JBB INFRASTRUCTURES PRIVATE LIMITED,NEW DELHI vs. WARD 13(3), DELHI, NEW DELHI

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ITA 4663/DEL/2025Status: DisposedITAT Delhi20 August 2025AY 2015-164 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal rejected the assessee's sole substantive ground of appeal. The Tribunal noted that the assessee's primary grievance was being treated as an 'assessee in default' for failing to deduct TDS on External Development Charges (EDC) paid to HUDA. The Tribunal found that the jurisdictional High Court in Puri Construction (P) Ltd. Vs. Addl. CIT (2024) 159 taxmann.com 444 (Del.) had already decided this issue against the assessee, holding that such payments of EDC do attract TDS deduction under Chapter XVII of the Act. Consequently, the Tribunal found no merit in the assessee's argument and rejected the ground. The Tribunal did not explicitly address the other grounds raised by the assessee, such as those related to section 191, section 40(a)(ia), section 148, and section 151, as the primary substantive issue was decided against the assessee based on the High Court's precedent. The appeal was dismissed.

What were the facts?

The assessee, JBB Infrastructures Pvt. Ltd., filed an appeal for Assessment Year 2015-16 against an order passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi. This order was passed under section 147 read with section 143(3) of the Income-tax Act, 1961. The appeal challenges the confirmation of an addition of Rs. 2,58,000.00 by the lower authorities. The core of the dispute revolves around the assessee being treated as an 'assessee in default' for not deducting Tax Deducted at Source (TDS) on External Development Charges (EDC) paid to Haryana Urban Development Authority (HUDA). The assessee contends that HUDA directly paid the tax, and the EDC payment was not for specific work done for the assessee, thus not attracting TDS. The Assessing Officer and CIT(A) confirmed the addition.

What were the issues?

1. Whether the assessee can be considered an 'assessee in default' under section 201 of the Act, in light of the Explanation to section 191, when the tax has been paid directly by HUDA? 2. Whether the disallowance of Rs. 2,58,000.00 under section 40(a)(ia) of the Act is justified, given that the External Development Charges (EDC) were not charged to the Profit and Loss account? 3. Whether the notice dated 28.03.2019 under section 148 of the Act is valid, considering no income chargeable to tax had escaped assessment? 4. Whether the proceedings are vitiated due to the absence of sanction/approval from the Principal Commissioner of Income Tax under section 151 of the Act? Assessee's Contentions: - The assessee cannot be deemed an 'assessee in default' as per the Explanation to section 191 because HUDA paid the tax directly. Reliance was placed on the Explanation to section 191. - The disallowance under section 40(a)(ia) is incorrect as EDC was not charged to the Profit and Loss account, rendering the section inapplicable. Reliance was placed on section 40(a)(ia). - The notice under section 148 is bad in law as no income had escaped assessment. - The proceedings are bad in law as no sanction under section 151 was obtained or provided. - The CIT(A)'s order was passed mechanically without considering facts and in violation of natural justice and section 250(6). Revenue's Contentions: - The revenue argued that the payment of EDC attracts TDS deduction. The judgment notes that the jurisdictional High Court in Puri Construction (P) Ltd. Vs. Addl. CIT (2024) 159 taxmann.com 444 (Del.) has settled the issue against the assessee.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 191,Section 201,Section 40(a)(ia),Section 148,Section 250(6),Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI

Before: SHRI SATBEER SINGH GODARA

Hearing: 20.08.2025Pronounced: 20.08.2025

Date of hearing 20.08.2025 Date of pronouncement 20.08.2025 ORDER This assessee’s appeal for assessment year 2015-16, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2025-26/1075986373(1), dated 01.05.2025 involving proceedings under section 147 r.w.s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.

2.

This assessee’s appeal raises the following substantive grounds:

1.

