KOLORS HEALTHCARE LLP,HYDERABAD vs. ITO, WARD (TDS)-1(4), HYDERABAD

ITA 532/HYD/2026Status: DisposedITAT Hyderabad23 September 2026AY 2024-258 pages
AI SummaryRemanded

What were the facts?

The assessee, Kolors Healthcare LLP, engaged in slimming, skin, and hair care services, filed its return for AY 2024-25. The Assessing Officer (AO)/TDS CPC raised demands for interest under section 201(1A), fees under section 234E, and interest under section 220(2) for Quarters 2 and 3 of AY 2024-25. The assessee appealed to the CIT(A), arguing that unconsumed challans were not credited, leading to inflated demands and interest. The CIT(A) dismissed the appeal, finding the claim unsubstantiated. The assessee then appealed to the ITAT, Hyderabad Bench.

What did the Tribunal hold?

The Tribunal found substantial force in the CIT(A)'s observation that the assessee needed to substantiate its claim of unconsumed challans with documentary evidence. However, since the assessee undertook to furnish complete details, copies of challans, and reconciliation before the AO/TDS CPC, the Tribunal restored the issue to the AO for fresh examination. The AO is directed to verify the claim, and the assessee must provide all particulars, including challan copies, payment dates, TDS liability, utilization details, and reconciliation. The AO will then determine the credit available and recompute the demand under section 201(1A) and the consequential interest under section 220(2). Regarding the second issue, the Tribunal also directed the assessee to furnish complete particulars of payees, payments, and evidence of tax payment by payees to the AO/TDS CPC for determination of interest under section 201(1A) in accordance with law, emphasizing that claims must be substantiated with documentary evidence. The Tribunal clarified it had not expressed a final view on the factual correctness of the claims.

What were the issues?

1. Whether the demand raised by the AO/TDS CPC for interest under section 201(1A) and section 220(2) of the Income-tax Act, 1961, is excessive due to the non-consideration of unconsumed challans for TDS payments? (Question of mixed law and fact, concerning Section 201(1A) and 220(2)). Assessee's Contention: The AO/TDS CPC wrongly raised the demand by not giving credit for unconsumed challans, leading to inflated interest under section 201(1A) and consequently under section 220(2). The assessee requested the matter be restored to the AO for furnishing complete details and reconciliation. Revenue's Contention: The AO/TDS CPC correctly determined the liability. The assessee failed to provide cogent details or documentary evidence for unconsumed challans, and the CIT(A) rightly rejected the contention. 2. Whether the assessee's liability towards interest under section 201(1A) should be determined considering that the respective payees have already discharged the relevant tax liability? (Question of mixed law and fact, concerning Section 201(1A)). Assessee's Contention: If payees have already paid the tax, the interest under section 201(1A) should be computed considering the actual date of payment by the payees. Revenue's Contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 201(1),Section 201(1A),Section 220(2),Section 234E

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI RAVISH SOOD, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE

PER BENCH:

The present appeals filed by the assessee, M/s Kolors Healthcare LLP, are directed against the respective orders passed by the Additional/JCIT(Appeals)-1, Pune, dated 23.03.2025, which in turn arise from the respective orders passed by the Assessing Officer/TDS CPC (for short, ‘AO/TDS, CPC’) under section 201(1)/201(1A) of the Income-tax Act, 1961 (for short, ‘the Act’), dated 10.03.2025 for Quarter 2 and Quarter 3 of AY 2024-25, wherein

ITA 530/HYD/2026

demands towards interest

The order continues below.

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