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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI T.R. SENTHIL KUMAR & SHRI MAKARAND V. MAHADEOKAR
ORDER \nPER MAKARAND V. MAHADEOKAR, AM:\nThis appeal is filed by the assessee against the order dated 30.03.2023\npassed by the Learned Commissioner of Income Tax (Appeals), National\nFaceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “Ld.\nCIT(A)"], under section 250 of the Income Tax Act, 1961 [hereinafter referred\nto as \"the Act\"], for the Assessment Year (AY) 2015–16. The appeal arises\nfrom the order of the Income Tax Officer, TDS Ward-1, Ahmedabad\nITA No.1465/Ahd/2024\nArchanaben Rajendrasingh Deval\nAsst. Year: 2015-16\n2\n[hereinafter referred to as \"AO”] dated 06.01.2022 passed under sections\n201(1)/201(1A) of the Act.\nFacts of the case:\n2. The brief facts of the case, as emanating from the record, are that the\nassessee, an individual, had jointly purchased immovable property along\nwith co-owners during the year under consideration. As per the information\ngathered by the TDS Wing, the assessee had purchased land situated at\nSurvey No.196, Khata No. 430, at Village Shiholi Moti, Dist. Gandhinagar, for\ntotal consideration of Rs.1,23,67,360/-. The share of the assessee in the said\nproperty was Rs.53,67,360/-.\n2.
1. Based on this transaction, the AO initiated proceedings under section\n201 of the Act for failure to deduct tax at source (TDS) under section 194IA of\nthe Act. The AO issued notices to the assessee on multiple occasions\nincluding 11.08.2021, 07.10.2021 and 21.12.2021, seeking explanations along\nwith copies of sale deeds and details of payment of TDS, if any.\n2.
2. In response to the notices issued by the AO, the assessee, vide letter\ndated 14.08.2021, submitted that the land purchased was agricultural land\nsituated in Village Shiholi, Taluka Kalol, District Gandhinagar. It was stated\nthat the land was purchased jointly and the share of the assessee in the total\nconsideration of Rs.1,23,67,360/- was Rs.53,67,360/-. The assessee submitted\nthat since the land is agricultural land, the provisions of section 194IA of the\nAct are not applicable. It was further submitted that since the payment to\neach seller was below Rs.50 lakhs, the provisions of section 194IA(2) of the\nAct would also apply, and therefore, no TDS was required to be deducted.\n Rajendrasingh Deval\nAsst. Year: 2015-16\n3\nBased on these grounds, the assessee contended that the provisions of section\n194IA of the Act were not applicable.\n3. The AO rejected the assessee's claim that the land in question was\nagricultural in nature and therefore outside the purview of section 194IA of\nthe Act. The AO referred to the letter dated 17.07.2021 issued by the\nGandhinagar Urban Development Authority (GUDA), which confirmed that\nthe subject land was located at an aerial distance of only 2.61 kilometers from\nthe municipal limits of Gandhinagar. Further, the Assessing Officer noted\nthat the assessee's individual share in the total purchase consideration was\nRs.53,67,360/-, which exceeded the monetary threshold of Rs.50,00,000/- as\nprescribed under section 194IA(2) of the Act. Accordingly, the AO held that\nthe assessee was liable to deduct tax at source at the rate of 1% under section\n194IA(1) of the Act. The AO rejected the assessee's contention that no\npayment to any individual seller exceeded Rs.50 lakhs, observing that the\nstatutory threshold under section 194IA of the Act applies with reference to\nthe consideration payable by the transferee and not with reference to any\nindividual share. Since no tax was deducted at source, the AO treated the\nassessee as an assessee-in-default under section 201(1) of the Act for failure\nto deduct tax.\n4.\nThe assessee preferred an appeal before the Ld.CIT(A). The assessee\ncontended that the primary condition for the application of section 194IA of\nthe Act, namely that the transaction involved transfer of an immovable\nproperty other than agricultural land, was not fulfilled in the present case.\nThe assessee submitted that the land purchased was agricultural land, as\nevidenced by its classification in the registered sale deed. There was no\ndispute raised by the AO regarding the classification of the land in the\nITA No.1465/Ahd/2024\nArchanaben Rajendrasingh Deval\nAsst. Year: 2015-16\n4\nrevenue records. It was further submitted that the land was situated at a\ndistance of 2.61 kilometers from the limits of the Gandhinagar Municipal\nCorporation, as confirmed by a certificate issued by the Village Talati.\nAdditionally, it was brought to the notice of the Ld.CIT(A) that the\npopulation of Village Shiholi was less than 10,000, as certified by the local\nPanchayat. In view of these facts, the assessee argued that the land was\ncovered by the exclusion set out in section 2(14)(iii)(b)(II) of the Act, which\nprovides that land shall not be treated as a capital asset if it is situated beyond\na certain distance from a municipality, and the population of the relevant area\ndoes not exceed the prescribed limit. Since both conditions failed, the land\ncould not be treated as a capital asset, and hence, the provisions of section\n194IA of the Act were not applicable. The assessee also contended that even\nassuming for a moment that the land was not agricultural, the provisions of\nsection 194IA(2) of the Act were still not attracted. It was submitted that the\ntotal purchase consideration was Rs.1,23,67,360/-, which was jointly paid by\nthe assessee and her co-owner. The assessee's individual share in the\nproperty was Rs.53,67,360/-, but the consideration was paid in two parts to\ntwo separate sellers – Rs.21,83,680/- and Rs.31,83,680/- respectively – and\nhence, payment to each seller was below Rs.50 lakhs.\n4.
