Allahabad Bank wasn't at fault for TDS default on interest payments if depositors had paid taxes thereon
IT: Recovery provisions under Section 201(1) can be invoked only when loss to revenue is established; that can only be established when it is demonstrated that the recipient of income had not paid due taxes thereon and the recipient of the accounts had the liability to tax
Facts:
• The Income-tax authorities surveyed the assessee, a nationalized bank. During survey it was noticed that assessee had not complied with TDS obligations in respect of interest on certain deposits placed by the customers. In this backdrop, the demand was raised against it under Section 201(1).
The Tribunal held as under:
| (1) | The Onus is on revenue to demonstrate that the taxes have not been recovered from the person who had the primary liability to pay taxes, and it was only when the primary liability was not discharged that vicarious recovery liability could be invoked. | |
| (2) | Once all the details of the persons to whom payments could had been made were on record, it was for the AO, who had all the powers to requisition the information from such payers and from the income-tax authorities, to ascertain whether or not taxes had been paid by the person in receipt of the amounts from which taxes had not been withheld. | |
| (3) | Recovery provisions under Section 201(1) can be invoked only when loss to revenue is established; that can only be established when it is demonstrated that the recipient of income has not paid due taxes thereon and the recipient of the accounts had the liability to tax. | |
| (4) | Thus, the matter was restored to file of AO for fresh adjudication in accordance with the law and in the light of aforementioned observations. |
Regards
Prarthana Jalan
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