SBI, (ERSTWHILE SBBJ),BARAN vs. ITO (TDS), KOTA

ITA 143/JPR/2026Status: DisposedITAT Jaipur13 October 2026AY 2017-1820 pages
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What were the facts?

The assessee, SBI (erstwhile SBBJ), is an appellant before the Income Tax Appellate Tribunal (ITAT) challenging an order dated 30.11.2025 passed by the Commissioner of Income Tax (Appeals). The assessment year in question is AY 2017-18, corresponding to FY 2016-17. The dispute concerns the assessee being held as an assessee in default under Section 201(1) and 201(1A) of the Income Tax Act, 1961, for failing to deduct Tax Deducted at Source (TDS) on Leave Travel Concession (LTC) paid to its employees for foreign travel. The Assessing Officer (AO) initiated proceedings based on a Supreme Court decision holding that LTC involving foreign travel is not exempt under Section 10(5) and employers must deduct TDS under Section 192(1). The AO raised a demand of Rs. 1,15,984/-. The CIT(A) confirmed the AO's order. The assessee's appeal is now before the ITAT.

What did the Tribunal hold?

The Tribunal held that the assessee cannot be held to be an assessee in default under Section 201 of the Act. The reasoning is based on the chronology of events and judicial pronouncements, particularly those of the Hon'ble Madras High Court and the Hon'ble Apex Court. The Tribunal noted that the assessee bank was prevented from deducting TDS on LTC paid to its employees for foreign travel due to interim orders from the Hon'ble Madras High Court. Specifically, an interim order dated 16.02.2015 clarified that during the pendency of a stay on the bank's circular withdrawing LTC for overseas travel, any LTC paid would not be considered income for TDS purposes. This order barred the bank from deducting TDS. Although the Supreme Court decision in AY 2013-14 held the bank liable to deduct TDS, the ITAT and Kerala High Court decisions for AY 2016-17 and AY 2017-18 (the present case's period) found the assessee not in default because it was prevented by the Madras High Court's order. The Tribunal emphasized that while the Apex Court decision lays down the law, the fact that the assessee was precluded from deducting TDS due to a court order is a vital fact that cannot be ignored. Therefore, the demand raised by the AO under Section 201(1) and 201(1A) is set aside. The appeal is allowed in favour of the assessee.

What were the issues?

1. Whether the proceedings initiated and concluded against the State Bank of Bikaner and Jaipur (SBBJ), a non-existent entity post-merger with SBI, are void-ab-initio, illegal, and unsustainable in law, warranting quashing of the assessment order, as argued by the assessee. The revenue has not recorded any specific arguments on this point. 2. Whether the Assessing Officer lacked jurisdiction to adjudicate the matter under Section 201(1) and 201(1A) of the Act, with statutory powers vested in the Joint Commissioner or Additional Commissioner, rendering the AO's action invalid, as contended by the assessee. The revenue has not recorded any specific arguments on this point. 3. Whether the CIT(A) erred in confirming the AO's order when the reference number (DIN) was affixed manually, violating CBDT Circular No. 19/2019, thus making the proceedings illegal, as argued by the assessee. The revenue has not recorded any specific arguments on this point. 4. Whether the AO erred in initiating proceedings under Section 201/201(1A) without invoking appropriate inquiry powers under Section 133(6), as Section 201 does not confer independent inquiry powers, rendering the proceedings void ab initio and the defect not curable under Section 292BB, as argued by the assessee. The revenue has not recorded any specific arguments on this point. 5. Whether the AO erred in confirming the demand during the pendency of SLP No. 16734/2023 before the Supreme Court and its corresponding stay order, which restrained the bank from making recoveries from employees, making the assessment order untenable, as argued by the assessee. The revenue has not recorded any specific arguments on this point. 6. Whether the bank can be treated as an assessee in default for not deducting TDS on LTC due to bonafide belief based on bank circulars and the liability also resting on the assessee-employee under Section 4(1), 190, and 191(1) of the Act, as argued by the assessee. The revenue has not recorded any specific arguments on this point. 7. Whether the AO and CIT(A) erred in not considering that the assessee-deductor bank was bound by the orders of the High Court and Apex Court during the pendency of matters, and any action would amount to contempt of court, and initiating proceedings solely on the bank against principles of natural justice, as argued by the assessee. The revenue has not recorded any specific arguments on this point. 8. Whether the assessee can be held to be an assessee in default under Section 201(1) for not deducting TDS on reimbursement of LTC paid to its employees, considering the legal obligation arising from orders of the Hon'ble Madras High Court and the Hon'ble Apex Court, as argued by the assessee. The revenue has not recorded any specific arguments on this point.

Which sections of the Income-tax Act were involved?

Section 250,Section 201,Section 201(1A),Section 192,Section 10(5),Section 133(6),Section 292BB,Section 271C,Section 4(1),Section 190,Section 191(1)

AI-generated summary — verify with the full judgment below

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

Before: SMT. ANNAPURNA GUPTA

Hearing: 15.07.2026Pronounced: 13.10.2026

Per Annapurna Gupta, AM:- The present appeal has been filed by the assessee against the order passed by the Office of the Commissioner of Income Tax, Appeal Addl/JCIT(A) 03 Hyderabad (hereinafter referred to as “Ld. CIT(A)”), dated 30.11.2025 under Section 250of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

P a g e | 2 SBI (Erstwhile SBBJ)

2.

The grounds raised by the assessee read as under:-

1.

The Learned Assessing Officer (AO) erred in law and on facts by initiating and concluding proceedings against the State Bank of Bikaner and Jaipur (SBBJ), a non- existent entity following its merger with the State Bank of India (SBI). The proceedings initiated and concluded in the name of the erstwhile entity

The order continues below.

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