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Facts
The assessee, a Nidhi company, accepted fixed deposits and granted loans. Following a survey, the assessee was found to have failed to deduct TDS on interest paid, amounting to Rs. 2,19,99,137, and was treated as an 'assessee in default'. The assessee contended there was no obligation to deduct TDS on payments below Rs. 5,000.
Held
The CIT(A) passed a cryptic order dismissing the appeal without considering the assessee's submissions and principles of natural justice. The Tribunal found the CIT(A)'s order to be unreasoned and lacking due consideration of the submissions.
Key Issues
Whether the CIT(A) erred in passing a cryptic and unreasoned order without considering the submissions and principles of natural justice. The appeal was remitted to the CIT(A) for fresh adjudication.
Sections Cited
Section 194A of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI PRAKASH CHAND YADAV, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-1, Mumbai [CIT(A)] dated 30.04.2025 for Assessment Year (AY) 2016-17.
Brief facts of the case are that the appellant is a Nidhi company accepting fixed deposits from the general public and grants loans as per the interest rates fixed by the firm. The ITO/TDS Thiruvananthapuram had conducted survey operations in the business premises of the appellant and found that the appellant had Muthoot Syndicate Nidhi Ltd. failed to deduct TDS on the interest paid of Rs.2,19,99,137/-. Accordingly, the appellant was treated as an ‘assessee in default’ and demanded TDS of Rs. 43,99,828/- for FY 2015-16.
Being aggrieved, an appeal was filed before the CIT(A) contending that there was no obligation on the part of the appellant company to deduct tax on interest paid to a person to whom aggregate payment made in a year did not exceed Rs. 5,000/- as it is below the threshold limit. However, the CIT(A), without considering the submissions made on behalf of the appellant company dismissed the appeal by passing cryptic order.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
We have heard the rival contentions and perused the material available on record. at the outset we find that the CIT(A) had passed cryptic order without taking into consideration the submissions made before him and confirmed the order passed by the TDS Officer. In our considered opinion the order passed by the CIT(A) does not meet the requirement of a reasoned order, was passed in breach of the principles of natural justice and, therefore, the order passed by the CIT(A) is set aside and remitted back to the file of the CIT(A) for de novo adjudication of the issues in the appeal on merits after affording reasonable opportunity of hearing to the appellant.