S. 201/ 201(1A): The payer is not liable for TDS default if the Dept does not prove that the tax could not be recovered from the recipient, further no liability for interest u/s 201(1A) if recipient of income had no tax liability embedded in such payments
Allahabad Bank vs. ITO (ITAT Agra) The assessee, a bank, - was held liable u/s 201(1) and 201(1A) r.w.s. 194 A - for failure to withholding TDS on interest paid by it to customers on deposits placed by them with the assessee. The assessee claimed that it could not be treated as an assessee-in-default as no steps had been taken to determine whether the recipients of the interest had paid tax thereon. HELD by the Tribunal allowing the appeal: (i) A short deduction of tax at source, by itself does not result in a legally sustainable demand u/s 201(1) and u/s 201(1A) . As held in Hindustan Coca Cola Beverages vs. CIT 293 ITR 226, taxes cannot be recovered once again from the assessee in a situation in which the recipient of income has paid due taxes on income embedded in the payments from which tax withholding requirements were not fully or partly, complied with . In Jagran Prakashan vs. DCIT 21 TM.com ...