IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)

AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)

ITA No. 5118/MUM/2025 Assessment Year: 2024-2025 Pravin Prakash Magar CIT(Appeals) Ward 4, Panvel B 106 Pratiksha CHS Plot No. 55, Panvel, Maharashtra 410206 Sec 15, Koper Khairne, Kopar Vs.

Khairne S.O., Mumbai 400709 PAN NO. BPAPM1266A Appellant Respondent Assessee by : Shri.Pravin Magar (Assessee in person)

Revenue by : Shri Virabhadra Mahajan, Sr. DR (Virtually appear)

Date of Hearing : 16/10/2025 Date of : 03/11/2025 pronouncement

ORDER

PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated

16.06.2025 passed by the Ld. Commissioner of Income-tax Appeals/ National Faceless Appeal Centre (NFAC), Delhi [in short ‘the Ld. CIT(A)’] for AY 2024-25 in relation to order u/s. 201 of the Income Tax Act, 1961 [in short the ‘Act’] passed by the AO for short deduction of tax at source on payment made for purchase of property from non-resident Indian. The relevant grounds raised by the assessee are reproduced as under:

“1. BECAUSE the “CIT(A)” has erred in law and on facts in confirming the demand raised u/s 201(1) and 201(1A) of the Income-tax Act, 1961, without appreciating that the “appellant” had acted on a bona fide understanding of the lower deduction certificate issued by the Assessing Officer u/s 195 of the Income Tax Act, 1961 and without considering the replies filed by the appellant on the e-filing portal.

2. BECAUSE the “appellant” had submitted a detailed estimated computation to the Assessing Officer while applying for a lower deduction certificate, explicitly computing the tax liability at 12.61% inclusive of surcharge and cess; and the issuance of a certificate at 12.61% exclusive of surcharge and cess led to a genuine and inadvertent short deduction.

3. BECAUSE the “CIT(A)” has erred to consider that the payees (NRIs — Prabhat Saxena and Swati Durgesh Saxena) have duly filed their returns of income in India, disclosed the relevant capital gains to tax, , thereby fulfilling the conditions of the first proviso to section 201(1); as such, the “appellant” could not be treated as an assessee-in default.

4. BECAUSE the “CIT(A)” has erred in upholding the levy of interest u/s 201(1A) without properly considering the “appellant’s” bonafide belief and compliance history, and without appreciating that the shortfall arose due to a technical misinterpretation of the certificate, not due to delay or willful default.

5. BECAUSE the “appellant” was not provided a specific opportunity to furnish Form 26A as required under Rule 31ACB of the Income Tax Rules and proviso to Section 201(1) of the Income Tax Act, the adverse inference drawn and dismissal of the appeal are unjustified. The appellant was willing to furnish the said certificate, and hence, prays for the matter to be restored for fresh consideration after allowing due opportunity.

6. BECAUSE the order appealed against is contrary to the facts, law and principles of natural justice to the extent mentioned in the foregoing grounds.”

2. Briefly stated, the facts of the case are that the assessee, an Indian resident, purchased an immovable property situated in India from two non-resident Indians, namely, Smt. Swati Durgesh Saxena and Shri Prabhat Saxena, for a consideration of ₹66,00,000/- each. Under the statutory mandate of Section 195 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), the assessee was obliged to deduct tax at source from the payment made to the non-resident sellers.

2.1 In pursuance of the said obligation, the assessee approached the Assessing Officer for issuance of a certificate under Section 197 of the Act, seeking permission for deduction of tax at a lower rate. Though the assessee had requested for deduction of tax at the rate of 12.61% inclusive of surcharge and cess, the certificate so issued prescribed the rate of 12.61% excluding surcharge and cess. It, however, appears