SUNDER DASS DUDEJA,FARIDABAD vs. ITO (INTERNATIONAL TAXATION), GURGAON
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the purchasers acted in good faith and were unaware of the seller's NRI status at the time of purchase. Since the seller had offered capital gains and paid taxes, there was no loss to the revenue. Therefore, the assessees could not be considered as assessees in default.
What were the facts?
The assessees, co-owners of a property, purchased it from an individual who later declared himself an NRI. The purchasers deducted TDS at 1% believing it to be the applicable rate, unaware of the seller's NRI status. The AO initiated proceedings for short deduction of TDS and levied interest under Section 201 and 201(1A).
What were the issues?
Whether interest under Section 201 and 201(1A) is leviable when purchasers deducted TDS in good faith at a lower rate due to ignorance of the seller's NRI status, and the seller has subsequently paid taxes on the capital gains.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘D’: NEW DELHI
Before: SHRI SAKTIJIT DEY & SHRI N.K. BILLAIYA
appeals by five different assessees preferred against the order of the CIT(A)-43, New Delhi, dated 21.05.2019 pertaining to A.Y. 2015-16 .- 1135/Del/2020 and 4 other appeals. Ajay Dudeja. 2. Since the underlying facts in the grievance are identical in the captioned appeals, these were heard together and are disposed of by this common order for the sake of convenience and brevity.
Facts on records shows that the captioned assessees were co-owners of an immovable property being Plot No.-25, Sector 21C, Urban Estate, Faridabad having 1/5th share each.
3.1 The said property was purchased by them vide sale deed No.- 10619 dated 27.10.2014 from Mr. Hardeep Singh, tax @ 1% was deducted at source from the consideration paid to Mr. Hardeep Singh.
3.2 When Mr. Hardeep Singh, filed his return of income, he mentioned his status as NRI which triggered the impugned proceedings as the AO was of the firm belief that the purchasers ought to have deducted tax at source @ 20% as per the relevant provision of the Act. Since tax was deducted at source @ 1% , impugned proceedings were initiated against the captioned assessee and the AO concluded the proceedings by charging interest under Section 201 and 201(1A) of the Act from the date on which such tax was deductible till the date of such tax was deducted and levied interest of Rs. 1,27,400/- on each of the captioned assessee. .- 1135/Del/2020 and 4 other appeals. Ajay Dudeja.
The order of the AO was challenged before the CIT(A) and the CIT(A) by way of separate appellate orders confirmed the charging of interest. Before us, the Counsel for the assessee furnished the tax details of Mr. Hardeep Singh and pointed out that Hardeep Singh has offered the capital gains on the sale such property and has paid taxes thereon.
Therefore, there is no loss to the Revenue. The DR strongly supported the order of the CIT(A) stating that charging of interest is mandatory and is automatic.
We have given a thoughtful consideration to the orders of the authorities below. When the captioned assessee purchased the impugned property from Mr. Hardeep Singh, they were unaware of the fact that the Mr. Hardeep Singh was an NRI nor this fact was disclosed by the seller.
The purchasers under the bonafide belief and in good faith deducted tax at source @ 1% which was the applicable rate on such transaction.
Therefore, it cannot be said that the purchasers wilfully deducted tax at a lower rate.
It is only when Mr. Hardeep Singh filed his return of income; the AO as well as the captioned assessees came to know that Mr. Hardeep Singh .- 1135/Del/2020 and 4 other appeals. Ajay Dudeja. was an NRI. Since the transaction was concluded earlier, therefore, the purchasers could not do anything.
Considering the peculiar facts of the case, we are of the considered view, that the impugned purchasers i.e. the five captioned assessee could not be considered as assessee in default and therefore in our considered view on the given facts of the case interest under provision of Section 201(1) & 201(1A) of the Act are not applicable. We therefore, direct the AO to delete the interest charged in the hands of the captioned assessees.
All the appeals are accordingly allowed.
In the result, appeals are allowed.
Order pronounced in the Open Court on 6.10.2023
More judgments on Section 201
- Sbi, (Erstwhile Sbbj), Baran vs ITO (TDS), KotaITA 143/JPR/2026[2017-18]Status: Disposed13 Oct 2026AY 2017-18
- Santosh Kumar Bhogi, Visakhapatnam vs Deputy Commissioner of Income-Tax…ITA 253/VIZ/2026[2023-24]Status: Disposed1 Oct 2026AY 2023-24
- Raj Construction, Vadodara vs The ITO, Ward TDS-2, VadodaraITA 327/AHD/2026[2018-19]Status: Disposed30 Sept 2026AY 2018-19
- Himanshusinhji Jyotendrasinhji Jadeja… vs DCIT/ACIT Circle-1(1), RKT, RajkotITA 325/RJT/2026[2018-19]Status: Disposed29 Sept 2026AY 2018-19
- Jagadish Panchal, Udaipur vs Additional Commissioner of Income Tax…ITA 314/JODH/2024[2016-17]Status: Disposed29 Sept 2026AY 2016-17
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