The New Delhi Income Tax Appellate Tribunal (ITAT) ruled that the Department cannot call for an advantage by citing multiple provisions of the Income Tax Act in the show cause notices, which are not finally invoked for fastening the tax liability. Accordingly, the Tribunal quashed the orders declaring the appellant as ‘assessee-in-default’.
The ruling came after finding that the impugned assessment orders very categorically mentioned about invoking of the provisions of Section 194I of the Income Tax Act, to hold the appellant as ‘assessee-in-default’, which actually does not apply to the External Development Charges (EDC) paid to the Haryana Urban Development Authority (HUDA). Further, presuming that it will not work, the AO simultaneously mentioned the provisions of Section 194C.
The Division Bench comprising Anubhav Sharma (Judicial Member) and Manish Agarwal (Accountant Member) observed from perusal of the assessment orders that while issuing notices calling upon the appellant to show cause, the AO had initially invoked Section 194I of the Income-tax Act, and also, on a non-prejudiced basis, mentioned the provisions of Section 194C.
However, while concluding the assessment order, the Bench found that the AO specifically referred to the appellant being in default for non-deduction of TDS under Section 194I. Though there is a specific mention at the time of conclusion of application of Section 194I in the assessment order, the impugned order of CIT(A) specifically refers to the invocation of Section 194I in both the Assessment Years.
Briefly, the appellant, a real estate company, was subjected to a survey at the business premises of Haryana Urban Development Authority (HUDA), and based on the information gathered, it was alleged that the appellant had paid External Development Charges (EDC) of about Rs. 9.40 crores to HUDA without deducting TDS. Accordingly, proceedings were initiated under Sections 201(1)/201(1A) of the Income Tax Act.
The Assessing Officer issued show-cause notices invoking section 194I and, without prejudice, also referred to section 194C. In concluding the orders, the AO held the appellant to be in default for non-deduction of TDS under Section 194I and raised a demand.
Case Relied On:
DLF Homes Panchkula (P.) Ltd. vs. Joint CIT (OSD) [(459) ITR 773 (Delhi)]
Appearances:
CA S.S. Nagar, for the Appellant/ Taxpayer
Manish Gupta, for the Respondent/ Revenue
