2024 (10) TMI 1197 - AT - Income Tax

Penalty u/s 234E - late filing of TDS Form 26QB - HELD THAT -CIT(A) has given a finding that through the purchase consideration paid by the assessee was less than Rs. 50 Lakhs, the stamp duty valuation of the property was Rs. 1,41,46,475/-, which was more than 50 Lakhs and, therefore, the assessee could not have claimed exemption u/s.194IA(2). This observation of the CIT(A) is not found to be correct. The deduction of TDS u/s.194IA of the Act at the relevant point of time, when the transaction was made by the assessee, was required to be made on the amount of payment as made by the assessee. The provision for TDS u/s.194IA of the Act on the stamp duty value of the property was introduced w.e.f. 01.04.2022 i.e. after transaction was already completed by the assessee. It is found that the assessee was not liable to deduct any TDS u/s.194IA of the Act. And when the assessee was not liable to deduct the TDS under the provision of the Act, no penalty u/s.271E of the Act can be imposed for late filing of TDS return. Therefore, the penalty of as imposed u/s.234E of the Act is cancelled. Appeal of the assessee is allowed.

Summary

Issues:
Delay in filing appeal, Penalty under Section 234E of the Income Tax Act, 1961, Incorrect imposition of penalty, Liability to deduct TDS, Stamp duty valuation discrepancy, Exemption under Section 194IA of the Act.

Delay in filing appeal:
The appeal was filed by the assessee against the order of the National Faceless Appeal Centre (NFAC) for the Assessment Year 2022-23, with a delay of 3 days due to an error in the original Form No.36. The delay was condoned upon explanation by the assessee.

Penalty under Section 234E of the Income Tax Act, 1961:
The appeal was directed against the penalty of Rs. 15,150/- imposed under Section 234E for late filing of TDS Form 26QB. The Ld. CIT(A) dismissed the appeal, leading to the assessee appealing before the ITAT.

Incorrect imposition of penalty:
The ITAT found that the assessee was not liable to deduct any TDS under Section 194IA of the Act as the payment made was below Rs. 50 Lakhs. The penalty was imposed due to a delay in filing the TDS return, which was unintentional.

Liability to deduct TDS:
The assessee had purchased agricultural land and paid an amount below Rs. 50 Lakhs, deducting TDS voluntarily. The delay in filing the TDS return led to the penalty being imposed, even though the assessee was not liable to deduct TDS under the Act.

Stamp duty valuation discrepancy:
The Ld. CIT(A) incorrectly considered the stamp duty valuation of the property to be above Rs. 50 Lakhs, leading to the imposition of the penalty. However, the ITAT clarified that the assessee was not liable to deduct TDS based on the actual payment made.

Exemption under Section 194IA of the Act:
The ITAT observed that the provision for TDS under Section 194IA of the Act on the stamp duty value of the property was introduced after the transaction was completed by the assessee. As the assessee was not liable to deduct TDS, the penalty under Section 234E was canceled, and the appeal was allowed.