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2026 Supreme(Online)(ITAT) 9375
IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE
Prashant Maharishi, Vice-President, Soundararajan K., Judicial Member
Artha Real Estate Corporation Ltd. – Appellant
Versus
Deputy Commissioner of Building, Income Tax, TDS Circle – 1(1), Bangalore – Respondent
ITA No. 1850/Bang/2025
For the Appellants/Petitioners: Shreeshkumar Hegde
For the Respondents: Balusamy N.
Failure to deduct TDS on the full purchase price of immovable property under Section 194IA renders the purchaser an 'assessee in default' under Section 201, regardless of whether the amount is debited to the P&L account.
Headnote:(A) TDS on Immovable Property - Section 194IA - Non-deduction of tax on full sale consideration - Debiting the purchase amount to the Profit and Loss account does not exempt the purchaser from the statutory obligation to deduct TDS on the entire purchase value. (Para 21)
(B) Assessee in Default - Section 201 - Failure to deduct tax at source - Where a purchaser fails to deduct TDS on the total consideration of land, they are rightly treated as an assessee in default under the Act. (Para 21)
(C) Natural Justice - Additional Evidence - Remand for verification - Where new evidence, such as Form 16A, is produced that was not considered by lower authorities, the matter may be remitted to the Assessing Officer for de novo consideration to determine if the assessee is in default. (Para 22)
Issues: Whether the assessee is an assessee in default under Section 201 for failure to deduct TDS on the purchase of land and other expenses.
ORDER
PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 26/06/2025 in respect of the A.Y. 2018-19.
“1. The order passed under the provisions of section 250 of the Act by the learned CIT(A) confirming the order passed by the learned Assessing Officer in so far as it is against the Appellant, is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the case.
2. The learned CIT(A) has erred by confirming the order passed by the learned Assessing Officer learned Assessing Officer treating the Appellant as Assessee in default for not deducting the taxes at source on certain provisions for expenses made in the books of accounts on the facts and circumstances of the case. The learned Assessing Officer erred in assessing the tax liability of the Appellant at Rs.21,58,524 on the facts and circumstances of the case.
3. The learned CIT(A) has erred by holding that the Appellant has not deducted the tax at source on the real estate land cost charged to statement of profit and loss on the facts and circumstances of the case. Further, the learned CIT(A) has erred by holding that the provisions of section 194IA are applicable in the instant case on the facts and circumstances of the case.
WITHOUT PREJUDICE TO ABOVE
4. The learned CIT(A) has erred by holding that the Appellant is required to deduct the taxes at source on provisions which has not crystallized under the provisions of Chapter XVII – B of the Act on the facts and circumstances of the case. The learned CIT(A) failed to appreciate the requirement to deduct the tax arises only when the Appellant is required to pay the income on the facts and circumstances of the case.
5. The learned CIT(A) has erred by holding that the Appellant should have deducted the taxes at source on provisions which have been reversed subsequently in the books of account on the facts and circumstances of the case.
FURTHER WITHOUT PREJUDICE TO ABOVE
6. The learned CIT(A) has failed to call for remand report and has erred by not considering the additional evidence filed by the Appellant during the appeal proceedings which had material bearing on the outcome of the appeal proceedings on the facts and circumstances of the case.
7. The learned CIT(A) ought to have appreciated that the provisions reported in form 3CD have crystallised in subsequent years and the taxes have been deducted at source and paid in respective years by the Appellant on the facts and circumstances of the case.
8. The learned CIT(A) Assessing Officer ought to have appreciated that the Appellant has deducted and deposited the taxes at source on interest expense on due basis on the facts and circumstances of the case.
9. Without prejudice, the learned CIT(A) has erred in law in confirming the levy of interest under the provisions of section 201(1A) of the Act on the facts and circumstances of the case.
10. Without prejudice, the learned CIT(A) has erred in law in confirming the initiation of the penalty proceedings under the provisions of the Act on the facts and circumstances of the case.
11. The Appellant craves to add, alter, delete or substitute any of the grounds urged above.
12. In view of the above and other grounds as may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.”
The brief facts of the case are that the assessee is in the business of real estate and they have filed their tax audit report in form 3CA. The AO based on the tax audit report had found that the assessee had not deducted the tax on certain expenses which were eligible for TDS. Therefore, the AO had initiated the proceedings u/s. 201 of the Act. The assessee had not filed any satisfactory explanations with regard to the non-compliance of TDS provisions. Subsequently, the AO based on the entries in the balance sheet and the P&L account found that the assessee had purchas
