RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INFRASTRUCTURE CORPORATION LTD.,JAIPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-TDS, JAIPUR, JAIPUR

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ITA 1895/JPR/2025Status: DisposedITAT Jaipur24 August 202612 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that in the interest of justice, the assessee should be granted an opportunity to furnish Form 26A before the AO for verification. The AO is directed to adjudicate the issue after verifying the certificates.

What were the facts?

The assessee, Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd., was held as an assessee in default for non-deduction of TDS on interest payments made to HUDCO. The assessee claimed that HUDCO was exempt or had disclosed the income and paid taxes, but could not provide Form 26A earlier.

What were the issues?

Whether the assessee can be absolved from being an assessee in default for non-deduction of TDS if the payee has disclosed the income and paid taxes, and if an opportunity should be granted to furnish proof.

Which sections of the Income-tax Act were involved?

Section 201(1),Section 201(1A),Section 139

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “B” BENCH, JAIPUR

Before: SMT. ANNAPURNA GUPTA & SHRI UDAYAN DASGUPTA

Hearing: 30.06.2026Pronounced: 24.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “B” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI UDAYAN DASGUPTA JUDICIAL MEMBER ITA No.1891 to 1895/JPR/2025 (Assessment Year:2019-20 ( Quarter1, 2&4)

Rajasthan Urban Drinking Vs. Deputy Water Sewerage and Commissioner of Infrastructure Corporation Ltd. Income Tax, Old Working women Hostel, Circle-TDS, Behind Nehru Palance, Lal Jaipur. Kothi, Tonk Road, Jaipur. �थायीलेखासं./जीआइआरसं./PAN/GIR No:JPRRO3589F Appellant .. Respondent Appellant by : Sh. Tarun Agrawal, C.A. Respondent by : Sh. Shravan Kumar Meena, CIT Date of Hearing 30.06.2026 Date of Pronouncement 24.08.2026 O R D E R All the appeals relate to the same assessee and are filed against the separate orders passed by the Office of the Commissioner of Income Tax, Appeal Addl./JCIT(A), Panaji (hereinafter referred to as “Ld. CIT(A)”), all dated 08.10.2025, confirming the order passed by the Assessing Officer (in short “AO”) under Section 201(1)/201(1A) of the Income Tax Act, 1961

P a g e | 2 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. (hereinafter referred to as “the Act”), holding the assessee to be “assessee in default” for non deduction of tax at source on payments made which allegedly qualified for TDS and accordingly raising demand on the assessee to pay TDS so found to have not been deducted and also interest thereon for the period of in default. 2. At the outset itself Ld. Counsel for the assessee pointed out that the appeals related to TDS not found to have been deducted by the assessee in the various quarters pertaining to financial year 2017-18 and 2018-19 relating to the assessment years 2018-19 and 2019-20 respectively. 3. It was common ground that all the payments so found to have been made without TDS related to that made to HUDCO-a government corporation, of interest paid to it on account of loan facility availed by the assessee from HUDCO. In the different appeals filed before us, the assessee was found to be in default for non deduction of tax at source with respect to the different quarters as under:-

ITA No. 1891/JPR/2025 A.Y. 2018-19 ( Quarter-2)

P a g e | 3 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd.

P a g e | 4 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. ITA No. 1893/JPR/2025 A.Y. 2018-19 (Quarter-1)

P a g e | 5 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. ITA No. 1894/JPR/2025 A.Y. 2019-20 ( Quarter-1)

P a g e | 6 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. ITA No. 1895/JPR/2025 ITA No. 1895/JPR/2025 A.Y. 2019-20 (quaerter 20 (quaerter-2)

P a g e | 7 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. ITA No. 1892/JPR/2025 A.Y. 2019-20 ( Quarter-4)

4.

It was pointed out that to us that the Ld. CIT(A) had passed order dismissing the assessee’s appeal ex-parte as non appeared on behalf of the

P a g e | 8 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. assessee before the Ld. CIT(A). However, it was pointed that during proceedings before the AO it was pleaded by the assessee that further time was required by the assessee to place on record a certificate in Form No. 26AS certifying the fact that the said income of interest earned by HUDCO from the assessee had been duly disclosed in the return filed by HUDCO for the impugned year and taxes paid thereon, so as to absolve the assessee from being held as the assessee in default for non deduction of TDS thereon. He pointed out that pleading made by the assessee in this regard is reproduced at page 3 of the order for the quarter 4 as under:-

“F-2(AT)/RUDSICO/Incometax/TDS assessment /13450 Date: 25 SEP 2019 Mr. Ravinder Singh Yadav Dy. Commissioner of Income tax (TDS), Room no.312, N.C.R.B Statue Circle, Jaipur

