consideration It Is Noted Tha T The Deductor Was Under Bonafide Believe For Non Deduction Of Tds On Considering The Form 15 G Furnished By The Deductee Without Realizing The Admissibility Of Form 15 G By A Company Further The Appellant Was Under Misconception That If The Deductee Have Exempt Income Then There Was No Requirement To Deduct Tds Further It Is Also A Fact That The Deductee Has Filed Its Return Of Income And Assessment Passed U S 143 3 For A Y 2010 11 I E F Y 2009 10 Has Been Assessed At Nil Considering The Exemption Pr Ovided U S 11 Of The I T Act And Registration Granted U S 12 Aa Of The Act Further Ita No S 2310 To 2313 De L 2015 Union Bank Of India 5 On Perusal Of Audit Report Relevant To F Y 2012 13 It Is Noted That The Income On Account Of Interest Has Been Accounted For By The Deductee In Its P L Account And Bala Nce Sheet Therefore The Deductee S Income Is Exempted As Per Provisions Of Section 11 Subject To Fulfillment Of The Conditions Stipulated In Section 11 Of The Act Further The Honble Supreme Court In The Hindustan Coca Cola Beverage Pvt Supra Has R Eferred To The Circular Issued By The Cbdt And Gave The Judgment As Under The Circular No 275 201 95 It B Dated 29 1 1997 Issued By The Central Board Of Direct Taxes Would Put An End To The Controversy The Circular Declares That No Demand Visualized Under Section 201 1 Should Be Enforced After The Tax Deductor Has Satisfied The Officer In Charge Of Tds That Taxes Due Have Been Paid By The Deductee Assessee However This Will Not Alter The Liability To Charge Interest Under Section 201 1 A Till The Dale Of Payment Of Taxes By The Deductee Assessee Or The Liability For Penalty Under Section 271 C 7 3 In View Of Above Facts I Find That By Virtue Of Proviso To Section 201 1 The Deductor May Not Be Considered Assessee In Default In Failing To Deduct Such Tax Moreover In View Of Decision Of Honble Supreme Court In The Case Of Hindustan Coca Cola Beverage Pvt Ltd Supra The Deductor Cannot Be Treated As Assesses In Default As The Tax Is Not Recoverable From Deductor To The Extent If The Same Has Been Paid By The Recipient There Are No Findings By The Ito Tds Regarding Ita No S 2310 To 2313 De L 2015 Union Bank Of India 6 The Payment Of Taxes By The Deductee For Various Financial Years Though The Appellant Has Submitted That Deductees Income Is Exempt U S 11 However In The Absence Of Examinatio N Of Facts For All Financial Years The Ito Tds Is Directed To Verify The Tax Liability For Each Financial Year And Find Out The Extent And Quantum Of The Tax Paid By The Deductee If As Per Proviso To Section 201 1 The Tax Amount As Claimed From The De Ductor Has Been Paid By The Deductee Or There Was No Liability To Pay Tax By The Deductee Then For That Amount The Deductor Cannot Be Treated As Assessee Is Default For Respective Financial Years Accordingly The Relief Is Avai Lable For Tax Computed U S 2 01 1 To The Appellant Subject To The Verification By The Ito Tds About The Tax Liability Of The Deductee For Each Financial Year 11 From The Above Observations Of The Ld Cit A It Is Clear That Direction Was Given To The Ito Tds For Verification However He Had Taken A Contradictory Stand While Confirming The Action Of The Ao We Therefore Considering The Contradictory Stand Taken By The Ld Cit A Deem It Appropriate To Set Aside This Issue Back To The File Of The Ao To Be Adjudicated Afresh I N Accordance With Law After Providing Due And Reasonable Opportunity Of Being Heard To The Assessee The Ao Is Also Directed To Verify As To Whether There Was Any Liability Of The Deductee To Pay The Tax Or Any Tax Has Been Paid As Regards To The Applicab Ility Of The Proviso Inserted By Finance Act 2012 Is Concerned It Is Relevant To Point Out That The Hon Ble Supreme Court In The Ita No S 2310 To 2313 De L 2015 Union Bank Of India 7 Case Of Cit Vs Alom Extrusions Ltd 200 319 Itr 306 Supra Has Held As Under When A Proviso In A Section Is Inserted To Remedy Unintended Consequences And To Make The Section Workable The Proviso Which Supplies An Obvious Omission Therein Is Required To Be Read Retrospectively In Operation Particularly To Give Effect To The Section As A Whole 12 In The Present Case Also The Proviso To Section 201 1 Of The Act Has Been Inserted To Remedy Unintended Consequences To Make The Section Workable So It Is Required To Be Retrospective In Operation Therefore In The Instant Case If It Is Found That The Deductee Was Not Li Able To Pay Any Tax And The Income Earned As Interest Of The Fdrs Has Been Accounted For In The Income Which Is Exempt Then The Assessee Should Not Be Treated As An Assessee In Default 13 In All Other Appeals For The Assessment Years 2010 11 To 2013 14 The Facts Are Identical Therefore Our Findings Given In Respect Of Assessment Year 2009 10 Shall Apply Mutatis Mutandis 6 So Respectfully Following The Aforesaid Referred To Order Dated 30 11 2017 The Issue S Under Consideration Are Remand Ed Back To The File Of The Ao To Be Adjudicated Afresh As Per The Direction Given In The Aforesaid Referred To Order Dated 30 11 2017 Ita No S 2310 To 2313 De L 2015 Union Bank Of India 8 7 In The Result The Appeal S Of The Department Are Allowed For Statistical Purposes Order Pron Ounced In The Court On 22 12 2017 Sd Sd K N Chary N K Saini Judicial Member Accountant Member Dated 22 12 2017 Subodh Copy Forwarded To 1 Appellant 2 Respondent 3 Cit 4 Cit Appeals 5 Dr Itat Assistant Re Gistrar