Sri Shyamal Gupta, Member

This Appeal is preferred against the Order dated 03-10-2013 passed by the Ld. District Forum, South 24 Parganas in C.C. No. 123/2013 whereby the complaint has been decreed in favour of the Complainants.  Being aggrieved by and dissatisfied with the same, OPs thereof have preferred this Appeal.

Briefly narrated, case of the Complainants before the Ld. District Forum was that they made two Fixed Deposits with the OP No. 1 for a sum of Rs. 90,000/- and Rs. 1,00,000/- on 26-08-2011 and 14-10-2011, respectively.  On maturity, they presented the said FD Certificates before the OP No. 1 for transferring maturity proceeds to their account.  However, to their utter surprise, they found that the OP Bank instead of paying the promised sum, paid them lesser amount in respect of both the Fixed Deposits.  It is the case of the Complainants that they submitted Form No. 15H in respect of both the Fixed Deposit Certificates on 26-04-2012.  Therefore, there was no question of deduction of TDS in respect of the said two fixed deposits.  Repeated persuasion of the matter with the OP No. 1 did not yield any positive result.  As such, they filed the complaint case.

In their defence it is stated by the OPs before the Ld. District Forum that lesser amount was paid to the Complainants due to deduction of Income Tax on the interest amount. It is alleged that the Complainants refused to accept the Form No. 16A and demanded compensation from the OPs.  It is further clarified that as per Govt. of India guidelines, if FD interest amount in a financial year exceeds Rs. 10,000/- and unless 15H/15G form is submitted by the depositor, 10% of the interest amount is required to be deducted.  Since the Complainants did not submit requisite form during the financial year 2011-12 and their earning interest exceeded the threshold limit, in compliance with the Govt. of India directive, a sum of Rs. 1,020/- was deducted.  It is also stated that since the Complainants submitted 15H Form for the financial year 2012-13, no deduction was made for the said year.  Denying any laches/wrongdoing/ deficiency in service on their part, the OPs prayed for dismissal of the complaint.

Point to be considered is whether the impugned order suffers from any anomaly.

Decision with reasons

It is not in dispute that the Respondents made two Fixed Deposits with the Appellants.  It also appears that during the financial year 2011-2012, the Respondents did not furnish Form 15H, but they filed the said form for the next financial year, i.e. 2012-2013.  It appears that a sum of Rs. 1,020/- was deducted from the concerned FD accounts of the Respondents during the financial year 2011-2012.  However, no amount was deducted from the said FD accounts during the financial year 2012-2013.

The bone of contention is whether such deduction of income tax conformed to the law of the land or not.  In this regard, Appellants pointed out  Sec. 194A of the Income Tax Act which runs as under:

“194A. Interest other than “Interest on securities”: (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force”.

Simple reading of the above clause makes it clear that TDS on interest income can be levied either at the time of credit of such income to the account of the payee or at the time of making payment thereof, whichever is earlier.  It transpires from the Statement of Account in respect of both the fixed deposits that interest was credited in respect of the said deposits on quarterly basis since inception of the fixed deposits.  Since the Respondents did not furnish 15H Form for the financial year 2011-2012, TDS was levied on the interest income by the Appellant and such action being in conformity with Sec. 194A of the Income Tax Act, no fault can be attributed to the Appellants. 

However, it is also a fact that the Appellants did not make any endeavour to enlighten the Respondents about the implications of law. It is true that ignorance of law is no excuse.  However, we fail to understand when the Respondents sought due clarification about such deduction vide their letters dated 07-09-2012 and 02-11-2012, why did the Appellants keep mum instead of clarifying the position of law and handing over 16A Form to the Respondents.  It is alleged by the Appellants that the Respondents refused to accept the said form.  However, no cogent documentary proof is forthcoming before us to prove the bona fide of such claim. 

Let us appreciate that the duty/responsibility of a bank does not end with deduction of Tax at source and filing return thereof with the Income Tax Department.  Whenever tax is deducted, it becomes the bounden duty of the bank concerned to handover necessary Certificate in this regard to enable the depositor stake refund claim/income tax benefit. 

There is nothing to show that the Appellants handed over necessary Forms/Certificates to the Respondents against deduction of tax.  Since the Respondents as a layman were ignorant of nitty-gritty of Income Tax Act and more so, as they did not receive any certificate from the Appellants, they were not in a position to stake refund claim from the Income Tax Department following due procedure. 

Not only that, what we find quite indeed intrigue is that the returns submitted before the Income Tax Department pertaining to the Respondents were full of errors.  First they quote a wrong PAN; then although they rectified the said mistake, they mentioned a wrong date towards deposit of tax.  Although the Appellants blamed an unidentified agency to whom they purportedly outsourced the job of furnishing returns, to our mind, for such acts of omission and commission, the Appellants cannot shrug off vicarious liability.

Evidently, no serious attempt was made from the side of the Appellants to address the grievance of the Respondents, let alone resolve it. Their disinterest and even defiance of sober behavior norms can be traced out of the fact that they do not bother to respond to the complaint letters written by aggrieved customers.

Before we conclude, Appellants must be reminded that whatever little faith common people still have about the sincerity of purpose on the part of officials of our public sector banks would be lost in no time if incident like this is not addressed in a prudent manner forthwith.  Bank officials are there to serve the customers of banks; not to compound their misery/hardship.  They must introspect, whether by such act, they are doing justice to the job they are paid for. 

Keeping in view all the facts and circumstances of the case, we absolve the Appellants from returning Rs. 299/- to the Respondents.  Appellants are further exonerated of paying penalty to the tune of Rs. 1,00,000/- and interest as ordered by the Ld. District Forum.  However, Appellants must pay the compensation and litigation cost as ordered. Further, they must also send an error free TDS Certificate to the Respondents.

The Appeal, thus, succeeds in part.

Hence,

O R D E R E D

That FA/1185/2013 be and the same is allowed in part on contest.  The impugned order is modified as under:

Appellants shall jointly and severally pay a sum of Rs. 2,000/- and Rs. 5,000/- as cost and compensation, respectively, to the Respondents within 45 days hence.   Appellants are further directed to send error free TDS Certificate to the Appellants within the afore mentioned period.