WITHOUT PREJUDICE TO ABOVE, the Appellant can not be said to be 'assessee in default' in view of explanation to section 191 of the Act. As per explanation to section 191 if any person does not deduct, OR after so deducting fails to pay, OR does not pay, the whole OR any part of the tax, as required by OR 1 under the Act and WHARE the assessee has failed to pay any such tax directly, then, such person shall, without prejudice to any other consequences which he may incur, be deeded to be an assessee in default. In the present the tax has been paid directly by the HUDA, therefore the Appellant cannot be considered as "assessee in default".

2. BECAUSE, upon the facts and in overall circumstances of the case the Ld CIT(A) was wrong, unjust and arbitrary in confirming the addition of Rs. 258000.00/- and is in gross violation of first proviso of section 201 of the Act.

3.

BECAUSE, upon the facts and in overall circumstances of the case the Ld. CIT(A) was wrong, unjust and arbitrary in confirming the addition of Rs. 258000.00/- by invoking section 40a(ia) of the Income Tax Act. Section 40(a)(ia) states that 30% of amount payable to a resident, on which tax is deductible at source and such tax has not been deducted OR after deduction, has not been paid on OR before the due date. In the present case the amount of EDC was not charged to Profit and Loss account, therefore no question of any disallowance, as the same has not been charged to Profit and Loss Account. Section 40(a)(ia) shall have no application. 4. The appellant craves leave to add OR alter one OR more ground (s) during the course of hearing of appeal. 5. Because the impugned order dated 01/05/2025 passed by the Ld Commissioner (Appeal), NFAC is bad in law as the same has been passed without considering the correct facts of the case, which is quite unfair and against the principle of natural justice. 6. Because the impugned order passed by the Ld CIT(Appeals), NFAC is bad in law as the same has not been passed in accordance with the provisions of sub section (6) of section 250 of the Act. The grounds of appeal

raised by the Appellant were disposed off mechanically without properly appreciating the facts of the Case and ignoring the correct facts narrated by the Appellant during the course of appellate proceedings.

7. BECAUSE, upon the facts and in overall circumstances of the case the Ld CIT(A) has erred in law in confirming the validity of 2 | P a g e issuance of Notice dated 28.03.2019 under section 148 of the 7 Income Tax Act ignoring the vital fact that there was no income much less the income chargeable to tax, within the meaning of section 147 of the Act was escaped assessment for the relevant Assessment year.

8. BECAUSE, upon the facts and in overall circumstances of the case the appellant denies its liability in terms of Notice dated 28.03.2019 issued under section 148 of the Income Tax Act, as no sanction/approval of Principal Commissioner of Income Tax was taken under section 151 of the Income Tax Act and not provided to the Appellant.

9. BECAUSE, upon the facts and in overall circumstances of the case the Assessment order dated 18.12.2019 passed by the Assessing Officer and confirmed by the Ld CIT(A), NFAC is bad in law and on facts, as the Addition made of Rs 2,58,000.00 on account of disallowance made u/s 40(a)(ia) of the Act is totally incorrect and without appreciating the correct facts of the case that the payment of External Development Charges (EDC) 9 is not for carrying out any specific work to be done by Haryana Urban Development Authority (HUDA) for and on behalf of the appellant. The payment has been made to HUDA through DTCP which is a Government Department and the same is not in pursuance to any contract between the appellant and HUDA. Thus, the payment of EDC to HUDA would not be liable for deduction of tax at source and accordingly the assessee cannot be treated "assessee in default" as per section 201 of the Act.

3. Suffice to say, the assessee’s sole substantive grievance canvassed in the instant appeal seeks to reverse both the learned lower authorities’ action treating it as the assessee is in default for not having deducted TDS on external development charges paid to M/s. Haryana Urban Development Authority (HUDA). This being the clinching factual position, learned counsel could hardly dispute that hon’ble jurisdictional high court in Puri Construction (P) Ltd. Vs. Addl. CIT (2024) 159 taxmann.com 444 (Del.) appears to have 3 | P a g e already settled the issue against the assessee and in the department’s favour thereby concluding that such a payment of external development charges indeed attracts TDS deduction under chapter XVII of the Act. I thus see no merit in the assessee’s instant sole substantive ground, which is hereby rejected in very terms.

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