Failure to Deduct TDS on Expenses u/s 40(a)(ia): ITAT Sets Aside Ex Parte Order, Remands Matter for Fresh Adjudication [Read Order]
The tribunal held that justice should not be denied due to procedural lapses and remanded the matter for fresh adjudication, directing the to cooperate with the proceedings.
![Failure to Deduct TDS on Expenses u/s 40(a)(ia): ITAT Sets Aside Ex Parte Order, Remands Matter for Fresh Adjudication [Read Order]](https://images.taxscan.in/h-upload/2025/07/30/2070772-failure-deduct-tds-on-expenses-itat-ex-parte-order-remands-matter-fresh-adjudication-taxscan.webp "Failure to Deduct TDS on Expenses u/s 40(a)(ia): ITAT Sets Aside Ex Parte Order, Remands Matter for Fresh Adjudication [Read Order]")
The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) sets aside an ex parte order of the Commissioner of Income Tax (Appeals)[CIT(A)] in a case involving failure to deduct Tax Deducted at Source ( TDS ) on dumper hire charges, lease rent, and loan interest, which led to disallowance of expenses under Section 40(a) of Income Tax Act,1961.Complete GST Act & Rules with amendments made...
The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) sets aside an ex parte order of the Commissioner of Income Tax (Appeals)[CIT(A)] in a case involving failure to deduct Tax Deducted at Source ( TDS ) on dumper hire charges, lease rent, and loan interest, which led to disallowance of expenses under Section 40(a) of Income Tax Act,1961.
Anup Nayak ,appellant-assessee, was in the business of mining work and trading. For the financial year 2011-12, he neither deducted TDS on payments for dumper hire charges (₹8,42,365), lease rent (₹23,27,000) and loan interest (₹5,88,884), nor filed TDS returns.
The Assessing Officer (AO) disallowed these expenses under section 40(a) and raised a demand of ₹5,50,980 under sections 201(1) and 201(1A).
Nayak appealed to the CIT(A) but did not appear or file any documents, leading to an ex parte order that upheld the disallowance and demand. He then approached the tribunal, contesting the ex parte order and the additions.
When the appeal came up for hearing, no one appeared for the assessee despite notices from the Registry, so the bench heard the matter with the help of the Departmental Representative (DR).
The DR argued that the CIT(A) rightly passed an ex parte order as the assessee had not appeared or provided any evidence.
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The two member bench comprising Sonjoy Sarma (Judicial Member) and Rakesh Mishra (Accountant Member) heard the DR and reviewed the records. It noted that the CIT(A) passed an ex parte order because the assessee did not appear despite repeated notices.
The bench held that justice should not be denied due to such lapses and decided to give the assessee another chance.
It set aside the CIT(A)’s order dated 25.07.2023 and sent the matter back for fresh adjudication, directing the assessee to respond to notices and cooperate, failing which the case could again be decided ex parte. Accordingly the appeal of the assessee was allowed for statistical purposes.
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