Case Number: ITA 1138/DEL/2020
Appellant: Sunder Dass Dudeja, Faridabad
Respondent: ITO (International Taxation), Gurgaon
Assessment Year: 2015-16
Result: 2015-16
Case Filed On: 2020-03-20
Order Type: Final Tribunal Order
Date of Order: 2023-10-06
Pronounced On: 2023-10-06
This case involves Sunder Dass Dudeja from Faridabad appealing against the order of the Income Tax Officer (International Taxation), Gurgaon, for the assessment year 2015-16. The appeal was allowed as the Tribunal found that the assessee could not be considered in default for TDS deducted at a lower rate due to the seller’s NRI status being undisclosed.
The assessment year under consideration is 2015-16. The appellant, Sunder Dass Dudeja, along with other co-owners, purchased an immovable property being Plot No.-25, Sector 21C, Urban Estate, Faridabad, from Mr. Hardeep Singh. The property was purchased vide sale deed No.-10619 dated 27.10.2014, and tax @ 1% was deducted at source from the consideration paid to Mr. Hardeep Singh.
However, when Mr. Hardeep Singh filed his return of income, he mentioned his status as a Non-Resident Indian (NRI). This triggered the impugned proceedings as the Assessing Officer (AO) believed that the purchasers ought to have deducted tax at source @ 20% as per the relevant provisions of the Act. Since tax was deducted at source @ 1%, impugned proceedings were initiated against the appellant and the other co-owners, resulting in the AO charging interest under Section 201 and 201(1A) of the Act from the date on which such tax was deductible till the date of such tax was deducted, levying interest of Rs. 1,27,400/- on each of the captioned assessees.
The order of the AO was challenged before the Commissioner of Income Tax (Appeals) [CIT(A)], and the CIT(A) confirmed the charging of interest by way of separate appellate orders.
The ITAT, consisting of Vice President Shri Saktijit Dey and Accountant Member Shri N.K. Billaiya, heard the appeal. The counsel for the appellant furnished the tax details of Mr. Hardeep Singh and pointed out that Hardeep Singh had offered the capital gains on the sale of such property and paid taxes thereon, indicating no loss to the Revenue.
The Tribunal found that when the appellants purchased the property from Mr. Hardeep Singh, they were unaware of his NRI status, which was not disclosed by the seller. The purchasers, under the bona fide belief and in good faith, deducted tax at source @ 1%, the applicable rate on such transactions. Therefore, it could not be said that the purchasers willfully deducted tax at a lower rate.
It was only when Mr. Hardeep Singh filed his return of income that the AO and the appellants came to know of his NRI status. Since the transaction was concluded earlier, the purchasers could not do anything further. Considering these peculiar facts, the Tribunal held that the appellants could not be considered as assessees in default. Therefore, the interest under the provisions of Section 201(1) & 201(1A) of the Act was not applicable.
The Tribunal directed the AO to delete the interest charged in the hands of the appellants, allowing the appeals.
In conclusion, Sunder Dass Dudeja’s appeal against the ITO (International Taxation), Gurgaon, for the assessment year 2015-16, was allowed by the ITAT. The Tribunal found that the appellant could not be considered in default for deducting TDS at a lower rate due to the seller’s undisclosed NRI status. The interest charged under Section 201(1) & 201(1A) was ordered to be deleted.
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