Sub: Submission of Reply and document. Ref. No. DCIT(TDS)/JPR/2019-20/1427 dated 12.09.2019. Sir, With reference to above it is to submit that we have made interest payment to HUDCO without deduction of TDS. Kindly refer your letter no. DCIT(TDS)/JPR/2019-20/1427 dated 12.09.2019 where you have mentioned "RAVIL Cbi Malviya Nagar Police housing 1127" in the column of "Name of Party". Kindly note that all payments as mentioned in your letter have been made to HUDCO for FY 2018-19, 2017-18 and 2016-17. Kindly rectify this. Further it is to submit that RUDSICO has not deducted TDS on interest payment being HUDCO has exemption, detail as further: For FY 2016-17: U/s 194A(3)(iii)(f) of the Income tax act, 1961 has provided exemption in case of deduction of TDS for the companies in which all the shares are held by the Government or the Reserve Bank of India or a corporation owned

P a g e | 9 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. by that Bank (Copy enclosed). Being HUDCO was 100% Government company during FY 2016-17. Accordingly there was no requirement to deduct TDS while making interest payment to HUDCO. For FY 2017-18: For FY 2017-18 we have made request for Form 26A, through which it is evident that HUDCO has taken into account the sum referred for computing his taxable income in return of income filed by him. HUDCO will submit it to us soon. As soon as receipt of Form 26A we will submit it to you. Kindly allow us time for collection. For FY 2018-19; Annual accounts have not been finalized yet in case of HUDCO, due to this we are attaching Advance tax receipts for FY 2018-19. After receipt of Annual financial statements we will submit to your good office as an evidence of tax paid in complete. Kindly allow us time for collection. For FY 2019-20 HUDCO has avalled exemption u/s 1944 of Income tax act Act, 1961-Deduction of tax source-Interest other than interest on securities. Vide notification number. SO 1399(E)(No.26/2019(F.no.275/15/2018-IT(D)), dated 20.3.2019, HUDCO has been notified for exemption. Hence there is no need to deduct the TDS. Kindly acknowledge the documents attached herewith and allow some time for submission of remaining documents. Enclosed: As mentioned above General Manager (Finance) RUDSICO”

5.

He further pointed out that before the Ld. CIT(A), the assessee had raised ground that adequate opportunity had not been granted to the assessee to furnish Form No. 26A, which was however dismissed by the Ld. CIT(A) stating that sufficient opportunity had been granted by the AO and the assessee did not furnish necessary Form before him also during the appellate proceedings.

P a g e | 10 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. 6. Learned Counsel for the assessee contended before us that he was now in a possession of Form 26A in relation to all the interest paid to HUDCO taken up in the appeal before us and he pleaded therefore, an opportunity be granted to furnish the same to the AO for verification and thereafter adjudicate of the issue before him. Copies of Form 26A for different quarters were placed before us as evidence.

7.

In the light of the averments made by the Ld. Counsel for the assessee before us that he had sought time to file Copy of Form 26A to the Ld. CIT(A), which was not granted to him and that he is now in possession of the same, copies of which were furnished before us also, we hold that in the interest of justice the assessee’s plea of being granted an opportunity to furnish Form No. 26A before the AO for verification be granted.

8.

The law in this regard is very clear. The assessee is saved from the rigors of the section 201/201(1A) of the Act, of being treated as an assessee in default for not/ short deduction of TDS, in the circumstance where the assessee furnishes necessary certificate in Form 26A from the payee, of the amount paid to it having been included in their total income returned to tax and taxes paid thereon. The relevant proviso to Section 201(1)/201(1A) of the Act is reproduced hereunder”- ……………….. “ 201(1) where any person, including the principal Officer of a company,- (a) Who is required to deduct any sum in accordance with the provisions of this Act; or

P a g e | 11 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd. (b) Referred to in sub-section (1A) of Section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: 14[Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a [payee] or on the sum credited to the account of a [payee] shall not be deemed to be an assessee in default in respect of such tax if such [payee]- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed¹:] …………………

9.

In view of the above, since the assessee is now in a position to claim the benefit of the proviso of Section 201(1)/201(1A) of the Act we consider it fit to restore the issue back to the file of the AO in all the appeals before us for verification of the certificates in Form No. 26A in relation to all the cases in which the assessee has been held to be assessee in default. The AO is directed thereafter to adjudicate the issue in accordance with law.

10.

Ld. Counsel for the assessee has stated orally before us that the assessee is willing to pay interest demanded under Section 201(1A) of the Act. The AO is directed to consider this admission of the assessee while passing order as directed by us above. In view of the same all the appeals of the assessee are allowed for statistical purposes.

P a g e | 12 ITA No. 1891 to 1895/JPR/2025 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Ltd.

11.

In the combined result, the appeals of the assessee in ITA Nos. 1891 to 1895/JPR/2025 are allowed for statistical purposes. Order pronounced in the open court on 24.08.2026.

Sd/- Sd/- (UDAYAN DASGUPTA ) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 24.08.2026 *Santosh Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order,

Asst. Registrar ITAT, Jaipur

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