Proceedings against an assessee for failure to deduct TDS under Section 201 of the Income Tax Act must be initiated within a reasonable period of four years, and where the non-resident recipient has already discharged the tax liability, the assessee cannot be treated as an assessee in default.

O R D E R

PER S. BALAKRISHNAN, AM

This appeal is filed by the assessee against the order of the Ld. Addl/JCIT(A), Thane in DIN & Order No. ITBA/APL/S/250/2024-25/1070848271(1), dated 03/12/2024 (“Ld. CIT(A)”) arising out of the order passed U/s 201(1) & 201(1A) of the Act, dated 29/03/2019 for the AY 2012-13.

2. Brief facts of the case are that as per the information available with the Department, the assessee purchased an immovable property vide Document No.6985/2011, dated 24/11/2011 and paid Rs. 25 lakhs to the owner of the property Sri Jandhyala Bala Bhaskara Sastry, a non-resident Indian. The Ld. AO observed that since the assessee paid the amount of Rs. 25 lakhs to a non-resident towards purchase of immovable property, the assessee is under obligation to deduct tax U/s. 195 of the Act. Accordingly, the Ld. AO issued a show cause notice 21/03/2019 and called for reply of the assessee as to why the order U/s. 201(1) & 201(1A) of the Act should not be passed. However, there was no response from the assessee and therefore the Ld. AO treated the assessee as an assessee in default U/s. 201(1) of the Act and passed order U/s. 201(1) of the Act along with the interest U/s. 201(1A) of the Act. The assessee was also issued a recovery notice by the ITO, Ward – Int. Txn, Vijayawada on 27/01/2020. Aggrieved by the order and the recovery notice of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A), Thane.

3. The Ld. CIT(A) dismissed the appeal of the assessee by observing as follows:

“5.1. the appellant is on appeal before this office against the recovery notice issued by the ITO, Ward Int Txn, Vijayawada on 27/01/2020. Though the appellant has filed copies of Form 35, Statement of facts and grounds of appeal, he has not filed copy of order passed U/s. 201, as well as copy of challan of payment of the appeal fees inspite of numerous opportunities granted to him as discussed in preceding para.”

The Ld. CIT(A) also stated that multiple opportunities were provided to submit documents and make submissions in response to the appeal. He therefore, held that the appeal is not maintainable while dismissing the appeal of the assessee by confirming the addition made by the Ld.AO. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. The assessee has raised the following grounds of appeal:

“1. That, in light of the facts and circumstances of the case, the order passed U/s. 201(1) & 201(1A) of the Act 27/01/2020, which was upheld by the Ld. Addl/JCIT(A), NFAC, in order passed U/s. 250 of the Act on 03/12/2024, is contrary to the facts of the case and provisions of law.

2. The Ld. Addl/JCIT(A), NFAC erred in dismissing the appeal as not maintainable, citing the absence of the order passed U/s. 201(1) & 201(1A) of the Act, along with the challan for appeal fees, as not being enclosed with Form No. 35.

3. The Ld. Addl/JCIT(A), NFAC ought to have taken into account that the assessee relied on a tax practitioner assigned with the responsibility of handling the matter, and there was no deliberate neglect on the part of the assessee in failing to comply with the necessary procedural requirements for pursuing the case.

4. The assessee submits that, under the given facts and circumstances, he was denied a reasonable opportunity for a fair hearing, thus being deprived of natural justice.

5. The Addl/JCIT(A) failed to consider the fact that the NRI seller of the property filed a return of income declaring capital gains and duly paid taxes on the same. As a re