TDS demand and interest cannot be restored on conjecture where specific default and liability are not established.

TDS demand and consequential interest under Sections 201(1) and 201(1A) could not be restored without establishing the specific default and the basis of liability. The appellate findings accepted that the alleged survey admission was not proved, substantial tax had already been deposited, the audit fee provision had been added back, no TDS was exigible on certain payments, and an estimated average-rate approach for expenditure-wise short deduction was unsupported. Interest could not survive once the principal demand was deleted. The Tribunal found no infirmity in these findings and sustained the deletion of the demand and interest.

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Issues: Whether the revenue was entitled to restore the TDS demand and interest raised under Section 201(1) and Section 201(1A) of the Income-tax Act, 1961, including the additions relating to alleged survey admission, audit fee provision, payments under Sections 194C and 194J, estimated expenditure-wise short deduction, and salary-related TDS defaults.

Analysis: The orders below found that the assessee had not admitted the alleged TDS liability during survey, had already deposited a substantial amount, and that the Assessing Officer had not explained how the disputed lump-sum liability arose or identified the precise accounts requiring deduction. The appellate authority also accepted that the audit fee provision had been added back in income, that no TDS was exigible on certain payments, that the estimated average-rate approach on expenditure was unsupported, and that interest could not survive where the principal demand itself was deleted. The Tribunal found no infirmity in these findings and noted that the revenue did not effectively rebut the appellate reasoning.

Conclusion: The deletion of the TDS demand and consequential interest was upheld; the revenue's challenge failed.

Final Conclusion: The appellate orders were sustained in full and the revenue's appeals for both assessment years stood dismissed.

Ratio Decidendi: A TDS demand and consequential interest under Section 201 can be sustained only when the Assessing Officer establishes the specific default and supporting basis of liability; where the appellate authority finds no proved short deduction or non-payment, the demand cannot be restored on conjecture or a lump-sum estimate.

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