City Elevators Pvt. Ltd. Vs. TDS Ward-1(1)(4)

Parties Involved

Facts Summary

The Assessing Officer noticed that the assessee failed to deduct TDS on salary paid to M/s Sushila Rajgopalan and therefore, held the assessee as “assessee-in-default” as per the provisions of section 201(1)/201(1A) of the Income-tax, 1961 (in short ‘the Act’) and raised liability of Rs.14,90,765/- vide order u/s 201(1)/201(1A) of the Act passed on 01.03.2023 for assessment year 2016-17. On further appeal, the Ld. CIT(A) upheld the liability on the ground that the assessee did not file the requisite details as required under the proviso to section 201 of the Act to support that payee has paid the tax and filed return of income. The relevant finding of the Ld. CIT(A) is reproduced as under: “9. The evidence filed by the appellant are perused. For the provisions to section 201 to apply, the conditions set there in have to be met cumulatively. The return of income has to be furnished within the time u/s 139(1). It is seen that the return for AY 2016-17 has been filed on 02.01.2017 without payment of tax which makes it an invalid return. Hence the first condition for filing of return u/s 139 cannot be said to have been fulfilled. Secondly the income or such sum paid without deduction of TDS should have been taken into account and tax paid and declared in such return. It is seen that the return has been filed without payment of tax. The third condition of furnishing certificate in form 26A from a CA could not be produced by appellant due to technical error. Therefore the condition…

Legal Issues

• 1. CIT(Appeals) erred in confirming the action of TDS Officer by treating appellant as 'assessee in default' for non-deposition of tax of Rs. 7,45,980/-. Such action is erroneous and bad in law.
• 2. CIT(Appeals) erred in confirming the action of TDS Officer by treating appellant as 'assessee in default' and levying the interest u/s 201(1A) for non-deposition of tax of Rs. 6,73,785/-. Such action is erroneous and bad in law.
• 3. CIT(A) has erred in confirming the TDS demand & interest without providing proper opportunity of hearing which is against the principle of natural justice.

Judgment Outcome

Decided in favour of Assessee.

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