TDS Demand on Amount Already Paid Tax Leads to Double Taxation: ITAT deletes Demand u/s 201(1) and 201(1A) of IT Act [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) deleted the demand of Tax deducted at source (TDS) on the amount already paid tax under sections 201(1) and 201(1A) of the Income Tax Act,1961 leading to double taxation.

Mrudulagauri Jaysukhlal Bhalodia, the appellant assessee was an individual deriving income from the partnership firm and income from other sources. The assessee filed an appeal against the order passed by the commissionerfor confirming the order of the assessing officer by treating himself (the assessee) as the assessee in default and raised the demand of an amount under the provisions of section 201(1) and 201(1)A of the Income Tax  Act,1961.

Shri Vimal Desai, the counsel for the assessee contended that both the parties of the partnership firm had paid due taxes and therefore, the assessee cannot be treated as the assessee in default under the proviso to section 201(1) of the Income Tax  Act,1961 and no demand along with the interest can be raised upon the assessee for non-deduction of Tax Deducted at Source(TDS).

Shri R.R Makwana, the counsel for the respondent supported the order of lower authorities.

The bench observed that the transferor of the land had paid taxes on the amount received from the assessee, but the receipt had not been disclosed in the income tax returnwhich raised the demand for non-deduction of TDS.

A single-member bench comprising of Shri Waseem Ahmed( Accountant) held that no demand can be raised under section 201(1) of the Income Tax Act,1961 while allowing the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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