Rs. 18.76 cr Disallowed for Non-Deduction of TDS u/s 194Q: ITAT Restores Matter to CIT(A) [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) restored the matter to the Commissioner of Income Tax (Appeals) [CIT(A)] in the matter, where a disallowance of Rs. 18.76 crore was made for non-deduction of Tax Deducted at Source ( TDS ) under section 194Q of Income Tax Act,1961.

Jakhad Enterprise LLP,appellant-assessee, filed its return of income on 30/09/2023, declaring total income of Rs.3,40,91,610/-. The return was processed under section.143(1) by CPC, and the total income was later revised to Rs.4,90,91,610/- with a tax liability of Rs.12,52,190/- vide intimation dated 09/01/2024.

The case was selected for scrutiny under CASS on the issue of large business purchases for which no TDS was deducted under section 194Q. The Assessing Officer, noting the assessee’s failure to provide the requested details despite multiple opportunities, passed an assessment order dated 21/01/2025 under section 143(3) read with section 144B, determining total income at Rs.23,67,10,338/- and making an addition/disallowance of Rs.18,76,18,728/- under section 40(a)(ia).

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The assessee challenged the order before the CIT(A), who, by order dated 30/07/2025, upheld the AO’s addition through an ex-parte order on the ground of non-compliance. The assessee then filed an appeal before the tribunal against the CIT(A) order.

The two member bench comprising Kavitha Rajagopal (Judicial Member) and Omkareshwar Chidara (Accountant Member) heard the parties and perused the record. The assessee counsel submitted that the CIT(A) had confirmed the disallowance of Rs.18,76,18,728/-, representing 30% of business purchases of Rs.62,53,95,763/-, on the ground of failure to deduct TDS under section 194Q.

The assessee counsel further contended that the appellant was prevented by sufficient cause from appearing before the CIT(A) and furnishing required details, and requested another opportunity to present its case.

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The departmental counsel opposed the request, relying on the orders of the lower authorities.

The appellate tribunal observed that the assessee had been non-compliant before both the AO and the CIT(A), and that the CIT(A) had upheld the disallowance ex-parte. Considering the submissions, the tribunal restored the issue to the file of the CIT(A) to provide the appellant one more opportunity to present its case, in line with natural justice.

The assessee was directed to cooperate fully without delay, and the CIT(A) was directed to decide the matter on merits, calling for a remand report from the AO if necessary, and to pass an order in accordance with law.

Accordingly the appeal was allowed.

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