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2025 Supreme(Online)(ITAT) 1539
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
SHRI B.R. BASKARAN, ACJ, SHRI ANIKESH BANERJEE, J
AMMAR ABDULLA ARSIWALA MUMBAI – Appellant
Versus
ITO (IT)-1(1)(2) MUMBAI – Respondent
ITA 5561/MUM/2024
Shri Dhaval Shah, Shri Ram Krishn Kedia, Sr.DR
The benefit of the first proviso to section 201(1) of the Income Tax Act is contingent upon the fulfillment of specified conditions, which must be demonstrated by the assessee.
Headnote:(A) Income Tax Act, 1961 - Sections 201, 201(1), 201(1A), and 234E - Appeal against demand raised for short deduction of TDS on property purchase - Assessee deducted TDS at 1% instead of 20% applicable for non-resident seller - Demand of Rs.20,99,500/- confirmed by Ld.CIT(A) - Assessee argued that seller declared capital loss, invoking first proviso to section 201(1) - Court found that relevant documents were not presented before AO - Opportunity granted to present case properly. (Paras 2-6)
(B) Natural Justice - The court emphasized the importance of providing an opportunity to the assessee to present all relevant documents before the AO for a fair examination of the case. (Paras 5-6)
Facts of the case:
The assessee purchased property for Rs.2,21,00,000/- and deducted TDS at 1%. The AO held that TDS should have been deducted at 20% for the non-resident seller, leading to a demand for short deduction.
Findings of Court:
The court set aside the Ld.CIT(A)'s order and restored the matter to the AO for further examination, allowing the assessee to present necessary documents.
Issues: The main issues were whether the first proviso to section 201(1) applied and if the assessee complied with its conditions.
Ratio Decidendi: The court ruled that the benefit of the first proviso to section 201(1) is contingent upon the fulfillment of specified conditions, which were not met in this case.
Result: Appeal treated as allowed for statistical purposes.
| Table of Content |
|---|
| 1. property purchase and tds deduction (Para 2) |
| 2. assessee's argument on compliance (Para 3) |
| 3. dr's counter-argument (Para 4) |
| 4. rejoinder by ld.ar (Para 5) |
| 5. order set aside and restored (Para 6) |
ORDER
PER B.R. BASKARAN, A.M :
The assessee has filed this appeal challenging the order dt.29-08-2024 passed by the Ld. Commissioner of Income Tax (Appeals)-55, Mumbai [„Ld.CIT(A)‟] and it relates to AY. 2016-17. The assessee is aggrieved by the decision of the Ld.CIT(A) in confirming the demand raised by the AO u/s.201 of the Income Tax Act, 1961 („the Act‟) and also the interest levied by the AO u/s. 201(1A) of the Act.
2. During the year under consideration, the assessee had purchased a property from a person, named, Shri Shabbir Sarafali Golawala for a consideration of Rs.2,21,00,000/-. The assessee deducted TDS @ 1% u/s. 194IA of the Act. The AO noticed that the seller, Shri Shabbir Sarafali Golawala, is a non-resident and hence he held that the assessee should have deducted TDS u/s. 195 of the Act @ 20%. Since there was short deduction of tax at source, the AO treated the assessee herein as an assessee in default. Accordingly, the AO raised a demand of Rs. 20,99,500/- u/s. 201(1) of the Act and also charged interest u/s. 201(1A) of the Act to the tune of Rs. 17,11,861/-. The AO also levied fee u/s. 234E of the Act for late filing of TDS return. The assessee filed appeal challenging the demand and interest raised u/s. 201/201(1A) of the Act before the Ld.CIT(A), but the said appeal came to be dismissed by the First Appellate Authority (FAA). Hence, the assessee filed this appeal before the Tribunal.
3. The Ld.AR submitted that the seller of the property, Shri Shabbir Sarafali Golawala has filed his return of income for the year under consideration, wherein he has declared capital loss arising from the sale of the property that was purchased by the assessee. Accordingly, he submitted that the assessee herein shall be covered by concession given in the first proviso to section 201(1) of the Act. Accordingly, the Ld.AR submitted that the AO was not right in raising the demand u/s. 201(1) of the Act. The Ld.AR further submitted that the seller of the property was not ultimately liable to pay tax for the current year. Hence, there was no loss of revenue to the Government on account of short deduction of tax at source and in that case, the interest u/s. 201(1A) of the Act also not leviable. In support of this proposition, the Ld.AR placed reliance on the decision rendered by the Co-ordinate Bench of the Tribunal in the case of Mr. Thomas Muthoot vs. DCIT in ITA No. 383/Coch/2011 and others and also the decision rendered by the Jabalpur Bench of the Tribunal in the case of National Highway Authority of India vs. ACIT, 49 taxmann.com 32 (Jabalpur-Trib).
4. The Ld.DR, on the contrary, submitted that the assessee can take the benefit of proviso to section 201(1) of the Act only if he furnishes a certificate obtained from an Accountant to the effect that the conditions prescribed in the first proviso to sec.201(1)have been fulfilled. However, the assessee has not furnished the said certificate before the AO. He further submitted that the details of income tax return filed by the seller were filed before Ld CIT(A) only. Accordingly, the Ld.DR submitted that the assessee has not complied with the first proviso to sec.201(1) of the Act.
5. In the rejoinder, the Ld.AR submitted that the assessee has since obtained the required certificate from a Chartered Accountant in Form 26A and assessee will be in a position to present it and also other income tax details of the seller before the AO, if an opportunity is given. 6. We heard the parties and perused the record. There should not be any dispute that the concession/benefit given in the first proviso to section 201(1) of the Act will be available to the assessee only if the conditions mentioned therein are satisfied. In the instant case, the assessee did not file all the relevant document
