BANK OF BARODA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The petitioner, Bank of Baroda, has challenged the order dated 15th April, 2015, passed by the CIT(A), Belagavi, whereby the learned CIT has rejected the petitioner 's prayer for stay of demand dated 16th March, 2015.

(2.) Briefly, the facts of the case are that the ITO, respondent No. 1 (the 'ITO ', for short), had issued summons on 15th Dec., 2014 under section 131 along with notice under section 133(6) of the IT Act, 1961, calling upon the petitioner-bank to submit details of the fixed deposits held by the Visveswarayya Technological University, Belagavi ( 'the VTU ', for short) and the interest paid on such deposits during the financial years 2010-2011 to 2013-14, and the tax deducted at source (TDS ', for short) on such payment, and to show reasons as to why these deductions have not been made, and quarterly statements filed under section 194A of the Act, in respect of such payments. By letter dated 26th Dec., 2014, the petitioner-bank informed the ITO that it did not deduct any TDS on the interest paid to the VTU, because by letter dated 3rd Sept., 2014, the VTU had informed the bank that the university is exempted from filing the returns under section 10(23C)(iiiab)/s. 139 of the Act. The bank further claimed that since it had no reason to disbelieve the assertion made by the payee-VTU, it did not deduct the TDS.

(3.) Not satisfied by the explanation offered by the petitioner-bank, on 29th Dec., 2014, the ITO issued a show-cause notice to the petitioner, calling upon it to explain why it should not be considered as an assessee in default, for failing to make the TDS under section 194A of the Act. Subsequently, on 16th Jan., 2015, the ITO issued summons under section 131 of the Act, and also sent a letter to the petitioner-bank calling upon the bank to appear before him on 22nd Jan., 2015. The bank was directed to produce the additional documents related to interest payments made to the VTU, without deducting TDS. Consequently, on 19th Jan., 2015, the bank filed a written submission explaining the reasons why the TDS was not made on interest paid to the VTU. The bank further explained the reason why it should not be treated as an assessee in default.