1. In addition to the above, the assessee further submitted that the AO\nhad erred in treating her as an assessee-in-default under section 201(1) of the\nAct without satisfying the conditions laid down in the Explanation to section\n191 of the Act and the first proviso to section 201(1) of the Act. The assessee\nclaimed to have acted under a bona fide belief that the transaction did not\nattract TDS, as the land was agricultural and the payments to individual\nsellers were below Rs.50 lakhs. However, the CIT(A) dismissed the appeal.\nThe Ld.CIT(A) primarily relied on the findings recorded by the AO and\n Rajendrasingh Deval\nAsst. Year: 2015-16\n5\nproceeded to summarily affirm the same. The Ld.CIT(A) placed sole reliance\non the certificate issued by the Gandhinagar Urban Development Authority\n(GUDA), which stated that the land in question was situated at a distance of\n2.61 kilometers from the limits of the Gandhinagar Municipality. Based on\nthis fact, the Ld.CIT(A) inferred that the land did not qualify as \"agricultural\nland\" within the meaning of section 2(14)(iii) of the Act. The Ld.CIT(A) also\ndenied the assessee the benefit of the first proviso to section 201(1) of the Act.\n5.\nAggrieved by the order of the Ld.CIT(A), the assessee is in appeal\nbefore us raising following grounds of appeal:\n1. That the Ld. CIT(A), National Faceless Appeal Center has erred both in law and\non facts while passing the order u/s 250 of the Income Tax Act, 1961 and therefore\nthe order passed is against the facts on record and prejudicial to the interest of\njustice, therefore the addition sustained u/s 201(1) /201(1A) of Rs.1,00,907/-\nrequire to be deleted.\n2. That the assessee has not made any default U/s 201(1)/ 201(1A) of the I.T. Act,\n1961, however the demand raised by the ITO, TDS ward 1, Ahmedabad and\nsustained by the CIT(A), National Faceless Appeal Center is against the\nprovision of law and requires to be deleted.\n3. That the appellant has purchase agriculture land situated at (1) Survey No. 196,\nKhata No. 430, Dist, Gandhinagar, Village Shiholi Moti, The GUDA has\nalso spconfirmed that the land is 2.61 Kms away from Gandhinagar Municipality\nand the population of Village Shiholi is less than 10,000, which amounts to\nagriculture land on purchase of which TDS provisions of section 1941A is not\napplicable, which ground is not considered by the CIT(A) and therefore the order\npassed by CIT(A) is against the provision of law and therefore the addition made\nu/s 201(1)/201(1A) require to be deleted.\n4. That the assesse has purchase agriculture land along with her co-owner for\nRs.1,23,67,360/- and paid amount to each landowner less than Rs.50 lacs,\nhowever the Ld. CIT(A) and ITO has wrongly interpreted the section 201(1)/\n201(1A) and raised heavy demand of Rs.1,00,907/- is require to be deleted.\n5. That the assessee is govern by proviso to section 201(1) of the Income Tax Act,\n1961, Further the ITO has without ascertaining whether deductees have failed to\npay the tax directly or not, heavy addition made may please be deleted.\nITA No.1465/Ahd/2024\nArchanaben Rajendrasingh Deval\nAsst. Year: 2015-16\n6\n6. The learned assessing officer erred in treating the assessee as 'assessee in default'\nunder section 201(1) without demonstrating the satisfaction of the requirements\nof Explanation to section 191 and first proviso to section 201(1) of the Act and\nas such the demand raised of Rs.1,00,907/- requires to be deleted.\n7. That the assesse has not made any default U/s 201(1) / 201(1A), however the\npenalty proceedings-initiated u/s 271C of the act, requires to be dropped.\n8. The assessee craves leave to add, alter, amend or delete any grounds of\nappeals before the appeal finally heard and decided.