DEPUTY GOTHWAL CONSTRUCTIONS PRIVATE LIMITED,DELHI vs. DCIT CIRCLE 74 (1), NEW DELHI

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ITA 7328/DEL/2025Status: DisposedITAT Delhi28 April 2026AY 2016-173 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the issue of TDS deduction on EDC payments was debatable, there was a reasonable cause for the assessee not to have deducted TDS. Therefore, the penalty under Section 271C was directed to be deleted.

What were the facts?

The assessee paid external development charges (EDC) to HUDA without deducting TDS. The lower authorities levied a penalty under Section 271C for non-deduction of TDS.

What were the issues?

Whether a penalty under Section 271C for non-deduction of TDS is leviable when the deductibility of TDS on the payment was a debatable issue.

Which sections of the Income-tax Act were involved?

Section 271C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘C’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA

Hearing: 06.04.2026Pronounced: 06.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘C’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 7328/Del/2025 Assessment Year: 2016-17 Vs. Deputy Deputy Gothwal Commissioner of Constructions Private Income Tax Limited Circle 74(1) L-73, Mahipalpur New Delhi Extension, South Delhi- 110037 PAN/TAN: DELD12560C (Appellant) (Respondent) Assessee by Sh. R. P. Mall, Adv. Department by Sh. Om Prakash Sr. DR Date of hearing 06.04.2026 Date of pronouncement 06.04.2026 ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2016-17, arises against the Commissioner of Income Tax/National Faceless Appeal Centre (in short, the “CIT(A)/NFAC”) Delhi’s dated 21.08.2025 passed in DIN & Order No. ITBA/NFAC/S/250/2025- 26/1079842382(1), involving proceedings u/s 271C of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’).

Heard both the parties at length. Case file perused.

ITA No.7328/Del/2025 2. We now advert to the assessee’s sole substantive grievance herein directed against both the learned lower authorities’ respective findings levying section 271 TDS non-deduction penalty of Rs. 5,94,000/- in its hands in the assessing Officer’s order dated 30.10.2023 as upheld in the lower appellate discussion.

4.

We have given our thoughtful consideration to the assessee’s and the Revenue’s vehement submissions reiterating their respective stands against and in support of the impugned penalty. We make it clear that the assessee/deductor appears to have paid external development charges “EDC” to the Haryana Uraban Development Authority “HUDA” without deducting any TDS thereupon. There does not appear to be further no quarrel that such builders/developers engaged in real estate development activity had to mandatorily pay such “EDS” charges as “HUDA” as per the recipients prescribed formula. And that the issue as to whether such EDC payments attracts TDS deduction or not came to be finally settled in the Revenue’s favour in (2024) 462 ITR 326(Del) in Puri Constructions (P) Ltd. vs. ACIT. This is what has 2 | P a g e

ITA No.7328/Del/2025 made both the learned lower authorities have levied the impugned penalty for TDS non-deduction in the assessee’s hands. We are of the considered view that once the TDS deduction herein on such EDC charges had become a debatable issue, there was indeed a reasonable cause for the assessee not to have deducted the same forming mitigating circumstances so as to delete the impugned section 271C penalty. The same is directed to be deleted in very terms.

5.

This assessee’s appeal is allowed.

Order pronounced in the open court on 6th April, 2026.

Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28.04.2026 Pooja Mittal/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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