RAJMANI RAM,DELHI vs. WARD 62(1), DELHI, DELHI

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ITA 4413/DEL/2026Status: DisposedITAT Delhi23 June 2026AY 2024-253 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the TDS deduction under Section 194J by a client, even if erroneous, cannot solely form the basis for an addition in the assessee's hands without proper examination. The matter was remanded back to the AO for re-examination of the nature of services rendered.

What were the facts?

The assessee, a sub-contractor, was engaged in installing fire extinguishing and safety alarm equipment, providing both material and labor. A client erroneously deducted TDS under Section 194J (technical services) instead of Section 194C (contract services). The Assessing Officer (AO) made an addition of Rs. 22,00,000 based solely on this TDS deduction.

What were the issues?

Whether an addition can be made based solely on the TDS deduction under Section 194J by a client, without verifying the actual nature of services rendered by the assessee.

Which sections of the Income-tax Act were involved?

Section 194J,Section 194C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI VIKAS AWASTHY

PER SHRI VIKAS AWASTHY, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 22.01.2026, for Assessment Year 2024-25.

2.

Shri Ankit Gupta, appearing on behalf of the assessee submits that the assessee is a sub-contractor and is engaged in installation of fire extinguishing equipment and fire safety alarms. The assessee while rendering services provides material along with the labour. One of the clients of the assessee has inadvertently deducted tax at source u/s.194J of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) i.e. for providing technical services, whereas the TDS ought to have been deducted u/s. 194C of the Act for rendering of contract services. The ld. Counsel asserted that the assessee is not rendering any service of technical nature, therefore, TDS under section 194J of the Act has been wrongly been deducted. These facts were explained before the Assessing Officer (AO) during assessment proceedings. The AO disbelieved the same 1

ITA 4413/DEL/2026 RAJMANI RAM and made an addition of Rs.22,00,000/- on the premise that the assessee has provided technical services. The only reason to make addition is TDS u/s.194J of the Act. The assessee filed an appeal against the assessment order before the CIT(A), however, the CIT(A) without considering submissions of the assessee passed the impugned order. He submitted that since no technical services were rendered by the assessee, the addition made by the AO may be deleted. 3. Per contra, Shri Manoj Kumar, representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. 4. Both sides heard, orders of the lower authorities examined. The solitary issue in the instant appeal is addition of Rs.22,00,000/- by the AO. The case of the assesse is that the TDS has been inadvertently deducted by one of the client’s of the assessee u/s.194J of the Act which led to the belief of AO that the assessee has received payment of Rs.22,00,000/- for rendering technical services not disclosed in rate of interest. From perusal of the assessment order it emerges that the AO without examining facts and without specifying the nature of technical service provided by the assessee has made the addition. The matter is remanded back to the AO for re-examination. The AO shall examine the nature of service rendered by the assessee. Merely because the TDS has been deducted u/s.194J of the Act by one of the client of the assessee erroneously, ipso facto cannot form basis of addition in hands of the assessee. The assessee, if so advised, may furnish relevant documents/evidence in support of his contention that the assessee is not rendering technical services and no technical services were rendered by the assessee to the client who had deducted tax at source u/s.194J of the Act. With the above directions, the matter is restored back to the AO, the AO shall pass fresh assessment order, in accordance with law after allowing reasonable opportunity to the assessee to make submissions.

5.

In the result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on Tuesday the 23rd of June, 2026. Sd/- VIKAS AWASTHY JUDICIAL MEMBER Delhi Dated: 25-Jun-2026 2

ITA 4413/DEL/2026 RAJMANI RAM Copy to: RAJMANI RAM, LIST 1725/6 SANGAM VIHAR DELHI 1 110080, NEW DELHI-110080, DELHI WARD 62(1), DELHI, 2 CIVIC CENTRE,NEW DELHI, NEW DELHI-110002, DELHI 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE

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