SEEMA AGRAWAL, RAIPUR,RAIPUR V. INCOME TAX OFFICER-TDS, RAIPUR, RAIPUR

ITA 429/RPR/2024

AI Insights

The case involves Seema Agrawal, who purchased immovable property and deducted TDS at 1% on the payment made to the sellers, one of whom did not have a PAN at the time of the first payment. The Income Tax Officer (ITO), Raipur, raised demands for short deduction of TDS and interest, which were sustained by the Commissioner of Income Tax (Appeals). Agrawal appealed to the Income Tax Appellate Tribunal, which found that the TDS was correctly deducted at 1% as the PAN was available at the time of the property registration. The Tribunal partly allowed the appeal, directing re-computation of interest and fees.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 106799 (ITAT-RAIPUR)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-10-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 27-09-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: BIKRAM JAIN
• Keywords: TDS
• Section: 250; 234E; 201; 201(1); 206AA; 20

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 429/RPR/2024 (िनधाŊरण वषŊ Assessment Year: 2018-19) Seema Agrawal, Shop No. C-2/102 Aishwarya Chambers, Aishwarya residency, Telibandha, G.E. Road, Raipur (C.G.), 492001 V s Income Tax Officer, TDS, Raipur PAN: AFEPA5511K (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : Shri Bikram Jain, CA राजˢ की ओर से /Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 28.10.2024 घोषणा की तारीख/Date of Pronouncement : 29.11.2024 आदेश / O R D E R Per Arun Khodpia, AM: This is an appeal by the assessee, directed against the order of Commissioner of Income Tax (Appeals), AddL / JCIT (A)-12, Mumbai) (in short “Ld. ACIT(A)”] u/s 250 of the Income Tax Act, 1961 (in short “the Act”), for the AY 2018-19, dated 30.07.2024, which in turn arises from the order of Ld. Income Tax Officer, Raipur (in short “Ld. AO”), u/s 201 of the Act, dated 22.01.2021. 2. The grounds of appeal raised by the assessee are as under: 2 ITA No. 429/RPR/2024 Seema Agrawal vs ITO, TDS, Raipur 1. On the facts and in the circumstances of the case, the Ld. ACIT(A) has erred in not considering the submission filed by the assesse before the A.O while passing the appellate order. Therefore, the order passed by ACIT(A) is unjustified, unwarranted and uncalled for. 2. On the facts and in the circumstances of the case, the Ld. ACIT(A) has erred in sustaining the assessment order passed by the ITO(TDS), Raipur wherein the ITO(TDS), Raipur, has erred in raising demand Rs.4,74,261/- on account of short deduction of TDS. The demand raised by the ITO(TDS), Raipur and sustained by ACIT(A) is unjustified, unwarranted and uncalled for. 3. On the facts and in the circumstances of the case, the Ld. ACIT(A) has erred in sustaining the assessment order passed by the ITO(TDS), Raipur, wherein the ITO(TDS), Raipur, has erred in raising demand Rs.l,86,606/- on account of interest u/s 201(lA). The demand raised by the ITO(TDS), Raipur and sustained by ACIT(A) is unjustified, unwarranted and uncalled for. 4. On the facts and in the circumstances of the case, the Ld. ACIT(A) has erred in sustaining the assessment order passed by the ITO(TDS), Raipur, wherein the ITO(TDS), Raipur, has erred in raising demand Rs.31,000/- on account of late filing U/s 234E. The demand raised by the ITO(TDS), Raipur and sustained by ACIT(A) is unjustified, unwarranted and uncalled for. 5. The assesse reserves the right to add, amend or alter any grounds of appeal at any time of hearing. 3. Brief facts of the case are that the assessee, who is an individual had purchased an immovable property for Rs.1,28,37,700/- on 24.01.2018. TDS u/s 194IA was made by the assessee on the consideration paid to the sellers of the property at 1%. Subsequently, proceedings u/s 201 are initiated against the assessee. During the said proceedings, Ld. AO observed that there was a default on the part of assessee in compliance to the provisions of Act qua the deduction of TDS u/s 194IA r.w.s. 206AA. It is noted by the Ld. AO that one of 3 ITA No. 429/RPR/2024 Seema Agrawal vs ITO, TDS, Raipur the sellers, Shri Babulal Renge to whom the payments were made towards the purchase of property exceeded the limit prescribed u/s 194IA of Rs. 50.00 lac, was not having PAN Number, when the part payment of Rs. 25,00,000/- was made out of Rs. 50,00,000/-. A show cause was issued to the assessee stating that since the assessee was not having PAN Number on the date on which the first payment of Rs. 25,00,000/- was made to him, while the deduction of TDS was done at 1% instead of 20% in terms of prescribed provisions of Section 206AA. In response, assessee submitted that the payment made to Shri Babulal Renge on 27.12.2017 was by M/s Avani Traders