2023 (8) TMI 336 - HC - Income Tax

Penalty u/s 271C - demand notice issued u/s 156 - petitioner treated as an assessee-in-default u/s 201/201(1A) for its failure to deduct withholding tax qua External Development Charges (EDC) paid to the Haryana Urban Development Authority HUDA - HELD THAT - As relying on case DLF Homes Panchkula Pvt. Ltd. 2022 (12) TMI 1426 - DELHI HIGH COURT the same result should follow vis-a-vis the penalty order and the demand notice assailed in the instant writ petition. Accordingly, the aforementioned penalty order and demand notice are quashed.

Summary

Issues involved:
The issues involved in this judgment relate to a challenge to an order passed u/s 271C of the Income Tax Act, 1961 and a demand notice issued u/s 156 of the Act for the Financial Year 2013-14. The challenge pertains to the treatment of the petitioner as an assessee-in-default u/s 201/201(1A) of the Act for failure to deduct withholding tax on External Development Charges (EDC) paid to the Haryana Urban Development Authority (HUDA).

Judgment Details:

Challenge to Order u/s 271C and Demand Notice u/s 156:
The petitioner challenged the order dated 28.11.2022 passed u/s 271C of the Income Tax Act, 1961, as well as the demand notice issued on the same date u/s 156 of the Act. The court noted that a coordinate bench had ruled in favor of the petitioner in a similar matter concerning withholding tax on EDC payments to HUDA. Citing this precedent, the court concluded that the penalty order and demand notice should be quashed in the present case.

Result and Disposal of Writ Petitions:
In light of the precedent favoring the petitioner, the court quashed the penalty order and demand notice. Consequently, the writ petitions were disposed of in favor of the petitioner. The court also directed the closure of pending interlocutory applications related to the writ petitions and vacated the interim order passed earlier. Parties were instructed to act based on the digitally signed copy of the order.

This summary provides a detailed overview of the judgment, highlighting the issues involved and the court's decision on the challenge to the order and demand notice under the relevant sections of the Income Tax Act, 1961 for the Financial Year 2013-14.