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2025 (4) TMI 782 - AT - Income TaxShort deduction of TDS - demand raised by the AO u/s.201 - TDS u/s 194IA or 195 - HELD THAT - There should not be any dispute that the concession/benefit given in the first proviso to section 201(1) of the Act will be available to the assessee only if the conditions mentioned therein are satisfied. In the instant case the assessee did not file all the relevant document before the AO in order to demonstrate that he has complied with all the conditions prescribed in the first proviso to sec.201(1) of the Act. According to the Ld A.R the details relating to income tax return filed by the seller were produced before the CIT(A) and the Accountant s certificate is also readily available. Accordingly in the interest of natural justice we are of the view that the assessee may be provided with one more opportunity to present his case properly before the AO. Accordingly we set aside the order passed by the Ld.CIT(A) and restore all the issues relating to demand u/s. 201(1)/201(1A) of the Act of the Act to the file of the AO for examination. Appeal filed by the assessee is treated as allowed for statistical purposes.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. TDS Deduction under Sections 194IA and 195 The relevant legal framework involves Sections 194IA and 195 of the Income Tax Act, 1961. Section 194IA mandates a 1% TDS deduction on the transfer of immovable property, whereas Section 195 requires a 20% TDS deduction when the payee is a non-resident. The Court noted that the seller, Shri Shabbir Sarafali Golawala, was a non-resident, thus necessitating TDS under Section 195. The Court's interpretation was that the assessee failed to comply with the correct provision by deducting only 1% TDS. The key evidence was the residency status of the seller, which was not disputed. The Court concluded that the assessee was initially in default for not adhering to Section 195. 2. Applicability of the First Proviso to Section 201(1) The legal framework for this issue is the first proviso to Section 201(1), which offers relief if the deductee has filed their return and paid the due taxes. The Court considered whether the assessee could benefit from this provision. The Court reasoned that the benefit is contingent upon the fulfillment of specific conditions, including furnishing a certificate from an accountant. The Ld.AR argued that the seller had declared a capital loss, implying no tax liability, and that the necessary certificate could be provided. However, the Ld.DR countered that this certificate was not presented to the AO initially. The Court found that the assessee had not initially complied with the requirements but acknowledged the potential for compliance if given another opportunity. Thus, the Court decided to remand the matter to the AO for re-evaluation with the opportunity for the assessee to present the necessary documentation. 3. Interest under Section 201(1A) and Fee under Section 234E The interest under Section 201(1A) is applicable for delays in TDS payment, and Section 234E imposes fees for late TDS return filing. The Ld.AR contended that since there was no loss of revenue due to the seller's capital loss declaration, the interest should not apply. The Ld.DR maintained that procedural compliance was necessary. The Court did not directly rule on the interest and fee issues but implied that these could be reconsidered upon the AO's re-evaluation of the primary issue under Section 201(1). SIGNIFICANT HOLDINGS The Court held that:
Verbatim Quote: "In the interest of natural justice, we are of the view that the assessee may be provided with one more opportunity to present his case properly before the AO." The Court's decision emphasizes the importance of procedural compliance while also allowing for rectification if initial lapses can be addressed, thereby balancing strict adherence to tax laws with equitable considerations.
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