\nCondonation of Delay\n6. At the outset, the registry has noted that there is a delay of 438 days\n(494 days as computed by the assessee) in filing the present appeal before us.\nThe assessee has filed an application for condonation of delay supported by\nan affidavit, wherein it is stated that the order of the Ld.CIT(A) dated\n30.03.2023 was never received by her either through email or physical\ncommunication. It is explained that the assessee became aware of the\nappellate order only when a pop-up message appeared on the Income Tax\ne-filing portal in July 2024 while attempting to file the income tax return for\n Assessment Year 2024–25. Thereafter, the assessee consulted her Chartered\nAccountant, who, due to the intervening filing season, could not immediately\nattend to the preparation of the appeal. The delay, according to the assessee,\nwas neither deliberate nor intentional, but occurred due to circumstances\nbeyond her control.\n7.\nWhile we have considered the reasons set forth by the assessee, we are\nunable to accept non-receipt of the e-mail from the department as a sufficient\ncause by itself for condoning such an extended delay. In the present digital\nframework, it is the responsibility of every taxpayer to regularly track and\nmonitor communications issued by the Income Tax Department through\nITA No.1465/Ahd/2024\nArchanaben Rajendrasingh Deval\nAsst. Year: 2015-16\n7\ntheir registered email and portal login. The presumption under the law is that\nan electronically issued order is deemed to have been served once it is made\navailable in the assessee's registered account or email, and ignorance of such\ncommunication does not by itself constitute a satisfactory explanation.\n7.
1. That said, it is equally well-settled law that a liberal and pragmatic\nview should be taken in condoning delay where denial of such relief would\nresult in injustice, especially when the delay is not attributable to mala fides\nor intentional disregard of law. In the facts of the present case, the assessee\nhas acted promptly upon discovery of the order and has approached us with\nan appeal on merits. Denial of hearing on technical grounds would defeat the\nvery object of adjudication.\n7.
2. Accordingly, while the explanation tendered by the assessee is not\nfully satisfactory, we are inclined to condone the delay in the interest of\nsubstantial justice, subject to payment of a nominal cost of Rs.2,000/- by the\nassessee to the credit of the Income Tax Department within a period of four\nweeks from the date of this order. The appeal is admitted for hearing and is\ntaken up for adjudication on merits.\n8.\nDuring the course of hearing before us, the Authorized Representative\n(AR) of the assessee reiterated the facts and stated that the assessee's share in\nthe purchase consideration was Rs.53,67,360/-, and the amount was paid to\ntwo different sellers – none of whom received more than Rs.50 lakhs. The AR\nclarified that while the assessee earlier relied on section 194IA(2) of the Act to\nargue that the consideration paid to each seller was below Rs.50 lakhs, it is\nnow evident that a proviso to section 194IA(2) of the Act has been inserted\nonly with effect from 1st October 2024 by the Finance Act, 2023. Therefore,\n Rajendrasingh Deval\nAsst. Year: 2015-16\n8\nthe benefit of the amended provision is not available for Assessment Year\n2015–16. The AR placed reliance on a decision of the Co-ordinate Bench of\nITAT Ahmedabad in the case of Bhikhabhai H. Patel vs. DCIT (ITA No.