Income Tax Appellate Tribunal - Jaipur
Union Bank Of India, Bapu Nagar Branch, ... vs Additional Commissioner Of Income Tax ... on 15 April, 2020
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES "B"JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA. No. 505, 506, 565 & 507/JP/2019
fu/kZkj.k o"kZ@Assessment Year : 2010-11, 2011-12, 2012-13 & 2013-14
Union Bank of India, cuke Addl. Commissioner of
Bapu Nagar Branch, Vs. Income Tax (TDS),
SB-57, Riddhi Tower, Tonk Jaipur
Road, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACU0564G
vihykFkhZ@Appellant izR;FkhZ@Respondent
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s Assessee by : Shri Ajay Khandelwal (CA)
jktLo dh vksj ls@ Revenue by : Miss Chanchal Meena (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 17/03/2020
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 15/04/2020
vkns'k@ ORDER
PER BENCH:
These are four appeals filed by the assessee against the respective orders of ld. CIT(A)-3, Jaipur dated 04.02.2019 for A.Ys 2010-11, 2011-12, 2012-13 & 2013-14 respectively. Since the common issues are involved and identical grounds of appeal have been taken, all these appeals were heard together and are being disposed off by this consolidated order.
2. In Ground No. 1, the assessee has challenged the action of ld. CIT(A) in confirming penalty imposed u/s 271C as per the original order passed by the ACIT(TDS) dated 22.03.2016 and ignorance of rectified order passed by the DCIT(TDS) dated 23.11.2016.
2 ITA. No. 505, 506, 565 & 507/JP/2019Union Bank of India, Jaipur vs. Addl. CIT-TDS, Jaipur
3. In this regard, ld. AR submitted that the Assessing Officer has passed the consolidated order for A.Y 2009-10 to A.Y 2013-14 u/s 201(1) and 201(1A) of the Act dated 22.03.2016 wherein the demand was created due to non-deduction of TDS on submission of Form No. 15G/15H in cases where interest paid exceeds basic exemption limit. Subsequently, the assessee's bank had applied for rectification of the order and order u/s 154 was passed by the DCIT(TDS) dated 23.11.2016 wherein the demand was reduced as per particulars below:
Assessment Year Original demand Revised demand (Rs) (Rs) 2010-11 31,486/- 23,688/-
2011-12 43,051/- 23,886/-
2012-13 30,855/- 30,885/-
2013-14 73,344/- 37,750/-
4. It was submitted that the Addl.CIT(TDS) while levying the penalty u/s 271C has not taken into consideration the rectification order so passed by the AO and the penalty u/s 271C has been levied basis the original order. It was submitted that the rectification order u/s 154 where passed, replaces the original order and imposition of penalty in ignorance of fact of rectification was against the law and therefore, liable to be quashed.
5. In Ground No. 2, the assessee has challenged the action of the ld. CIT(A) in not considering the plea of the assessee that under similar facts and circumstances of the case, in the case of another 3 ITA. No. 505, 506, 565 & 507/JP/2019 Union Bank of India, Jaipur vs. Addl. CIT-TDS, Jaipur branch of the same bank, penalty u/s 271C though initiated but was dropped by the Addl.CIT(TDS).
6. It was submitted that in case of Vishveshwariya Nagar Branch of the assessee bank, similar show cause for levy of penalty u/s 271C was issued by the same authority i.e Addl.CIT(TDS) pursuant to levy of demand due to non-deduction of TDS on submission of Form No. 15G/15H in cases where interest paid exceeds basic exemption limit. In response, the assessee bank submitted similar submission and taking the same into consideration, the penalty 271C of the Act was dropped by passing a specific order by the Addl.CIT(TDS) dated 19.10.2016. It was submitted that where the same authority has dropped to the penalty proceedings in case of Vishveshwariya Nagar Branch, there is no basis to levy the penalty in the case of another branch of the same bank, i.e, Bapu Nagar Branch where the facts and circumstances are exactly identical. It was further submitted that the Department itself has accepted the fact that in the eyes of Income tax department, all the units/branches of Union Bank of India are a single entity, as mentioned in the original order passed by the AO u/s 201(1) read with section 201(1A) and which has also been taken into consideration by the Addl.CIT(TDS) while passing the impugned orders u/s 271C of the Act. It was accordingly submitted that the same treatment should have been applied in the case of Union Bank of India, Bapu Nagar Branch and penalty should have been dropped.
7. In Ground No. 3, the assessee has challenged the imposition of penalty u/s 271C raising the plea that it has acted in good faith, 4 ITA. No. 505, 506, 565 & 507/JP/2019 Union Bank of India, Jaipur vs. Addl. CIT-TDS, Jaipur bona fide belief and without any male fide intention in relying on the declaration submitted by the depositors in Form No. 15G/15H.
