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Facts
The assessee sold an immovable property for Rs. 80,00,000, and the purchaser deducted TDS of Rs. 3,29,600. However, the deductor failed to file Form No. 27Q, causing the TDS credit to not reflect in Form 26AS. The Assessing Officer (AO) rejected the TDS claim, leading to a penalty under section 270A. The CIT(A) upheld the penalty, and the assessee appealed.
Held
The Tribunal noted that the TDS amount was indeed deposited. The purchaser subsequently filed Form No. 27Q, and the TDS credit is now reflected in Form 26AS. Since the credit is available, no outstanding demand survives against the assessee. Therefore, the penalty levied under section 270A is unsustainable.
Key Issues
Whether the penalty under section 270A is sustainable when the TDS credit, though initially not reflected due to a procedural lapse by the deductor, is subsequently available and no demand remains against the assessee.
Sections Cited
250, 147, 144C, 148, 270A
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Income Tax Appellate Tribunal, “F” BENCH MUMBAI
Before: SHRI. BIJAYANANDA PRUSETH
आदेश/O R D E R
PER ANIKESH BANERJEE [J.M]: The instant appeal of the assessee was preferred against the order of the Ld. CIT (A)-56, Mumbai [hereinafter referred to as "Ld. CIT(A)"] order passed u/s. 250 of the Income Tax Act, 1961 [hereinafter referred to as "Act"] order passed for the Assessment Year 2018-19 date of order 29.08.2025. The impugned order emanated from the order of the Assessment Unit Income Tax Department [hereinafter referred to as "Ld. AO"], order passed u/s. 270A of the Act, date of order 29.01.2025.
AY 2018-19 Merlyn Lenin Fernandes 2. Brief facts of the case is that the assesses case was framed u/s. 147 r.w.s. 144C of the Act. The assessee had sold an immovable property to Mr Ranjith Das Ramdas Nair for consideration of Rs. 80,00,000/-. The purchaser of the property had deducted TDS of Rs.3,29,600/- and deposited the tax amount through challan. However, the deductor had not filled Form No. 27Q and hence the credit is still not available for claim in Form No. 26AS. The assessee filed the return pursuing the notice u/s. 148 of the Act by declaring total income of Rs. 13,39,630/- under the head income from capital gain. The assessee claimed total TDS amount to Rs. 3,35,180/-. Only the TDS related to income from other sources was reflected in the Form No. 26AS amount to Rs. 5,580/-.The rest of the TDS amount to Rs. 3,29,600/- was not reflected in the Form No. 26AS. The assessee claimed that the said TDS was duly deducted by the purchaser of the immovable property, but the Form No. 27Q was filed by the said deductor. In assessment the Ld. AO, rejected the TDS claimed by the assessee amount to Rs. 3,29,600/- and the demand was raised. The Ld. AO issued notice u/s. 270A of the Act and the penalty was levied amount to Rs. 1,07,620/-. Being aggrieved assessee filed before Ld. CIT(A) by challenging the impugned penalty order. The Ld. CIT(A) rejected the assesse’s appeal. Being aggrieved the assessee filed an appeal before us.
The Ld. AR filed a paper book comprising pages 1 to 61, which has been taken on record. The Ld. AR submitted that TDS amounting to Rs.3,29,600/- had been duly deposited, and the challan evidencing such payment is placed at APB pages 56–57. It was contended that the said challan had also been furnished during the assessment proceedings. However, since the deductor had not filed Form No. 27Q, the corresponding TDS credit was not reflected in Form No. 26AS at the relevant time. It was argued that the lapse was attributable to AY 2018-19 Merlyn Lenin Fernandes the purchaser of the flat, resulting in hardship to the assessee. Subsequently, the purchaser filed Form No. 27Q, and the TDS credit is now duly reflected in Form No. 26AS. Thereafter, the assessee filed a rectification petition before the Ld. AO. Copies of the rectification petition are placed at APB pages 56 to 61. It was submitted that upon granting due credit of the said challan, no demand survives against the assessee. Accordingly, it was prayed that the penalty levied under section 270A amounting to Rs.1,07,620/- be deleted.
The Ld. DR relied upon the orders of the revenue authorities. However, no contrary material or specific rebuttal was placed on record to controvert the submissions advanced by the Ld. AR.
We have heard the rival submissions and perused the material available on record. It is evident that during the assessment proceedings, the assessee had claimed TDS of Rs.3,29,600/- in respect of the sale of immovable property. However, since the challan was not reflected in Form No. 26AS at that time, the Ld. AO rejected the TDS claim without undertaking any independent verification. Subsequently, Form No. 27Q was filed by the purchaser, and the TDS credit is now reflected in Form No. 26AS. The assessee thereafter filed a rectification petition before the Ld. AO, which remains pending with the department. The rectification request, supported by the challan paid by the purchaser, is placed at APB pages 58 to 61 and was filed on 02.09.2025. Admittedly, the rectification petition was filed after the passing of the impugned penalty order dated 29.01.2025 as well as the impugned appellate order dated 29.08.2025. The assessee has also placed on record the latest Form No. 26AS at APB pages 52 to 55, wherein the impugned TDS amount stands duly reflected. The Ld. DR has not raised any objection to the factual
AY 2018-19 Merlyn Lenin Fernandes submissions made by the Ld. AR. In view of the above factual matrix, we find that upon granting due credit of TDS amounting to Rs.3,29,600/-, no outstanding demand survives against the assessee. Consequently, the penalty levied under section 270A amounting to Rs.1,07,620/- is unsustainable and uncalled for. Accordingly, we set aside the impugned appellate order and direct deletion of the penalty levied under section 270A amounting to Rs.1,07,620/-.
In the result, appeal of the assessee bearing 6. allowed. Order is pronounced in the open court on 06.03.2026 Sd/- Sd/- BIJAYANANDA PRUSETH ANIKESH BANERJEE (ACCOUNTNAT MEMBER) (JUDICIAL MEMBER) Place: Mumbai Dated: 06.03.2026 Divya Ramesh Nandgaonkar Stenographer आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to: 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. आयकरआयु� / CIT 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरणDR, ITAT, Mumbai 5. गाड�फाईल / Guard file. स�ािपत�ित //True Copy// आदेशानुसार / BY ORDER,