proprietor Mr. Rajesh Agrawal (husband of assessee) as unsecured loan, however, later on that amount was utilized towards sale consideration for the transaction of purchase of the land by the assessee, wherein Shri Babulal Renge was one of the seller / Co-owner of the property. Accordingly, the amount was adjusted / credited towards consideration for purchase of property on 29.01.2018 at the time of its registry. Since, Shri Babulal Renge was allotted PAN on 10.01.2018, therefore, on the date of transaction i.e., registration of sale deed, the payee was in a possession of PAN, accordingly, the assessee had deduced tax @ 1% which is the prescribed u/s 194IA. Before Ld. AO, it was the submissions by the assessee that there was no default committed by the assessee under the provisions of Section 194IA r.w.s. 206AA. The submission of assessee was not found favour before the Ld. AO, therefore, the Ld. AO had raised a demand on account of 4 ITA No. 429/RPR/2024 Seema Agrawal vs ITO, TDS, Raipur default of short deduction for Rs.4,74,261/- u/s 201(1), interest u/s 201(1A) amounting to Rs.1,86,606/- and fee of Rs. 31,000/- u/s 234E of the Act. 4. Aggrieved with the aforesaid order of Ld. AO, assessee preferred an appeal before the Ld. ACIT(A), however, assessee remains non-compliant / non attentive before the Ld. ACIT(A), wherein on various occasions when the notice for representation were made to the assessee. The assessee could not represent on the said occasions. Accordingly, Ld. ACIT(A), have passed an exparte order approving the observations of the Ld. AO and have confirm the demand so raised by the Ld. AO. 5. Aggrieved again, the assessee preferred to carry the matter before us, which is under consideration in the present case. 6. Ld. AR on behalf of the assessee, Shri Bikram Jain, have reiterated the facts from the assessment order and also made same clarifications, which the assessee have claimed before the Ld. AO and have requested to accept the contention of the assessee and vacated the entire demand imposed by the Ld. AO. 5 ITA No. 429/RPR/2024 Seema Agrawal vs ITO, TDS, Raipur 7. Ld. Sr. DR, Dr. Priyanka Patel, representing the revenue, per contra, submitted that the order of revenue authorities are justifiable, in accordance with law, thus, deserves to be sustained. 8. We have considered the rival submissions and perused the material available on record. The sole controversy involved in the present matter is regarding applicability of TDS @ 1% or 20% in terms of provisions of Section 194IA with a conjoint reading of Section 206AA. Factually, a payment in the nature of loan was made through Avani Traders on 27.12.2017 by the proprietorship concern of Mr. Rajesh Agrawal, who happen to be the husband of assessee, Mrs. Seema Agrawal, and at that point of time, Mr. Renge was not having any PAN Number. The PAN was allotted to Mr. Babulal Renge on 10.01.2018. As per assessee the impugned amount of loan given by Mr. Rajesh Agrawal to Babulal Renge on 27.12.2017 was considered towards consideration for sales on 29.01.2018 and before that the PAN was available with the payee, therefore, the rate of TDS to be adopted should be 1%. On perusal of Provisions of Section 194IA, the transferee is responsible for deducting TDS @1% at the time of credit of such sum to the account of transferor or at the time of payment of such sum in cash or by issue of cheque or draft or by any other mode, whichever is earlier. In the present case, though the payment was made on the date before the transferor Mr. Babulal Renge 6 ITA No. 429/RPR/2024 Seema Agrawal vs ITO, TDS, Raipur was allotted PAN, but the payment was made by a person relative of the assessee, and not by the assessee herself. Subsequently, the same payment was adjusted towards the consideration for sale while completing / execution of sale deed on 29.01.2018. As the assessee / transferee had credited the said sum to the account of the transferor on 29.01.2018, and there was no payment in cash / by cheque or by draft or by any other mode by the transferee herself. It is the fact that on the date of transaction i.e., 29.01.2018 the PAN was available with the transferor Shri Babulal Renge, therefore, TDS @1% was correctly deducted by the transferee u/s 194IA. Under such circumstances, provisions of Section 206AA does not attract to hit the case of the assessee. 