The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) found that incorrectly entering a Tax Deduction Account Number (TAN) in a Tax Deduction Source (TDS) deposit Challan will not result in a demand under section 200A of the Income Tax Act, 1961.
The appeal was filed by the revenue against the order passed by the CIT(A) arised from the order of Assessing Officer (AO) under Section 200A(1) of the Income Tax Act, 1961 for the A.Y. 2014-15.
The assessee, TCIL Bina Toll Road Ltd, a subsidiary of Telecommunication Consultants India Ltd. (TCIL), a Government of India Undertaking under the administrative control of the Ministry of Communication.
The assessee company deducted TDS at a lower rate of 0.25% on payments made to its holding company, i.e, TCIL in compliance with the certificate furnished to it by the holding company.
However, the assessee-company at the time of depositing the TDS deducted inadvertently and wrongly mentioned TAN allotted by Delhi office, that is DELT10348C instead of TAN of Bina Madhya Pradesh Unit, that is BPLT01777G and filed its TDS return accordingly with its Delhi TAN.
Due to the inadvertent mistake in quoting TAN of a different unit, the Assessing Officer created a demand under section 200A of Income Tax Act alleging lesser deduction of tax on payments made to the holding company.
Aggrieved by the demand raised under Section 200A of the Act, the assessee preferred appeal before the CIT(A).
The bench observed that the CIT(A) found merit in the plea of the assessee on first principles towards inadvertent mistake in mentioning wrong TAN while applying lower percentage of tax rate under Section 194C of the Income Tax Act.
Further noted that the CIT(A) directed the AO to grant relief from the demand arising for wrong mention of TAN after due verification of facts.
The bench of Saktijit Dey (Judicial Member) and Pradeep Kumar Kedia (Accountant Member) observed that the order of the CIT(A) in granting relief to the assessee is founded on fair play and natural justice.
The authority found no error in relief granted by the CIT(A) to the assessee on equitable grounds.
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