This article provides a detailed review of the proceedings and judgment of the Income Tax Appellate Tribunal (ITAT) Delhi in the case of ITA No. 1854/DEL/2020, where ATS Meadows Private Limited, New Delhi, appealed against the disallowance of TDS on payments made to HUDA, assessed by the Addl. CIT Range-76, New Delhi for the assessment year 2017-18.
ATS Meadows Private Limited, the appellant, filed its income tax return for the assessment year 2017-18. The Assessing Officer (AO) disallowed certain payments made to HUDA on the grounds of non-deduction of tax at source (TDS). The appellant contended that these payments were statutory in nature and thus not liable for TDS under the Income Tax Act, 1961. However, the AO imposed a penalty under section 271C for the alleged failure to deduct TDS.
The case was heard by the Delhi ‘A’ Bench of the Income Tax Appellate Tribunal, with Shri N.K. Billaiya, Accountant Member, and Shri Anubhav Sharma, Judicial Member, presiding. The final order was pronounced on August 16, 2022, addressing the procedural and substantive issues surrounding the TDS disallowance.
ATS Meadows Private Limited appealed to the Commissioner of Income-tax (Appeals) [CIT(A)], contesting the penalty levied under section 271C. The CIT(A) upheld the AO’s decision, citing non-compliance and non-submission of required documents by the appellant.
The appellant then appealed to the ITAT, challenging the CIT(A)’s decision. The primary grievances of the appellant were:
The appellant argued that the payments to HUDA were statutory in nature and thus not liable for TDS. They contended that the penalty under section 271C was imposed without proper notice and that the CIT(A) did not consider the merits of the case.
The Departmental Representative (DR), Shri Kanav Bali, argued that the appellant had failed to deduct TDS on payments made to HUDA, which was a clear violation of the Income Tax Act, 1961. He supported the AO’s and CIT(A)’s decisions to impose the penalty under section 271C.
The ITAT examined the arguments and evidence presented by both sides. The tribunal noted that the CIT(A) referred to five notices issued to the appellant, none of which were attended. The CIT(A) dismissed the appeal in limine due to non-compliance by the appellant.
The tribunal observed that although the CIT(A) referred to the issuance of notices, there was no evidence that these notices were actually served on the appellant at the given address. The ITAT emphasized the importance of proper service of notices for ensuring fair play and justice.
The ITAT held that the CIT(A) should have decided the appeal on the merits of the case. The tribunal highlighted that the CIT(A) did not provide a reasonable opportunity for the appellant to present its case, especially considering the significance of the issues involved.
In the interest of justice and fair play, the ITAT restored the appeal to the file of the CIT(A) with a direction to decide the appeal on the merits of the case after serving proper notice and affording reasonable and sufficient opportunity of being heard to the appellant. The ITAT’s decision reinforces the principle that due process and fair hearing are essential components of justice.
Order pronounced in the open court on August 16, 2022.
Signed by:
Shri N.K. Billaiya, Accountant Member
Shri Anubhav Sharma, Judicial Member
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