2022 (12) TMI 1426 - HC - Income Tax

Assessees in default u/s 201/201(1A) - failure to deduct withholding tax against External Development Charges (EDC) paid to Haryana Urban Development Authority - order passed u/s 271C by respondent no.1 and the notice of demand of even date passed u/s 156 of the Act. HELD THAT - To be noted, the aforementioned penalty order and demand notice concern Financial Year (FY) 2013-2014. Issue notice. Counter-affidavit(s) will be filed within the next ten days. Rejoinder(s) thereto, if any, be filed before the next date of hearing.

Summary

Issues:
1. Challenge to penalty order and demand notice under Section 271C of the Income Tax Act for FY 2013-2014.

Analysis:
1. The petitioners sought interim relief regarding the issue of being treated as assessees in default under Section 201/201(1A) of the Income Tax Act for failure to deduct withholding tax against External Development Charges paid to Haryana Urban Development Authority (HUDA). This issue is also the subject matter of another pending writ petition. Ms. Kavita Jha represented the petitioners and highlighted the interim order passed in the previous writ petition.

2. The writ petitions challenged the penalty order dated 28.11.2022 passed under Section 271C of the Act by respondent no.1 and the notice of demand issued on the same date under Section 156 of the Act for FY 2013-2014. The respondents accepted the notice on behalf of the revenue. The court directed the filing of counter-affidavits within the next ten days and allowed for rejoinders before the next hearing date.

3. The matters were listed for further hearing on 09.01.2023. Meanwhile, the court ordered that the operation of the impugned penalty order and demand notice shall remain stayed until further directions are provided by the Court. The case was allowed subject to the petitioners submitting legible copies of annexures before the next hearing date to ensure a smooth legal process and consideration of all relevant documents.