HUBTOWN BUS TERMINAL (AHMEDABAD) PRIVATE LIMITED,AHMEDABAD vs. DCIT CIRCLE(TDS), AHMEDABAD, AHMEDABAD

On the facts and circumstances of the case as well as in Law the Learned predecessor Income Tax officer, TDS Circle (TDS), Ahmedabad, was satisfied that interest was not leviable. Hence he did not pass order after initiating proceedings and considering reply of the assessee and therefore the successor Income Tax officer, TDS Asst.Year –2015-16 - 2–

Without prejudice to above, the Learned ADDL/JCIT(A)-2, Mumbai, was not justified in confirming entire amount of interest levied by Learned Income Tax officer, TDS Circle (TDS); some amounts were not at all chargeable to interest and some amounts related to proceeding year TDS.

On the facts and circumstances of the case as well as in Law the Learned ADDL/JCIT(A)-2, Mumbai, has erred in confirming interest levied by Learned Income Tax officer, TDS Circle (TDS), Ahmedabad without first ensuring that the deductee has also not paid tax on interest amount on which TDS was not made; or without confirming that deductee was in fact liable to tax on such interest.

Under the circumstances the Appellant has been denied a reasonable opportunity to present its case.

The order under appeal is not only bad in law and invalid, but also against the principles of natural law of equity and justice.

The appellant craves leave to add, to amend, alter/delete and/or modify the above grounds of appeal on or before the final hearing.”

The brief facts of the case are that the assessee, Hubtown Bus Terminal (Ahmedabad) Private Limited, is a company engaged in the business of construction and operation of bus terminals under a Public Private Partnership (PPP) model. A survey under section 133A of the Income-tax Act, 1961 (“the Act”) was carried out on 07.08.2015 at the business premises of the assessee for verification of TDS compliance. During the course of survey, it was noticed that the assessee had deducted TDS aggregating to ₹2,89,37,379/- for the financial year 2014-15 under various sections, which pertained to deductions made during Financial Years 2012-13, 2013-14 and 2014-15, but the same had not been deposited into the Central Government account up to the date of survey. In response to the survey findings, the assessee submitted that the concessionaire fees payable to GSRTC under the concession agreement Asst.Year –2015-16 - 3–

The Assessing Officer, however, did not accept the explanation of the assessee. He observed that the assessee had admittedly deducted tax at source under various sections and failed to deposit the same within the prescribed time. According to the Assessing Officer, once tax was deducted, the assessee was mandatorily required to deposit it into the Government treasury, irrespective of whether the deduction was correct or not. Accordingly, the Assessing Officer treated the assessee as an assessee in default under section 201(1) of the Act and also levied interest under section 201(1A). The total demand raised was ₹3,45,28,003/-, comprising TDS of ₹1,41,50,821/- and interest of ₹2,03,77,182/-.

Aggrieved by the said order, the assessee filed an appeal before the Ld. CIT(Appeals). During the appellate proceedings, the assessee reiterated that TDS was not applicable on concessionaire fees and interest Asst.Year –2015-16 - 4–

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

The learned counsel for the assessee submitted that the predecessor Assessing Officer, after examining the issue and considering the replies filed by the assessee, was satisfied that interest was not leviable and therefore did not pass any order, and in such circumstances the successor Assessing Officer was not justified in reopening the matter after a lapse of more than five years and taking a contrary view by passing an order under section 201(1A) of the Act, which has been mechanically upheld by the appellate authority. It was further contended that, without prejudice, even otherwise the entire interest confirmed is unsustainable as part of the demand is not chargeable to interest at all and part of it relates to TDS of preceding years, an aspect which has not been examined by the learned ADDL/JCIT (Appeals). The learned counsel also submitted that interest under section 201(1A) of the Act cannot be sustained unless it is first established that the deductee had not paid tax on the relevant income or that the deductee was in fact liable to tax, and in the absence of such verification there is no loss to the Revenue. It was thus submitted that the assessee was denied a reasonable opportunity of being heard and that the impugned order is bad in law, invalid and contrary to the principles of natural justice, equity and fairness, and therefore liable to be set aside. Asst.Year –2015-16 - 6–

We have heard the rival contentions and perused the material available on record. In the facts of the present case, we find that the issue relates to determination of default under section 201(1) of the Act and levy of interest under section 201(1A) of the Act, arising out of non-deposit of TDS which, according to the assessee, was deducted erroneously and subsequently reversed, and which also involves examination of the nature of concessionaire fees, interest claimed by GSRTC, applicability of CBDT Circular No. 35/2016, and the effect of subsequent settlement pursuant to directions of the Hon’ble Gujarat High Court. We further note that the assessee has raised specific contentions that part of the demand relates to earlier years, that interest under section 201(1A) of the Act has been levied without verification as to whether the deductee had discharged its tax liability, and that the predecessor Assessing Officer was satisfied that interest was not leviable, which aspects have not been properly verified and examined by the lower authorities.

Considering the totality of the facts and circumstances of the case, and in the interest of justice, we are of the view that the matter requires fresh examination at the level of the juri ictional Assessing Officer after proper verification of the factual matrix and the legal contentions raised by the assessee. Accordingly, we restore the matter to the file of the juri ictional Assessing Officer for de novo consideration. The Assessing Officer shall verify the assessee’s claim regarding applicability of TDS provisions, reversal of TDS entries, nature of interest liability, year-wise breakup of TDS and interest, and whether the deductee has paid tax on the Hubtown Bus Terminal (Ahmedabad) Pvt. Ltd. vs. DCIT Asst.Year –2015-16 - 7–

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 16/12/2025 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 16/12/2025