The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that income tax department has no power to recover Tax Deduction at Source (TDS) from vendor if vendee deducts tax at source for purchase of property.
Assessee-Rajesh Dadu is an individual and filed his return of income for the assessment year 2019-20 on 31.10.2019.
The assessee has sold a property named as PARADISE PEARL to Mr Pradeep Ramrakhyani for a total consideration of Rs.10,11,00,000/-.
While making the purchase consideration to the assessee, the Vendee/Agreement Holder Mr. Pradeep Ramrakhyani, has deducted TDS @ 1% of the sale consideration amounting to Rs. 10,11,000/- as per the provisions of Section 194IA of the Income Tax Act, 1961 as the consideration is in excess of Rs.50,00,000/- and paid the balance amount to the assessee.
Vendee Pradeep Ramrakhyani, has the duty to remit the TDS as per Form No 16B but he was not given the required form hence the assessee could not mention the tax amount in his Annual Tax Statement.
Without considering this CPC Bengaluru in the intimation under Section 143(1) did not give credit of Rs.10,11,000/- being the TDS under Section 194IA of the Act by Pradeep Ramrakhyan.
Aggrieved assessee filed an appeal before the CIT(A)-NFAC and the CIT (A) upheld the action of the CPC.
Against the order of CIT(A) assessee filed an appeal before the tribunal.
B. Radha Krishna, counsel for the assessee submitted that “As the tax was already deducted by the vendee from the assessee, the demand raised by the DCIT, CPC at Bangalore against the assessee is not correct and the same should be recovered from the Vendee Pradeep Ramrakhyani.”
Further, it was submitted that as per the provisions of Section .201 of the Income Tax Act, 1961, as the particulars of the Tax Deducted at Source for the said amount along with the complete address and PAN of the Vendee is already made available to the department in the return of income filed by the assessee under part ‘B’ of the ‘Schedule CG’ of Long Term Capital Gains.
Therefore, once the deductor has deducted the tax at source, the Department has no power to recover TDS amount from the deductee.
KPRR Murthy, counsel for revenue submitted that since no evidence whatsoever is available that the vendee has deposited the TDS amount of Rs.10,11,000/- therefore, no credit of the same can be allowed to the assessee.
After considering the contentions the tribunal held that “Revenue cannot deny the TDS credit to the assessee and the only option left for the Revenue is to proceed against the deductor by holding him to be an assessee-in-default”.
Therefore, the bench of R.K. Panda, (Accountant Member) and K. Narasimha Chary, (Judicial Member) allowed the appeal filed by the assessee.
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