\n1680/Ahd/2018, order dated 31.01.2020), where the Co-ordinate Bench held,\nfollowing the decision of co-ordinate bench in case of Vinod Soni v. ITO (ITA\nNo. 2736/Del/2015 order dated 10.12.2018), that for the purposes of section\n194IA of the Act, the obligation to deduct tax must be examined with\nreference to each transferee and each transferor individually. Where the\nconsideration paid to any one transferor is below Rs.50 lakhs, the transferee\nis not required to deduct TDS under section 194IA of the Act. The AR\nsubmitted that the facts of the present case are identical in nature and the\nprinciple laid down therein should be followed to grant relief to the assessee.\nOn the other hand, the Learned Departmental Representative (DR) supported\nthe orders passed by the lower authorities. The DR submitted that the\nassessee's share in the purchase consideration exceeded Rs.50 lakhs and the\nproperty was not shown to be agricultural in nature in accordance with\nsection 2(14)(iii) of the Act. Therefore, the provisions of section 194IA of the\nAct were clearly applicable and the assessee, having failed to deduct tax at\nsource, was rightly held to be in default under section 201(1) of the Act and\nliable for interest under section 201(1A) of the Act.\n9.\nWe have carefully considered the rival submissions and perused the\nmaterial available on record. The undisputed facts are that the assessee, along\nwith a co-owner, purchased immovable property for a total consideration of\nRs.1,23,67,360/-, and her share in the said transaction was Rs.53,67,360/-. The\nAO invoked the provisions of section 194IA of the Act and held the assessee\nto be an assessee-in-default under section 201(1) of the Act for non-deduction\nof TDS, along with consequential interest under section 201(1A) of the Act.\nITA No.1465/Ahd/2024\nArchanaben Rajendrasingh Deval\nAsst. Year: 2015-16\n9\nThe Ld.CIT(A) affirmed the action of the AO without independent\nverification or analysis of key factual and legal aspects and summarily\ndismissed the appeal.\n9.
During the course of hearing before us, the AR of the assessee confined\nhis arguments to the issue that the provisions of section 194IA of the Act were\nnot applicable in view of the fact that the amount paid to each seller in the\ntransaction was below Rs.50,00,000, even though the assessee's share in the\ntotal transaction exceeded the threshold. The AR also contended that the\namendment made by way of insertion of a proviso to sub-section (2) of section\n194IA of the Act, by the Finance Act, 2024 with effect from 1st October 2024,\nis not applicable to the present year under appeal (AY 2015–16). Nevertheless,\nthe AR placed reliance on the decision of the Co-ordinate Bench of the ITAT\nAhmedabad in the case of Bhikhabhai H. Patel vs. DCIT (supra), wherein\nthe Co-ordinate Bench, following the decision in the case of Vinod Soni v.\nITO (supra), held that for the purpose of section 194IA of the Act, the\nthreshold of Rs.50 lakhs is to be examined with reference to each transferee-\ntransferor pair individually, and that where the consideration paid to each\nseller is below Rs.50 lakhs, the provisions of section 194IA of the Act are not\nattracted.\n9.
We find merit in the submission made by the AR. In the present case,\nas recorded in the assessment order and not disputed by the revenue, the\nassessee had paid Rs.21,83,680/- to one seller and Rs.31,83,680/- to another\nseller, both of which are individually below the threshold of Rs.50 lakhs\nprescribed under section 194IA of the Act. The assessee's reliance on the\ndecision of the Co-ordinate Bench in the case of Bhikhabhai H. Patel (supra)\nis well placed where it was held that for the purposes of section 194IA of the\n Rajendrasingh Deval\nAsst. Year: 2015-16\n10\nAct, the threshold of Rs.50 lakhs is to be examined with reference to each\ntransferee and each transferor individually. Where the amount paid to any\none transferor is below Rs.50 lakhs, the transferee is not obliged to deduct tax\nunder section 194IA of the Act.\n9.
In paragraph 5.2 of its order in the case of Vinod Soni (supra), the Co-\nordinate Bench categorically observed that section 194IA(1) of the Act\nimposes a deduction obligation on \"any person being a transferee\", and\ntherefore, section 194IA(2) of the Act, which provides a threshold exemption,\nmust also logically apply with reference to the individual transferee. The said\npara is reproduced herewith for clarity and ready reference\n“5.2 After perusing the Paper Book and the relevant provisions of law, we find that\nSection 194- IA(2) provides that Section 194- IA(1) will not applicable where the\nconsideration for transfer of immovable property is less than Rs.50,00,000/-.\nHowever, section 194- IA(1) is applicable on any person being a transferee, so section\n194- IA(2) is also, obviously, applicable only w.r.t. the amount related to each\ntransferee and not with reference to the amount as per sale deed. In the instant case\nthere are 04 separate transferees and the sale consideration w.r.t. each transferee is\nRs.37,50,000/-, hence, less than Rs.50,00,000/- each. Each transferee is a separate\nincome tax entity therefore, the law has to be applied with reference to each transferee\nas an individual transferee / person. I t is also noted that Sect ion 194- IA was\nintroduced by Finance Act, 2013 effective from 1.6.2013. It is also noted from the\nMemorandum explaining the provisions brought out along with the Finance Bill\nwherein it was stated that “in order to reduce the compliance burden on the small\ntax payers, it is further proposed that no deduct ion of tax under this provision shall\nbe made where the total amount of consideration for the transfer of an immovable\nproperty is less than fifty lakhs rupees.” We further find that the main reason by the\nAO is that the amount as per sale deed is Rs.1,50,00,000/ -. The law cannot be\ninterpreted and applied differently for the same transact ion, if carried out in different\nways. The point to be made is that, the law cannot be read as that in case of four\nseparate purchase deed for four persons separately, Section 194- IA was not\napplicable, and in case of a single purchase deed for four persons Sect ion 194- IA\nwill be applicable. It is noted that AO has passed a common order u/s.201(1) for al\nI the four transferees. In order to justify his action since in case of separate orders for\neach transferee separately, apparently, provisions of sect ion 194IA could not had\nbeen made applicable since in each case purchase consideration is only\nRs.37,50,000/-. This act ion of AO shows that he was also clear in his mind that\nwith reference to each transferee, Sect ion 1941A was not applicable. Hence, we are\n Rajendrasingh Deval\nAsst. Year: 2015-16\n11\nof the considered view that the addition made by the AO and confirmed by the Ld.\nCIT(A) is not sustainable in the eyes of law, thus the same is deleted. As far as issue\nof charging interest is concerned, the same is consequential in nature, hence, need\nnot be adjudicated. As regards the case laws ci ted by the Ld. DR are concerned, the\nsame are on distinguished facts and therefore, not applicable in the present case.\nAccordingly, the grounds raised by the assessee stand allowed and as a result thereof,\nthe appeal of the assessee is allowed.”\n9.4.\nApplying the above reasoning to the facts of the present case, we note\nthat the assessee paid Rs.21,83,680/- to one seller and Rs.31,83,680/- to\nanother seller — both of which are individually below Rs.50,00,000/-. In line\nwith the interpretation adopted in the case of Bhikhabhai H. Patel (supra),\nwe hold that the provisions of section 194IA of the Act were not attracted in\nthe case of the assessee.\n9.
We find that the Ld.CIT(A), while upholding the AO's action, failed to\nconsider the legal issue squarely raised by the assessee and did not deal with\nthe applicable precedent or examine the transaction structure in light of\njudicial interpretation. The approach of the appellate authority, in summarily\nconcurring with the AO without addressing these key issues, does not meet\nthe standard required under section 250(6) of the Act.\n9.
In view of the above findings, the demand raised under section 201(1)\nand 201(1A) of the Act is liable to be deleted. As the assessee has been held\nnot to be in default for failure to deduct tax under section 194IA of the Act,\nall other grounds raised in the appeal – including those relating to section\n2(14)(iii) of the Act, the proviso to section 201(1) of the Act, the Explanation\nto section 191 of the Act, and penalty under section 271C of the Act are\nrendered redundant and academic and are therefore not adjudicated.\n Rajendrasingh Deval\nAsst. Year: 2015-16\n12\n9.
Accordingly, the assessee could not have been held to be an assessee-\nin-default under section 201(1) of the Act, and the consequential levy of\ninterest under section 201(1A) of the Act also fails. The orders of the lower\nauthorities are therefore liable to be set aside on this short ground alone.\n10.\nIn the result, the appeal filed by the assessee is allowed, as indicated\nabove.\nOrder pronounced in the Open Court on 2nd April, 2025 at Ahmedabad.\nSd/-\n(T.R. SENTHIL KUMAR)\nJUDICIAL MEMBER\nSd/-\n(MAKARAND V. MAHADEOKAR)\nACCOUNTANT MEMBER\nअहमदाबाद/Ahmedabad, दिनांक/Dated 02/04/2025\nटी.सी. नायर, व.नि. स. / T.C. NAIR, Sr. PS\nआदेश की प्रतिलिपि अग्रेषित/