AMMAR ABDULLA ARSIWALA ,MUMBAI V. ITO (IT)-1(1)(2), MUMBAI

ITA 5561/MUM/2024

AI Insights

The case involves Ammar Abdulla Arsiwala, the appellant, who purchased a property from Shri Shabbir Sarafali Golawala, a non-resident, for Rs.2,21,00,000 during the assessment year 2016-17. The appellant deducted TDS at 1% under section 194IA of the Income Tax Act, 1961, whereas the Assessing Officer (AO) contended that TDS should have been deducted at 20% under section 195 due to the seller's non-resident status. The AO treated the appellant as an assessee in default for short deduction and raised a demand and interest under sections 201 and 201(1A) respectively. The appellant's appeal to the CIT(A) was dismissed, leading to the current appeal before the Tribunal. The Tribunal decided to set aside the CIT(A)'s order and restore the matter to the AO, allowing the appellant to present additional documents and arguments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471334 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Other Referred Cases: Mr. Thomas Muthoot vs. DCIT, National Highway Authority of India vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Assessee Lawyers: DHAVAL SHAH
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; TDS
• Section: 195; 234E; 201(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “A” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No. 5561/Mum/2024 Assessment Year : 2016-17 Ammar Abdulla Arsiwala, 1st Floor, Room No. 8, Mohammed Chambers, Sir J.J. Road, Byculla, Mumbai PAN : AMTPA1297L vs. ITO(IT)-1(1)(2), 18th Floor, Air India Building, Nariman Point, Mumbai (Appellant) (Respondent) For Assessee : Shri Dhaval Shah For Revenue : Shri Ram Krishn Kedia, Sr.DR Date of Hearing : 05-02-2025 Date of Pronouncement : 05-02-2025 O R D E R PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt.29-08-2024 passed by the Ld. Commissioner of Income Tax (Appeals)-55, Mumbai [„Ld.CIT(A)‟] and it relates to AY. 2016-17. The assessee is aggrieved by the decision of the Ld.CIT(A) in confirming the demand raised by the AO u/s.201 of the Income Tax Act, 1961 („the Act‟) and also the interest levied by the AO u/s. 201(1A) of the Act. 2. During the year under consideration, the assessee had purchased a property from a person, named, Shri Shabbir Sarafali Golawala for a consideration of Rs.2,21,00,000/-. The assessee deducted TDS @ 1% u/s. 194IA of the Act. The AO noticed that the seller, Shri Shabbir 2 ITA No. 5561/Mum/2024 Sarafali Golawala, is a non-resident and hence he held that the assessee should have deducted TDS u/s. 195 of the Act @ 20%. Since there was short deduction of tax at source, the AO treated the assessee herein as an assessee in default. Accordingly, the AO raised a demand of Rs. 20,99,500/- u/s. 201(1) of the Act and also charged interest u/s. 201(1A) of the Act to the tune of Rs. 17,11,861/-. The AO also levied fee u/s. 234E of the Act for late filing of TDS return. The assessee filed appeal challenging the demand and interest raised u/s. 201/201(1A) of the Act before the Ld.CIT(A), but the said appeal came to be dismissed by the First Appellate Authority (FAA). Hence, the assessee filed this appeal before the Tribunal. 3. The Ld.AR submitted that the seller of the property, Shri Shabbir Sarafali Golawala has filed his return of income for the year under consideration, wherein he has declared capital loss arising from the sale of the property that was purchased by the assessee. Accordingly, he submitted that the assessee herein shall be covered by concession given in the first proviso to section 201(1) of the Act. Accordingly, the Ld.AR submitted that the AO was not right in raising the demand u/s. 201(1) of the Act. The Ld.AR further submitted that the seller of the property was not ultimately liable to pay tax for the current year. Hence, there was no loss of revenue to the Government on account of short deduction of tax at source and in that case, the interest u/s. 201(1A) of the Act also not leviable. In support of this proposition, the Ld.AR placed reliance on the decision rendered by the Co-ordinate Bench of the Tribunal in the case of Mr. Thomas Muthoot vs. DCIT in ITA No. 383/Coch/2011 and others and also the decision rendered by the Jabalpur Bench of the Tribunal in the case of National Highway Authority of India vs. ACIT, 49 taxmann.com 32 (Jabalpur-Trib). 3 ITA No. 5561/Mum/2024 4. The Ld.DR, on the contrary, submitted that the assessee can take the benefit of proviso to section 201(1) of the Act only if he furnishes a certificate obtained from an Accountant to the effect that the conditions prescribed in the first proviso to sec.201(1)have been fulfilled. However, the assessee has not furnished the said certificate before the AO. He further submitted that the details of income tax return filed by the seller were filed before Ld CIT(A) only. Accordingly, the Ld.DR submitted that the assessee has not complied with the first proviso to sec.201(1) of the Act. 5. In the rejoinder, the Ld.AR submitted that the assessee has since obtained the required certificate from a Chartered Accountant in Form 26A and assessee will be in a position to present it and also other income tax details of the seller before the AO, if an opportunity is given. 6. We heard the parties and perused the record. 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 theLd A.R, the details relating to income tax return filed by the seller were produced before the Ld 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 Actto the file of the AO for examination. The assessee is free to submit the relevant documents and raise all the contentions before the AO. After affording adequate 4 ITA No. 5561/Mum/2024 opportunity of being heard to the assessee, the AO may take appropriate action in accordance with law. 6. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 05-02-2025 Sd/- Sd/- [ANIKESH BANERJEE] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 05-02-2025 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "