Bhikhabhai Parshottambhai Patel, Ahmedabad V. The ITO, Ward 1, TDS, Ahmedabad

ITA 49/AHD/2023

AI Insights

The case involves an appeal by Bhikhabhai Parshottambhai Patel against the orders of the lower tax authorities concerning the non-deduction of TDS on property transactions and the subsequent interest and penalty charges under Sections 201(1) and 201(1A) of the Income Tax Act, 1961. The property in question was purchased for a total consideration exceeding Rs. 1 crore, which required TDS deduction at 1% as per Section 194IA. The assessee contested the calculation and application of the interest and penalties, citing discrepancies with similar cases and procedural oversights by the tax authorities. The Tribunal's decision acknowledged these concerns and directed a recalibration of the interest charged, while also emphasizing the need for procedural fairness in handling the assessee's case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299935 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 11-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 22-01-2023
• Other Referred Cases: Hindustan Coca Cola Beverage Pvt. Ltd. vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; TDS
• Section: 201(1); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . N o . 4 9 /A hd / 2 0 23 ( A s se ss m e nt Y e a r : 20 15- 16 ) B h ik hab ha i Pa r s ho t ta mb h ai P at e l Pl o t No . 26 /B , B u n glo w N o. 24 1/ B , Sa t ya g r a h C h ha v a n i C o. O p. H o u si n g S oc ie t y, La n e N o . 12 J od hp u r, Sa t el li te , A h me d a b ad-38 0 0 15 V s.I T O TD S- 1, A h m e d a b ad [ P A N N o. AC I P P6 0 41 N ] (Appellant) .. (Respondent) Appellant by : Shri Rupesh R. Shah, A.R. Respondent by : Shri B. P. Makwana, Sr. D.R. D a t e of H ea r i ng 12.07.2023 D a t e of P r o no u n ce me nt 19.07.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi on 12.12.2022 for A.Y. 2015-16. 2. The grounds of appeal raised by the assessee are as under: “1. The both the lower authorities has erred in law and on the facts of the case in confirming the interest charged under S.201(1A) for Rs.58,306 which ought to be on higher side and wrongly calculated which was upheld by the National Faceless Appeal Centre Delhi as in the case of appellant wife the same is calculated at Rs. 7843/- on identical facts of the case may be sent back to the file of AO to recalculate the same in the interest of justice or restrict the till filing of IT Return by the appellant. 2. That NFAC Delhi in para 6.24 specifically directed to verify form number 26A in spite of that Ld. AO TDS Ward1, Ahmedabad without looking in to the judgment and direction case hurriedly passed order giving effect of CIT (Appeals) and confirmed demand of Rs.64,666 under S.201(1) of IT Act whereas on identical fats of the appellant wife Ld. CIT(A) relying on the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage Pvt. Ltd. (supra), deleted the demand under S.64,666 may be deleted in the interest of justice. ITA No. 49/Ahd/2023 Bhikhabhai Parshottambhai Patel vs. ITO Asst.Year–2015-16 - 2 - 3. That your appellant reserve right to amend/ alter/ modify any ground or grounds during the pendency of the appeal.” 3. The assessee has also filed the additional grounds of appeal:- “That under the facts and circumstances, the provisions of deduction of TDS @1% u/s.194IA are not applicable qua assessee as the purchase consideration qua assessee is less than Rs.50 Lakhs as under to different sellers 1 Smt. Vanitaben Ashokbhai Farkiwala 1866667 2 Shro. Ashokbhai Chimanlal Farkiwala 2083333 3 Shri. Ashokbhai Chimanlal Farkiwala (HUF) 2083333 Being less than Rs.50,00,000/- being joint property of seller in which 1/3 rd un-divided equal share of the property of which total purchase consideration is less than Rs.50 Lakhs purchased from 3 different persons, consequently, both the lower authorities erred in law as well as on merits in invoking provision of section 201(1) and 201(1A) and consequently calculating amount payable u/s. 201(1) as Rs.64,666 and interest u/s.201(1A) of Rs.1,22,972 That your appellant sys that during the course of proceedings under S.201(1)/201(1A) as well as during the course of appeal proceedings before NFAC your appellant relied on IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘B’, NEW DELHI ITA No. 2736/Del/2015 Assessment Year: 2014-15 VINOD SONI AND OTHERS Lrd AO TDS-1, Ahmedabad in order dated 17-11-2021 in para 3.2 also reproduced the appellant submission [Relevant Page 74 of Paper Book] Lrd CIT (NFAC) Delhi AO TDS-1, Ahmedabad in order datd 17-11-2021 in para 5.4 also reproduced the appellant submission [Relevant Page 8 and 24 of Paper Book] Both the lower authorities have failed to consider the above decision which may be considered while deciding this appeal in the interest of justice. Your appellant says that this judgment was referred before the Assessing Officer as well before the CIT (NFAC) Delhi being implied ground may be admitted in the interest of justice.” 