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Facts
The Assessing Officer treated the assessee in default for non-deduction of TDS on payments totaling Rs. 15,96,467/-. The CIT(A) dismissed the assessee's appeal. The assessee submitted Form 26A certificates for certain payments and cited technical difficulties for non-submission earlier.
Held
The Tribunal admitted additional evidence, noting that Form 26A for payments to Niraj Pamwani and Maithili Pamwani were verified, thus deleting the demand and interest related to them. For payments to Mustafa Ahmed and Ravi Dogra, the 30% disallowance of expenditure was confirmed.
Key Issues
Whether the assessee can be treated as assessee in default for non-deduction of TDS, and if the fee under section 234E is applicable.
Sections Cited
201(1), 201(1A), 234E
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH MUMBAI
आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM:
This appeal filed by the assessee is directed against the order dated 17.09.2025 passed by the learned Additional/Joint Commissioner of Income Tax from the office of the Commissioner of Income Tax (Appeals), Kochi [hereinafter referred to as “CIT(A)”], under section 250 of the Income Tax Act, 1961[hereinafter referred to as “the Act”], arising out of the order dated 29.11.2024 passed by the Income Tax Officer, TDS Ward 1(1)(1), Mumbai [hereinafter referred to as “Assessing Officer or AO”], under sections 201(1), 201(1A) and 234E of the Act, for Assessment Year 2020–21.
Facts of the Case 2. The Assessing Officer passed an order under sections 201(1) and 201(1A) of the Act on 29.11.2024, treating the assessee as an assessee in default for alleged non-deduction of tax at source on certain payments made during the relevant previous year. The Assessing Officer raised the following demand:
Particulars Amount Tax payable under section 201(1) Rs. 1,59,646/- Interest under section 201(1A) Rs. 1,08,559/- Fee under section 234E Rs. 1,59,646/- Total demand Rs. 4,27,851/-
The Assessing Officer observed that the assessee failed to deduct tax at source on aggregate payments of Rs. 15,96,467/- and further
Aggrieved, the assessee carried the matter in appeal before the learned CIT(A). The learned CIT(A), vide order dated 17.09.2025, dismissed the appeal ex parte, holding that the assessee failed to comply with notices issued under section 250 of the Act and further upheld the action of the Assessing Officer on merits, confirming the entire demand of Rs. 4,27,851/-.
Against the said order of the learned CIT(A), the assessee is in appeal before us raising following grounds of appeal:
1. On facts, in circumstances of the case and in law, the learned Addl./Joint CIT-A in erred in confirming raising demand by AO of Rs. 1,59,646/ under section 201(1) of the Income Tax Act, 1961.
2. On facts, in circumstances of the case and in law, the learned Addl./Joint CIT-A in erred in confirming raising demand by AO of Rs. 1,08,559/- under section 201(1A) of the Income Tax Act, 1961.
3. On facts, in circumstances of the case and in law, the learned Addl./Joint CIT-A in erred in confirming raising demand by AO of Rs. 1,59,646/ under section 234E of the Income Tax Act, 1961.
6. During the course of hearing before us, the learned Authorised Representative(AR) of the assessee submitted a written application seeking admission of additional evidence under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963.
7. It was submitted that the assessee had inadvertently failed to deduct tax at source on the following payments totalling to Rs. 15,96,467/- :
Name of Payee Nature of Amount Paid TDS Payment Amount Niraj Pamwani Rent Rs. Rs. 90,500/- 9,00,500/- Maithili Rent Rs. Rs. 52,000/- Pamwani 5,20,000/- Mustafa Ahmed Fees Rs. Rs. 13,597/- 1,35,967/- Ravi Dogra Fees Rs. 40,000/- Rs. 4,000/-
It was explained that during the proceedings under section 201 as well as before the learned CIT(A), the assessee could not submit Form 26A certificates due to persistent technical difficulties on the TRACES portal, issues relating to DSC, Java, browser compatibility, and delays in coordination with the Chartered Accountants of the payees. It was submitted that the non-submission of Form 26A was neither deliberate nor intentional but was due to circumstances beyond the control of the assessee.
The learned AR submitted that the assessee has now successfully obtained and filed the following documents: i. Acknowledgement of Form 26A dated 16.01.2026;
ALI FASAL ii. Form 26A in respect of payments made to Shri Niraj Pamwani and Smt. Maithili Pamwani; iii. Form 26A-A certificates duly filed on the TRACES portal. 10. It was submitted that the said Forms 26A have already been verified by the Department and, therefore, the demand under section 201(1) and consequential interest under section 201(1A) in respect of the said two payees deserves to be deleted.
With respect to the remaining two payments made to Shri Mustafa Ahmed and Shri Ravi Dogra, the learned Authorised Representative submitted that the assessee has already disallowed 30 percent of the expenditure in the computation of income in accordance with the provisions of the Act and, therefore, to that extent the addition may be sustained and the Assessing Officer may be directed to recompute the liability.
As regards fee levied under section 234E, it was submitted that the assessee had filed the TDS return within the prescribed time and, therefore, levy of fee under section 234E is not applicable. The Assessing Officer was requested to verify the same and delete the fee levied.
The learned Departmental Representative, when confronted with the application for admission of additional evidence and the documents filed therewith, raised no objection to the admission of the same.We have considered the rival submissions, perused the orders of the authorities below and the material placed on record.
ALI FASAL 14. In view of the explanation furnished by the assessee and considering the fact that the additional evidence goes to the root of the matter, and further noting that the learned Departmental Representative has raised no objection, we admit the additional evidence filed by the assessee under Rule 29 of the ITAT Rules, 1963, in the interest of justice.
It is an admitted position that Form 26A certificates in respect of payments made to Shri Niraj Pamwani and Smt. Maithili Pamwani have now been filed and the same have already been verified by the Department. In such circumstances, the assessee cannot be treated as an assessee in default under section 201(1) of the Act in respect of the said payments. Consequently, the demand raised under section 201(1) and interest levied under section 201(1A) corresponding to these two payees is directed to be deleted.
As regards the payments made to Shri Mustafa Ahmed and Shri Ravi Dogra, it is noted that the assessee has already disallowed 30 percent of the expenditure in the computation of income, as submitted by the learned Authorised Representative. To this extent, the action of the Assessing Officer is confirmed, and the Assessing Officer is directed to recalculate the amount payable, if any, in accordance with law after giving effect to this order.
The assessee has contended that the TDS return was filed within the prescribed time and, therefore, levy of fee under section 234E is not applicable. In the interest of justice, we direct the Assessing Officer to verify the factual position regarding filing of the TDS return and, if it is found that the return was filed within time, the fee levied under section 234E shall be deleted.
In the result, the appeal filed by the assessee is partly allowed, with the above directions.
Order pronounced in the open court on 22.01.2026.