No TDS Liability Can Be Fastened For Earlier Year If Taxpayer Was Not Aware Of Subsequent TDS Certificate Issued By Depositor: Mumbai ITAT

The Bench of Amit Shukla (Judicial Member) and Prashant Maharishi (Accountant Member) observed that “AO should have given opportunity to the assessee before carrying out rectification u/s. 154, so as to explain the various certificates which were issued by VIL to the assessee company for lower deduction of TDS”. (Para 7)

As per the brief facts of the case, the assessee bank was provided with a lower TDS Certificate (LDC) by the depositor M/s Vodafone Idea Ltd. As per the said certificate, TDS on any interest up-to Rs 30 Cr paid to the said depositor should be effected @ 3%. On Oct 19, 2019, the deposit was pre closed by the depositor and an interest of Rs 23,56,54,961 was paid after effecting a TDS of Rs 70,69,649/- The depositor produced another certificate u/s 197, wherein the limit of the earlier certificate was modified to Rs '0'. It is on this basis, an order was passed by considering an amount of Rs 1,64,95,846/-being the 7% of the interest paid as the short deduction of TDS.

The Bench found that the depositor VIL has offered the interest income to tax for which CA certificate in form 26A has been filed.

In view of first proviso to 201(1A), the Bench also noted that no demand can be confirmed if the recipient has paid the tax on the income and produced the certificate.

In this regard also, the ITAT remanded the matter and directed the AO to verify the certificate and if it found that depositor has offered this income to tax, then no demand should be enforced.

Counsel for Appellant/ Assessee: Ananthan

Counsel for Respondent/ Revenue: H.M Bhatt

Case Title: Canara Bank verses ACIT

Case Number: ITA No.3627/Mum/2023

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