9. Herein, we would like to discuss the provisions of Section 206AA which were brought in by the legislature under the Finance (No.), 2019 for improving compliances with provisions of quoting PAN through TDS regime. The relevant extracted from the memorandum explaining Finance Bill, 2019, is extracted hereunder for better interpretation of the issue. d. Improving compliance with provisions of quoting PAN through the TDS regime Statutory provisions mandating quoting of Permanent Account Number (PAN) of deductees in Tax Deduction at Source (TDS) statements exist since 2001 duly backed by penal provisions. The process of allotment of PAN has been streamlined so that over 75 lakh PANs are being allotted every year. Publicity campaigns for quoting of 7 ITA No. 429/RPR/2024 Seema Agrawal vs ITO, TDS, Raipur PAN are being run since the last three years. The average time of allotment of PAN has come down to 10 calendar days. Therefore, non-availability of PAN has ceased.to be an impediment. In a number of cases, the non-quoting of PANs by deductees is creating problems in the processing of returns of income and in granting credit for tax at deducted at source, leading to delays in issue of refunds. In order to strengthen the PAN mechanism, it is proposed to make amendments in the Income Tax Act to provide that any person whose receipts are subject to deduction of tax at source i.e. the deductee, shall mandatorily furnish his PAN to the deductor failing which the deductor shall deduct tax at source at higher of the following rates (i) the rate prescribed in the Act; (ii) at the rate in force i.e., the rate mentioned in the Finance Act; or (iii) at the rate of 20 per cent. TDS would be deductible at the above-mentioned rates will also apply in cases where the taxpayer files a declaration in form 15G or 15H (under section 197A) but does not provide his PAN. Further, no certificate under section 197 will be granted by the Assessing Officer unless the application contains the PAN of the applicant. These provisions will also apply to non-residents where TDS is deductible on payments or credits made to them. To ensure that the deductor knows about the correct PAN of the deductee it is also proposed to provide for mandatory quoting of PAN of the deductee by both the deductor and the deductee in all correspondence, bills and vouchers exchanged between them. This amendment will take effect from 1st April, 2010. 10. As per infusion of aforesaid provisions and the intent of the legislature, it can be inferred that higher rate of TDS was introduced to 8 ITA No. 429/RPR/2024 Seema Agrawal vs ITO, TDS, Raipur strengthen the PAN mechanism, so that the persons who are in receipt of payments and are subject to deduction of tax at source shall mandatorily furnish their PAN Numbers to the deductor and if they failed to do so, the deductor shall be liable to deduct tax at higher rate of 20%. Such provisions were brought in the Act to overcome the excuse of the non-availability of PAN or non-quoting of PAN, creating problems in processing of returns of income and in granting credit for tax deducted at source, leading to delay in issue of refunds. 11. Going through the facts of the present case, as the recipient Shri Babulal Renge has furnished his PAN Number before completion of the transaction, thus, non-availability of PAN or non-quoting of PAN, which was the concern of legislator has been complied with, therefore, it is not the case wherein, the processing of returns or any other proceedings or action which the revenue intending to perform against the parties to the impugned transaction of sale / purchase of property are being obstructed. We, therefore, are of the opinion that the act of assessee cannot be treated in violation of the mandate of law. 12. In view of aforesaid observations, facts and circumstances of the present case, we find force of the contentions raised by the Ld. AR on behalf 9 ITA No. 429/RPR/2024 Seema Agrawal vs ITO, TDS, Raipur of the assessee that the requisite TDS u/s 194IA was duly deducted and deposited by the assessee as prescribed under the relevant provisions of the Act, therefore, the demand raised u/s 201(1) qua the payment of Rs.25.00 lac made to Shri Babulal Renge are liable to be vacated. However, the interest for the period of default and the levy of fee u/s 234E of the Act are consequential in nature, therefore, we restore the issue to the file of Ld. AO with the directions to re-compute the amount of interest u/s 201(1A) and fee u/s 234E, in terms of our aforesaid observations. 13. In the result, appeal of the assessee is partly allowed, for statistical purposes. Order pronounced in the open court on 29/11/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 29/11/2024 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant- Seema Agrawal, Raipur 2. ŮȑथŎ / The Respondent- ITO, TDS, Raipur 3. आयकर आयुƅ(अपील) / The ACIT(A), 4. The Pr. CIT, Raipur (C.G.) 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 6. गाडŊ फाईल / Guard file 10 ITA No. 429/RPR/2024 Seema Agrawal vs ITO, TDS, Raipur आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur // स×याǒपत Ĥित True copy // "