2025 (1) TMI 523 - AT - Income Tax

Penalty u/s 234E - late fling of TDS form No, 26QB - As argued assessee deducted TDS voluntarily and property was agriculture land - HELD THAT - In the assessee s case the purchase consideration paid individually by him is more than 50 lakh, the total stamp duty valuation of the property is more than 50 lacs. CIT(A) held that the assessee cannot claim exemption under sub-section 2 of Section 194IA of the Income Tax Act, 1961. Besides this the CIT(A) further held that the plea of the assessee that the said land is agricultural land has not been established through documents by the assessee before the CIT(A). But the fact remains that the assessee deducted the TDS at the time of paying consideration and not deposited the TDS within the statutory time which denied the credit to deductor for his tax purpose. In the present assessee s case the TDS was deposited belated as well as Form 26QB. The purpose of depositing the TDS within the stipulated/statutory time is to allow the credit to the other party i.e. deductee, once it is deducted by the deductor. But in the present case the deductee could not avail the same. Thus, CPC-TDS has rightly imposed the penalty u/s. 234E of the Act. The appeal of the assessee is dismissed.

2024 (10) TMI 1197 - AT

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the National Faceless Appeal Centre (NFAC) erred in confirming the penalty under Section 234E of the Income Tax Act, 1961, for late filing of TDS Form 26QB, given the claim that the purchased land was agricultural and outside the purview of Section 194IA.
Whether the NFAC failed to consider the evidence provided by the assessee that the land purchased was agricultural, as indicated in the land purchase documents and supporting forms.
Whether the voluntary deduction of TDS by the assessee on the purchase of agricultural land should negate the penalty imposed under Section 234E.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Penalty under Section 234E for Late Filing of TDS Form 26QB

Relevant legal framework and precedents: The case revolves around the interpretation of Sections 194IA and 234E of the Income Tax Act, 1961. Section 194IA mandates TDS on certain property transactions, while Section 234E imposes penalties for late filing of TDS statements.
Court's interpretation and reasoning: The court found that the assessee had indeed deducted TDS voluntarily but failed to deposit it and file Form 26QB within the statutory period. The court emphasized the importance of timely compliance to ensure the deductee can claim the credit.
Key evidence and findings: The assessee argued that the land was agricultural and thus exempt from TDS under Section 194IA. However, the CIT(A) noted that the purchase consideration exceeded the threshold, and the agricultural nature of the land was not adequately documented.
Application of law to facts: The court applied the statutory requirements of Sections 194IA and 234E, concluding that the failure to comply with the timelines warranted the penalty, regardless of the land's nature.
Treatment of competing arguments: The court dismissed the assessee's reliance on a precedent where TDS was timely deposited but Form 26QB was late, distinguishing it from the present case where both were delayed.
Conclusions: The court upheld the penalty under Section 234E, emphasizing the necessity of adherence to statutory deadlines for TDS compliance.

Issue 2: Consideration of Evidence for Agricultural Land

Relevant legal framework and precedents: The determination of whether land is agricultural affects the applicability of Section 194IA.
Court's interpretation and reasoning: The court noted that the CIT(A) found insufficient evidence to classify the land as agricultural, as the documentation provided did not conclusively establish this status.
Key evidence and findings: The assessee provided land purchase documents and forms 7 and 8A as evidence. However, the CIT(A) required more concrete proof to substantiate the claim.
Application of law to facts: Without definitive evidence of the land's agricultural nature, the court applied the standard provisions of Section 194IA, which necessitated TDS deduction.
Treatment of competing arguments: The court acknowledged the assessee's submissions but found the evidence lacking in meeting the burden of proof required to exempt the transaction from TDS.
Conclusions: The court concluded that the NFAC correctly upheld the penalty, as the agricultural status of the land was not sufficiently proven.

Issue 3: Voluntary TDS Deduction and Penalty Implication

Relevant legal framework and precedents: Voluntary compliance with TDS provisions does not negate statutory penalties for non-compliance with procedural requirements.
Court's interpretation and reasoning: The court reasoned that voluntary deduction does not exempt the deductor from adhering to the statutory timelines for depositing TDS and filing the requisite forms.
Key evidence and findings: The assessee voluntarily deducted TDS but failed to comply with the statutory timelines, leading to the imposition of penalties.
Application of law to facts: The court applied Section 234E, emphasizing that the voluntary nature of TDS deduction does not absolve the assessee from the consequences of delayed compliance.
Treatment of competing arguments: The court dismissed the argument that voluntary deduction should negate penalties, highlighting the statutory obligation to comply with deadlines.
Conclusions: The court upheld the penalty, reinforcing the principle that voluntary compliance does not excuse procedural non-compliance.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The purpose of depositing the TDS within the stipulated/statutory time is to allow the credit to the other party i.e. deductee, once it is deducted by the deductor."
Core principles established: The judgment reinforces the principle that compliance with statutory timelines for TDS deposit and form filing is mandatory, irrespective of the voluntary nature of the deduction.
Final determinations on each issue: The court dismissed the appeal, affirming the penalty under Section 234E due to the assessee's failure to deposit TDS and file Form 26QB within the statutory period, and insufficient evidence to classify the land as agricultural.

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