COIMBATORE MUNICIPAL CORPORATION,COIMBATORE vs. THE DEPUTY COMMISSIONER OF INCOME TAX, COIMBATORE

The Assessee raised the following grounds of appeal : “1. The Order of the Learned Commissioner of Income Tax (Appeals) is contrary to the law, facts and circumstances of the case. 2. The Learned Commissioner of Income Tax (Appeals) erred in dismissing the appeal in limine. 3. The Learned Commissioner of Income Tax (Appeals) ought to have considered the Form 26A filed by the appellant before treating the appellant as an "Assessee in default". 4. The Learned Commissioner of Income Tax (Appeals) erred in failing to take into account the interest remitted by the appellant for the period commencing from the alleged date of deduction up to the date of filing of the Income Tax Return by the payee. For these grounds and such other grounds that may be adduced before or during the hearing of the appeal, it is prayed that the Hon'ble Tribunal may be pleased to restore the case back to CIT(A) and/or provide such other relief as this Hon'ble Tribunal may deem fit.” 3. Briefly, stated the facts of the case are that the appellant is a Local Municipal Authority constituted by State of Tamilnadu for administering the affairs of the Coimbatore Corporation. The DCIT, TDS(Coimbatore) hereinafter called as “TDS Officer” conducted survey operations u/s.133A of the Income Tax Act in the premises of Coimbatore Municipal Corporation on 27.03.2023. During the course of survey operations, TDS Officer found that the Appellant Corporation had failed to deduct TDS u/s.194A on interest paid to M/s.Tamilnadu Urban Finance and Infrastructure Development Corporation (TUFIDCO) and Tamilnadu Urban Infrastructure Financial and Services Limited (TUFISIL). Accordingly, a show cause notice dated 10.04.2023 was issued to the appellant corporation calling upon the Appellant-Corporation to show cause as to why the provisions of section 201 and 201(1A) of the Income Tax Act should not be invoked against the appellant corporation and treat the Appellant-Corporation as “Assessee in Default”. In response to show cause notice, the appellant submitted that vide letter dated 21.11.2023 M/s.Tamilnadu Urban Finance and Infrastructure Development Corporation (TUFIDCO) and Tamilnadu Urban Infrastructure Financial and Services Limited (TUFISIL) are Government owned Financial Institutions since they had already paid Income Tax on interest earned from the Appellant-Corporation, the question of deduction of TDS does not arise. However, rejecting the above contention of the appellant, the TDS Officer proceeded to hold the Appellant-Corporation as “Assessee in Default” demanded TDS of Rs.50,76,281/- and levied interest u/s.201A of Rs.36,54,922/- vide order dated 12.02.2024.

Being aggrieved by the order passed u/s.201(1)(A) of the Act, the appellant preferred an appeal before the ld.CIT(A) who vide impugned order dismissed the appeal for non-prosecution.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. At the outset, we find that there is a delay of 223 days in filing present appeal before us in the present appeal. The appellant filed an Affidavit seeking condonation of delay on the ground that the delay had occurred because of the appellant was not aware of the order passed by the ld.CIT(A) u/s.250 of the Income Tax Act and it had come to know of the order passed only at the time of verification of TRACES Portal of the Department. Subsequently, immediately steps were initiated to file the appeal before this Tribunal.

We have perused the Affidavit and the averments made in the Affidavit. The averments made in the affidavit remain uncontroverted by Learned CIT- DR. The Hon’ble Supreme Court in the case of M.Kalappa Sethi Vs. M.V.Laxmi Narain Rao AIR 1973 SC 627, held that an uncontroverted affidavit shall be taken as an affidavit on fact. In the light of this legal position, we are of the considered opinion that the delay had occurred in filing the appeal on account of Bonafide reasons and the explanation cannot be brushed aside. Therefore, we are of considered opinion that there is a reasonable and sufficient cause for the delay, hence, the delay is condoned. Accordingly, we admit the appeal for adjudication on merits.

We have heard rival submissions and perused the material available on record. We find that the ld.CIT(A) dismissed the appeal of the appellant for non-prosecution without entering into the merits of the addition. The CIT(A) without dealing with the contentions of the appellant merely dismissed the appeal in limine for non-prosecution. As contemplated u/s. 250(6) of the Act the CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. It is the settled position of law that the CIT(A), even while disposing of the appeal ex-parte, he is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) (Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.

Therefore, in the light of the above legal position, we are of the considered view that the matter requires to be remanded to the file of the ld.CIT(A) with the direction to dispose of the appeal denovo on merits after affording reasonable opportunity of hearing to the assessee. All the contentions raised by the appellant are left open for consideration before the ld.CIT(Appeals).

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open Court on 23rd June, 2026.