2024 (11) TMI 144 - AT - Income Tax

Demand u/s 201(1)/201(1A) - assessee in default towards non-deduction of TDS u/s 194I on lease rent paid to NOIDA Authorities - second round of proceedings - assessee contends that the assessee acted under bona fide belief that payment towards lease rental is not susceptible to provisions of Section 194-I in view of specific communications made by the NOIDA Authorities on the applicability of Section 194-I of the Act AND applicability of the observations and conclusions in Rajesh Projects 2017 (2) TMI 1109 - DELHI HIGH COURT is prospective. HELD THAT - On appraisal of the factual matrix and the position of law, we find considerable force in the plea raised on behalf of the Assessee. The assessee has successfully demonstrated the existence of bona fide belief. This demonstration on standalone basis enables us to exonerate the assessee from the clutches of Section 201(1) and 201(1A). We however further find that the operation of the judgment in Rajesh Projects (supra) have been made prospective as mentioned in paragraph 20 of the judgment. The cause of action under Section 201(1)/201(1A) in pursuance of the judgment of the Hon ble Delhi High Court is thus not available to the Revenue for A.Y. 2012-13 in question. We also find that in the identical factual matrix, the Co-ordinate Bench 2023 (12) TMI 1368 - ITAT DELHI has granted relief similar to what is claimed in the present case. Thus, we have no hesitation to set aside the first appellate order and quash the impugned order passed u/s 201(1) and 201(1A) of the Act under challenge. Decided in favour of assessee.

Summary

Issues:
Challenge to proceedings under Section 201(1)/201(1A) for non-deduction of TDS on lease rent paid to NOIDA Authorities.
Validity of second round of proceedings under the same provisions of the Act without notice under Section 148 or 263.

Analysis:
The appeal pertains to challenges against orders of the Commissioner of Income Tax (Appeals) dated 29.06.2022 arising from orders passed by the Assessing Officer under Section 201(1)/201(1A) of the Income Tax Act, 1961 concerning A.Y. 2012-13. The appeal involves issues related to non-deduction of TDS on lease rent paid to NOIDA Authorities, leading to the demand raised on the assessee. The appellant contests the action of the AO and CIT(A), arguing that the first and second round of proceedings under Section 201(1)/201(1A) were unjustified, citing the judgment in Rajesh Projects (India) Pvt. Ltd. vs. CIT (TDS)-II & Ors. The appellant claims to have acted in good faith based on communications from NOIDA Authorities regarding the non-applicability of TDS provisions on lease rentals.

The appellant asserts that the order under Section 201(1)/201(1A) in the first round covered all defaults in TDS deduction, making the second round unnecessary without proper notice under Section 148 or 263. The Revenue, however, supports the First Appellate Order, citing the judgment in Rajesh Projects. After considering the submissions and evidence, the Tribunal finds merit in the appellant's arguments. It acknowledges the appellant's bona fide belief and the prospective nature of the judgment in Rajesh Projects, which limits its applicability to the relevant assessment year. The Tribunal also notes a similar relief granted in a Co-ordinate Bench decision, leading to the setting aside of the impugned orders under Section 201(1) and 201(1A) for A.Y. 2012-13.

In a related case, ITA No.1900/Del/2022, with identical issues, the Tribunal applies the same reasoning and quashes the order under Section 201(1)/201(1A) dated 25.03.2019. Consequently, both appeals of the assessee are allowed, providing relief in the matter. The Tribunal's decision is based on the appellant's good faith belief, the prospective nature of the relevant judgment, and the absence of a valid cause of action for the Revenue in the given assessment year.