ITAT Reopens Canara Bank ₹69.8 Lakh TDS Demand u/s 201(1) & 201(1A) for Fresh Review [Read Order]

In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Panaji Bench has reopened Canara Bank’s appeal against a ₹69.8 lakh demand raised under Sections 201(1) and 201(1A) of the Income Tax Act, 1961 for alleged lapses in Tax Deducted at Source(TDS) compliance and remanded the matter to the Commissioner of Income Tax (Appeals) for fresh adjudication.

The petitioner, Canara Bank’s Margao branch, was subjected to a tax survey under Section 133A of theIncome Tax Act in September 2017. The Income Tax Department alleged non-compliance with Tax Deducted at Source (TDS) provisions for financial years 2016–17 and 2017–18, and raised a demand of ₹69.8 lakh under Sections 201(1) and 201(1A).

The bank appealed against the order, but the CIT(A) dismissed the appeal, citing a lack of proper submissions despite the issuance of hearing notices.

Counsel for the bank argued that the delay in filing the appeal was due to year-end accounting pressures, statutory audits, and staff transfers. The bank only became aware of the impugned orders months later through internal follow-up and promptly initiated the appeal process. They submitted affidavits and email records to substantiate their claim, asserting that the delay was unintentional and not motivated by bad faith.

On the other hand, the department maintained that adequate opportunities were provided during the appellate proceedings and that the CIT(A)’s dismissal was justified due to non-compliance and lack of submissions from the bank.

After considering the submissions, the tribunal cited landmark Supreme Court judgments, including B. Madhuri Goud v. B. Damodar Reddy and Collector, Land Acquisition v. MST Katiji, to support a liberal and justice-oriented approach to condonation of delay. It noted that procedural technicalities should not override substantial justice, especially when the delay is supported by reasonable cause.

Also on merits, the tribunal noted that the CIT(A) had dismissed the appeal without fully considering the evidence and submissions provided by the bank. It held that denying a fair hearing would amount to a failure of justice.

The tribunal observed that “Whereas the assessee has raised grounds of appeal challenging the demand raised u/sec201&201(1A) of the Act and there could be various reasons for non submissions of clarifications and evidences which cannot be overruled.”

The bench of Pavan Kumar Gadale (Judicial Member )and GD Padmahshali(Accountant Member) condoned the delay and set aside the order of the CIT(A). It remitted the matter back to the CIT(A) with directions to provide Canara Bank a fresh opportunity to present its case and submit relevant documents.

Accordingly, the appeals were allowed for statistical purposes.

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