ITAT quashes assessee-in-default order for failure to furnish Form 15G/15H of small farmers

Case Details: Saptagiri Grameena Bank v. ITO - [2022] 136 taxmann.com 84 (Hyderabad - Trib.)

Judiciary and Counsel Details

• • Chandra Mohan Garg, Judicial Member and Laxmi Prasad Sahu, Accountant Member
  • Sanjeev Aditya for the Appellant. 
  • Rohit Mujumdar for the Respondent.

Facts of the Case

The assessee was a Regional Rural Bank and was assessable as a cooperative society. During the course of survey proceedings, the Assessing Officer (AO) noted that the assessee had not submitted form 15G/15H filed by the investors of F.D./Term deposit along with complete relevant details of depositors such as the name of the depositor, amount of FD, deposit date, maturity date or interest rate, etc.

AO held assessee as assessee in default for payment of interest without deduction of tax at source and raised demand under section 201(1) and interest under section 201(1A). On appeal, CIT(A) upheld the order of AO. Aggrieved-AO filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that it was noted in assessee’s own case for another assessment year observed that assessee complied with section 197A considering facts that assessee had collected above 75 per cent of Forms and percentage of Forms not submitted compared to total interest disbursal by the assessee was just 2.26 per cent.

Further, the assessee was in a banking business operating as Regional Rural Bank (RRB). Its main customers are agriculturists and small farmers. The majority of the interest payments were in the segment of Rs. 10,000 – 20,000 and Rs. 20,000 – 50,000.
Even otherwise, customers (farmers) received the interest at the extreme level group say Rs. 50,000/- the income will be automatically exempt due to the basic exemption level of income tax. Therefore, considering the facts of case, the order of AO holding assessee to be in default was to be set aside.

Case Review

• • Saptagiri Grameena Bank v. Asstt. CIT [IT Appeal Nos. 815 & 1233 (Hyd.) of 2015, dated 6-5-2016] (para 10) followed.

List of Cases Referred to

• • Saptagiri Grameena Bank v. Asstt. CIT [IT Appeal Nos. 815 & 1233 (Hyd.) of 2015, dated 6-5-2016] (para 10).