8. In this regard, it was submitted by the ld. AR that one of the reasons for levy of penalty as stated by the Addl.CIT(TDS) while imposing the penalty is that declarations in Form No. 15G/15H were not produced either before the AO during the assessment proceedings or during the appellate proceedings before him. It was submitted that the present proceedings have itself started with non deduction of TDS on submission of Form 15G/15H as stated by the AO in his original order dated 22.03.2016. It was submitted that where the Department has already accepted that these forms/declarations had been provided by the customers, no question arises for providing the same in reply to the show cause notice u/s 271C of the Act. It was further submitted that Form No. 15G/15H is a declaration submitted by the customer for non deduction of TDS and the bank has deducted TDS in all cases accept where these declarations were submitted by the customers. It was accordingly submitted that the bank has acted in good faith under bona fide belief and without any mala fide intention by relying on the declaration submitted by the customers. It was submitted that the receipt of declaration in Form No. 15G/15H is itself a genuine cause for non deduction of TDS because it is self declaration form provided by the Income tax rules and the person signing the same is expected to provide correct information. In support, reliance was placed on the Co-ordinate Bench decision in case of L& T John Deere (P) Ltd vs. ACIT reported in 120 ITD 497 for the proposition that where the assessee has given bona fide explanation for failure 5 ITA. No. 505, 506, 565 & 507/JP/2019 Union Bank of India, Jaipur vs. Addl. CIT-TDS, Jaipur of deduction of TDS, the assessee should not be made liable for penalty u/s 271C for failure to deduct TDS.
9. Further, our reference was drawn to the provisions of sub-
section (1C) of section 197A and it was submitted that where the said provision read along with sub-section (1B) of section 197A and Rule 29C, it can be concluded that in a case of a Senior Citizen who is resident of India, TDS is not required to be deducted from payments u/s 194A on the submission of Form No. 15H even of the amount paid or credited exceeds the basic exemption limit. In present case, the Smt. Prem Lata Bhateja, whose date of birth was 10.01.1948 as per PAN database, was a senior citizen during F.Y 2012-13 and 2013-14 respectively, therefore, the ld. CIT(A) has grossly erred in law the confirming the penalty with reference to the interest payment to Smt. Prem Lata Bhateja as there was no liability to deduct TDS since she has submitted Form 15H and basis which, no TDS was deducted on interest payments made to her during the respective financial years and consequently, in absence of any TDS liability, there is no basis to levy penalty u/s 271C of the Act.
10. Per contra, the ld. DR is heard who has submitted that the ld. CIT(A) has already granted relief to the assessee in respect of demand reduced by the AO and has taken into consideration the order passed by the AO u/s 154 of the Act dated 23.11.2016 and the penalty has been confirmed corresponding to revised demand as per order passed u/s 154 of the Act. It was accordingly submitted that there is no basis in Ground No. 1 of the asseessee's appeal and therefore, the same should be dismissed.
11. It was further submitted by the ld. DR that merely relying on the declaration so submitted by the customers in Form No. 15G/15H cannot be a basis for non deduction of TDS and the assessee bank 6 ITA. No. 505, 506, 565 & 507/JP/2019 Union Bank of India, Jaipur vs. Addl. CIT-TDS, Jaipur is required to carry out certain basic due diligence while accepting such declaration and in the instant case, where the interest so paid or credited exceeds basic exemption limit as provided in the Income tax Act for the respective assessment years, the assessee bank cannot be absolved of its responsibility to deduct TDS on such payment/credit of interest to its customers. Further, the ld. DR relied on the findings of the Addl.CIT(TDS) as well as the order of ld. CIT(A).
12. We have heard the rival contentions and purused the material available on record. Section 271C of the Act provides that if any person fails to deduct whole or any part of the tax as required, then he shall be liable to pay by way of penalty a sum equal to the amount of tax which he has failed to deduct. At the same time, Section 273B of the Act provides that notwithstanding the provisions contained under Section 271C of the Act, no penalty shall be imposable upon the person or the assessee for any failure referred to in the aforesaid provision if the person or the assessee concerned proves there was reasonable cause for the said failure. Here, it would be appropriate to refer to the decision of the Hon'ble Supreme Court in the case of CIT v. Eli Lilly & Co. (India) (P.) Ltd. [2009] 178 Taxman 505 wherein it was held as under:
"Section 271C inter alia states that if any person fails to deduct the whole or any part of the tax as required by the provisions of Chapter XVII-B then such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct. In these cases we are concerned with Section 271C(1)(a). Thus Section 271C(1)(a) makes it clear that the penalty leviable shall be equal to the amount of tax which such person failed to deduct. We cannot hold this provision to be mandatory or compensatory or 7 ITA. No. 505, 506, 565 & 507/JP/2019 Union Bank of India, Jaipur vs. Addl. CIT-TDS, Jaipur automatic because under Section 273B Parliament has enacted that penalty shall not be imposed in cases falling there under. Section 271C falls in the category of such cases. Section 273B states that notwithstanding anything contained in Section 271C, no penalty shall be imposed on the person or the assessee for failure to deduct tax at source if such person or the assessee proves that there was a reasonable cause for the said failure. Therefore, the liability to levy of penalty can be fastened only on the person who do not have good and sufficient reason for not deducting tax at source. Only those persons will be liable to penalty who do not have good and sufficient reason for not deducting the tax."
