Back
2025 Supreme(Online)(ITAT) 4869
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
Siddhartha Nautiyal, J, BRR Kumar, VP
Kad Steel Rolling Mills – Appellant
Versus
Income Tax Officer – Respondent
I.T.A. No.652/Ahd/2025
For the Appellants/Petitioners: Shri Divya Agarwal
For the Respondents: Shri Rajenkumar M Vasavda
Minor technical lapses in compliance should not result in penalties if income has been declared by recipients.
Headnote:(A) Income-tax Act, 1961 - Sections 201(1) and 201(1A) - Assessee held as assessee-in-default for late submission of Forms 15G and 15H - The Assessing Officer initiated TDS proceedings based on late submission of forms, imposing penalties and interest - CIT(A) upheld A.O.'s order, finding explanation for delay inadequate - Clause under Section 119(2)(b) limits powers to condone such delays to the CBDT - Key decision emphasized verification of receipt of income by payees. (Paras 2, 4, 10)
(B) Appeal - The court must consider if a minor technical lapse is punishable, especially when income has been declared by recipients in their tax returns - The court recognized the importance of forms in showing compliance with TDS obligations and upheld the reliance on evidence showing that income was declared. (Paras 6, 10)
Facts of the case:
The assessee failed to deduct TDS on interest payments and submitted relevant forms late, incurring penalties. Assessee aimed to argue that payees had declared the income, hence absolving them from TDS obligations.
Findings of Court:
Acknowledging the role of Forms and the fact that recipients declared the income, the matter was remanded for verification of compliance with the law.
Issues: Whether the delay in filing Forms 15G/H warranted penalties under TDS provisions given the declaration of income by recipients.
Ratio Decidendi: The Tribunal observed that minor technical defaults should not always attract harsh penalties, especially when the tax liability has been satisfied by the payees. The significance of compliance documentation was emphasized.
Result: Appeal allowed for statistical purposes.
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT(A)-2, Pune vide order dated 29.01.2025 passed for A.Y. 2013-
14.
2. The assessee has raised the following grounds of appeal:
“1. Ld. CIT(A) NFAC has erred in confirming the order of A.O. levying penalty U/s. 201(1) of Rs. 42,924 and interest u/s. 201(1A) of Rs. 40,866 aggregating Rs. 83,790/- for late submission of Forms 15G and 15H for non-deduction of TDS from payment of interest to depositors. In as much as, Ld. A.O. as well Hon. CIT(A) has not disputed that: i. Form No. 15G and 15H are filed. There is delay of 3 months. ii. The deductees and assessed to tax and have paid tax as per Return of Income filed. iii. The interest U/s. 201(1A) is wrongly charged since there is no liability to deduct tax. iv. The marginal delay is technical default and in view of the above facts TDS U/s. 201(1)
and interest U/s. 201(1A) cannot be levied.”
3. The brief facts of the case are that the Assessing Officer (TDS) initiated proceedings under section 201(1) and 201(1A) of the Income-tax Act, 1961 (Act) on the assessee based on information received from ITO, Ward 3(2)(9), Ahmedabad. During the assessment of M/s Kad Steel Rolling for A.Y. 2013–14, it was found that the assessee had paid interest of Rs. 4,29,244 during the financial year 2012–13 to various parties but had not deducted TDS on these payments. The assessee submitted that the assessee had received Form No. 15G/H from the recipients of interest to justify non- deduction of TDS. However, the Assessing Officer (TDS) observed that these forms were not submitted to the Income Tax Department within the statutory timeline. Accordingly, the assessee was asked to submit the copies of Form No. 15G/H and supporting documents. In response, the assessee submitted the required forms along with audit reports and ledger accounts, and also produced proof that the forms had been submitted on 03.07.2013 with the concerned Officer. However, the Assessing Officer (TDS) noted that these Form No. 15G/H has been submitted by the assessee well beyond the due date of 07.04.2013. Accordingly, the AO held that the late submission of Form No. 15G/H meant the assessee could not be exempted from the obligation to deduct tax at source, and accordingly, treated the assessee as an assessee-in-default under section 201(1) of the Act. Interest was also levied under section 201(1A) of the Act for the delay. The Assessing Officer computed the total demand at Rs. 83,790/-, comprising Rs. 42,924/-
as TDS and Rs. 40,866/- as interest.
4. Aggrieved by this order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). During appellate proceedings, the assessee admitted that the forms were indeed filed late but submitted that the delay was due to an inadvertent oversight by their accountant. The CIT(A), however, held that such an explanation did not constitute a valid reason for non-compliance with the statutory provisions. The CIT(A) also noted that while he had the authority to condone delays in filing appeals, he does not have the power to condone delays in the filing of statutory forms like Form No. 15G/H, since such powers lie only with the CBDT under section 119(2)(b) of the Act. Consequently, finding the AO’s action in line with the provisions of law, the CIT(A) upheld the order passed under section 201(1) and 201(1A) and confirmed the demand of Rs. 83,790/- raised for A.Y. 2013–
14.
5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.
6. Before us, the Counsel for the assessee submitted Form No. 26A i.e. C.A. Certificate certifying that the payee / recipient of interest income has offered this interest income in it’s return of income. The payees / recipients have taken into account the amount paid by the assessee under the head “income from other so
