SANTOSH KUMAR BHOGI,VISAKHAPATNAM vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), VISAKHAPATNAM

ITA 253/VIZ/2026Status: DisposedITAT Visakhapatnam01 October 2026AY 2023-2412 pages
AI SummaryRemanded

What were the facts?

The assessee, Santosh Kumar Bhogi, filed an appeal against the order of the CIT(A) for Assessment Year 2023-24. The dispute concerns a disallowance of Rs. 30.33 crores made by the Assessing Officer (AO) under Section 40(a)(ia) of the Income Tax Act, 1961. This disallowance arose from the assessee's failure to deduct Tax Deducted at Source (TDS) under Section 194Q on purchases of Rs. 101.61 crore from M/s Blue Star Trading Co. during FY 2022-23. The AO noted that the seller did not appear to have collected Tax Collected at Source (TCS) under Section 206C(1H), as it was not reflected in the assessee's Form 26AS. The assessee later deposited the TDS along with interest after receiving a show cause notice. The AO disallowed the expenditure, holding that subsequent payment did not cure the default. The CIT(A) upheld the disallowance.

What did the Tribunal hold?

The Tribunal decided to remit the matter back to the Assessing Officer (AO). The Tribunal noted that the AO made the disallowance under Section 40(a)(ia) because the seller, M/s Blue Star Trading Co., did not comply with a notice under Section 133(6), and TCS was not reflected in the assessee's Form 26AS. The assessee deposited the TDS on 17.03.2025, after receiving a show cause notice. The AO viewed the disallowance and subsequent TDS payment as operating in different spheres. Crucially, a subsequent order dated 25.06.2025 by the ITO(TDS) declared the assessee not to be an assessee in default, stating that the payee had filed their return and the assessee had paid interest. This information was not available to the AO at the time of assessment or to the CIT(A) when confirming the addition. The Tribunal held that these subsequent developments, including the TDS Officer's order and interest payment, should be considered by the AO. Therefore, the matter was remitted to the jurisdictional AO to pass an appropriate order on whether the disallowance under Section 40(a)(ia) is to be made, after affording the appellant a reasonable opportunity of being heard.

What were the issues?

1. Whether the disallowance of Rs. 30.33 crores under Section 40(a)(ia) of the Income Tax Act, 1961, is justified when the assessee has subsequently deducted and deposited the TDS under Section 194Q? Assessee's Contention: The assessee argued that the TDS was not deducted in FY 2022-23 due to a bonafide mistake and was paid in FY 2024-25. They relied on the subsequent order of the TDS Officer, dated 25.06.2025, which stated that the assessee was not an assessee in default as the TDS was paid with interest, and the payee had filed their return. The assessee also cited CIT Vs. Ansal Land Mark Township (P) Ltd. (377 ITR 635) regarding the proviso to Section 40(a)(ia). Revenue's Contention: The revenue argued that the assessee failed to prove compliance with the conditions of the proviso to Section 40(a)(ia), including furnishing Form 26A and transaction-specific income inclusion. They contended that the subsequent order of the TDS Officer did not automatically nullify the disallowance, as the assessment was completed before the TDS Officer's order. The revenue emphasized that the statutory obligation to deduct tax at source was time-bound, and subsequent deposit did not cure the original failure.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194Q,Section 206C(1H),Section 133(6),Section 201(1),Section 201(1A),Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Pronounced: 01.10.2026

PER SHRI OMKARESHWAR CHIDARA, ACCOUNTANT MEMBER :

This appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals) [“Ld.CIT(A)”], National Faceless

1 Santosh Kumar Bhogi

Appeal Centre, Delhi vide DIN: ITBA/NFAC/S/250/2025- 26/1084815811(1) dated 15.01.2026 for the Assessment Year 2023-

24.2.

In the above cited appeal, the appellant has challenged the addition m

The order continues below.

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