13. In the instant case, the assessee bank has contended that it has relied upon the declarations submitted by its customers in Form 15G/15H, and basis such declarations, the tax has not been deducted at the time of credit/payment of such interest to respective customers. To our mind, the assessee bank is expected to carry out basic verification of such declarations before the same are accepted and similarly, where the interest paid/credited exceeds the basic exemption limit during the relevant financial year, such declarations shouldn't form the basis for non-deduction of TDS as the same would not be in consonance with assessee's bank obligation under section 194A read with section 197A(IB) which overrides the provisions of section 197A(IA) of the Act. At the same time, in terms of section 197A(1C), it has been provided that no deduction of tax shall be made in the case of an individual resident in India, who is of the age of sixty years or more at any time during the previous year, if such individual furnishes to the person responsible for paying any income of the nature referred to section 194A, a declaration in 8 ITA. No. 505, 506, 565 & 507/JP/2019 Union Bank of India, Jaipur vs. Addl. CIT-TDS, Jaipur writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.
14. Coming to the specific transactions under considerations, the assessee bank has relied on the declaration in Form 15G furnished by Shri Vimal Mehta for financial year 2010-11 and 2011-12 and in Form 15H furnished by Smt Prem lata Bhateja who is over sixty years of age during the financial year 2012-13 and 2013-14 respectively and has not deducted tax while crediting/paying the interest in the respective financial years. Therefore, as far as payment/credit of interest to Smt Prem Lata Bhateja who is over sixty years of age during the financial year 2012-13 and 2013- 14, in terms of provisions of section 197A(1C), there is a reasonable cause for non-deducting the TDS and the assessee bank cannot be fastened with the penalty u/s 271C of the Act.
15. In respect of Shri Vimal Mehta for financial year 2010-11 and 2011-12, given that the interest paid/credited exceeded the maximum amount not chargeable to tax, the assessee bank was required to deduct TDS in terms of section 194A of the Act r/w provisions of section 197A(1B) of the Act. The explanation of the assessee bank is that it has again relied on the declaration so furnished by the customer which is not disputed by the Revenue. It was submitted that it has acted in good faith under bona fide belief and without any mala fide intention by relying on the declaration so submitted by the customer. It was submitted that the receipt of declaration is itself a genuine cause for non deduction of TDS because it is self declaration form provided by the Income tax rules 9 ITA. No. 505, 506, 565 & 507/JP/2019 Union Bank of India, Jaipur vs. Addl. CIT-TDS, Jaipur and the person signing the same is expected to provide correct information. To our mind, there is no dispute that the information so provided in the declaration is the responsibility of the customer who is furnishing such declaration and where the assessee bank relies on such declaration, no fault can lie solely with the assessee bank except that certain basis verification is expected while accepting such declarations and uploading the same in bank IT system. In the instant case, we therefore find that where the assessee bank has relied on the declaration so furnished by the customer, there is no malafide which is reflected in the action of the assessee bank in not deducting the TDS and the assessee bank cannot be fastened with the penalty u/s 271C.
16. Further, we find that under identical facts and circumstances of the case, the Add. CIT (TDS) has dropped the penalty proceedings vide his order dated 19.10.2016 in case of another branch of the same bank and there is nothing on record which reflects the basis for taking a different view in the case of present branch of the same bank while passing the impugned order which was subsequently passed on 12.01.2017. No doubt the discretion to levy the penalty or to drop the penalty proceedings is entirely the discretion of the appropriate authority who is authorized under the statute, however, where in case of same bank, different approach is adopted by the same authority in exercise of its powers so bestowed by the statutory, the same reflect arbitrariness in absence of any distinguishing facts and circumstances so highlighted and any such arbitrary levy of penalty reflects non-application of mind by such authority and penalty so levied is liable to be deleted.
10 ITA. No. 505, 506, 565 & 507/JP/2019Union Bank of India, Jaipur vs. Addl. CIT-TDS, Jaipur
17. In the entirety of facts and circumstances of the case, we find that there exist a reasonable cause for non deducting the TDS by the assessee bank and the penalty so levied for the respective years is hereby directed to be deleted and the matter is decided in favour of the assessee bank and against the Revenue.
In the result, all the four appeals filed by the assessee are allowed.
Order pronounced in the open Court on 15/04/2020.
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(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 15/04/2020.
*Ganesh Kr.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Union Bank of India, Jaipur
2. izR;FkhZ@ The Respondent- Addl. CIT (TDS), Jaipur
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File { ITA. No. 505, 506, 565 & 507/JP/2019} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar