No default due to Non Deduction of TDS on Interest where Form 15G is Submitted

No default due to Non Deduction of TDS on Interest where Form 15G is Submitted

IN THE INCOME TAX APPELLATE TRIBUNAL

The Relevant Text of the Order as follows : 4. We have heard the rival contentions and perused the material available on record. In this case, the Assessing Officer passed the order u/s 201(1) read with 201(1A) dated 17.03.2017 holding the assessee to be in default for non-deduction of TDS on interest paid to Jaipur School Samiti. The said order has been challenged by the assessee before the ld. CIT(A) who has decided the matter vide order dated 01.04.2019 holding that the order so passed by the Assessing Officer is time barred and therefore, null and void and the appeal of the assessee has been allowed. The relevant findings of the ld. CIT(A)-3, Jaipur read as under:-

“4.3 I have carefully considered the observation made by the Assessing Officer and submission filed by the A/R of the appellant. Therefore in view of the submission filed by the A/R of the appellant this order is time barred. Accordingly, I treat this order is null and void. This additional ground is allowed.

5. There is no need to adjudicate the other grounds because the order has been treated as null and void.”

5. Apparently, the ld CIT(A) has confirmed the levy of penalty u/s 271C vide the impugned order dated 28.01.2019 and didn’t have the benefit of order passed in the appellate proceedings u/s 201(1) read with 201(1A) which has been disposed off subsequently on 01.04.2019. 6. In view of the above, we find that the order of the Assessing officer u/s 201(1) read with 201(1A) holding the assessee to be in default for non-deduction of TDS has been held as null and void and has attained finality and thus, in effect, there is no order where the assessee has been held guilty of non-deduction of TDS. Even in the penalty order so passed by the Add. CIT(TDS), he has relied on the findings of the AO in the order passed u/s 201(1) read with 201(1A) while levy the penalty. Further, we find that the assessee has relied on Form 15G filed by the Jaipur School Samiti and basis the same, has not deducted the TDS. In light of the aforesaid facts and circumstances of the present case, we therefore find that there was reasonable cause for non-deduction of TDS and the levy of penalty u/s 271C deserves to be set aside. We accordingly set aside the penalty u/s 271C of the Act and Ground No. 1 is decided in favour of the assessee. 7. Ground No. 2 is dismissed as not pressed by the assessee. In the result, appeal of the assessee is allowed. Order pronounced in the Open Court on 29/09/2020.