4. As per the information available with the Revenue office the assessee alongwith his wife Kanchanben B Patel purchases a property for total consideration of Rs. 1,25,00,001/-. The Assessing Officer observed that the assessee failed to deduct TDS on the above transaction as per the provision of Section194IA of the Act at 1%. As per the provision of Section 194IA if any person, being a transferee, responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property other than agricultural land shall at the time of credit of such sum ITA No. 49/Ahd/2023 Bhikhabhai Parshottambhai Patel vs. ITO Asst.Year–2015-16 - 3 - to the account of the transfer or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 1% of such sum as income tax thereon, provided that the consideration of transfer of such immovable property is not less than 50 lakh rupees. Since the assessee alongwith his wife purchase the above property for consideration of Rs. 1,25,00,001/- which was liable for a deduction of tax at 1% on his share in the said property which is Rs. 64,66,668/- which comes to Rs. 64,667/- under the provisions of Section 194IA of the Act. The Assessing Officer made addition of Rs. 1,22,972/- under Section 201(1) / 201(1A) of the Income Tax Act, 1961. 5. Being aggrieved by the order under Section 201(1) / 201(1A) the assessee filed appeal before the CIT(A). The CIT(A) partly allow the appeal of the assessee. 6. The Ld. A.R. submitted that the Assessing Officer was not right in making demand in respect of interest charged under Section 201(1A) for Rs. 58,306/- which ought to be on higher side and wrongly calculated which was upheld by the National Faceless Appeal Centre, Delhi as in the case of assessee’s wife the same is calculated at Rs. 7,843/- on identical facts of the case. Thus, the Ld. A.R. submitted that the matter may be remanded back to the file of the Assessing Officer to recalculate the same in the interest of justice. The Ld. A.R. further submitted that the CIT(A) directed to verify From No. 26A in spite of that the Assessing Officer (TDS) without looking into the judgment and direction case hurriedly passed order giving effect of CIT(A) and confirmed the demand of Rs. 64,666/- under Section 201(1A) whereas the identical fact of the assessee’s wife’s case. The Ld. CIT(A) ITA No. 49/Ahd/2023 Bhikhabhai Parshottambhai Patel vs. ITO Asst.Year–2015-16 - 4 - relied on the decision of Hindustan Coca Cola Beverage Pvt. Ltd. (supra), deleted the demand under Section 201(1) of the Act. 7. The Ld. D.R. submitted the CIT(A) rightly directed the Assessing Officer to verify From 26A alongwith certificate of Chartered Accountant. But the same was not available and therefore, has rightly made observation and directed the assessee to furnish the mandatory Form No. 26A alongwith the certificate of three sellers / co-owners alongwith computation of total income depicting in their total income before the Assessing Officer. As regards, the interest under Section 201(1) the Ld. D.R. submitted that the date on which the assessee paid the consideration to the three sellers / co- owners till the date of filing the income by the three seller was rightly done by the Assessing Officer. 8. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee as well as the seller of the property were under bonafide and genuine impression that if individual sale price by seller is below Rs. 50,00,000/- in that case no TDS at 1% is deductible under Section 194IA of the Act. As per the sale deed the details of the sellers / transferors of the said property and in fact the sellers individuals share in the said joint property was below Rs. 50,00,000/-, therefore, both seller and purchaser was under bonafide impression that threshold limit for TDS is Rs. 50,00,000/- and no TDS is required to be deducted. The Ld. A.R’s contention was considered by the CIT(A) and it was observed by the CIT(A) that the assessee did not deduct tax at source of the property despite the fact that the aggregate consideration paid by the assessee to all the three co-owners has exceed the threshold limit of Rs. ITA No. 49/Ahd/2023 Bhikhabhai Parshottambhai Patel vs. ITO Asst.Year–2015-16 - 5 - 50,00,000/-. The observation of the CIT(A) that the assessee has not filed Form No. 26A alongwith certificate of the Chartered Accountant appears to be correct and thus, the assessee has not fulfilled the condition of Section 201 of the Act. In respect of interest liability under Section 201(1A) the said interest was rightly calculated by the Assessing Officer and there is not need to interfere with the same. The Ld. A.R. submitted that in case of wife of the assessee the CIT(A) has calculated the interest charged under Section 201(1A) at Rs. 7,843/- on the identical facts and therefore, in the present case also the Revenue is directed to calculate the same. Thus, Ground Nos. 1 & 2 are partly allowed for statistical purpose. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. 9. In result, appeal of the assessee is partly allowed for statistical purpose. This Order pronounced in Open Court on 19/07/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 19/07/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad