ITAT Delhi quashes TDS demand on lease rent to NOIDA under sections 201(1)/201(1A) citing bona fide belief

ITAT Delhi held in favor of assessee regarding TDS demand under sections 201(1)/201(1A) for non-deduction on lease rent paid to NOIDA Authorities. Tribunal found assessee acted with bona fide belief that lease rental payments were not subject to section 194-I provisions based on NOIDA's specific communications. Court determined Rajesh Projects judgment had prospective application only, making revenue's cause of action unavailable for AY 2012-13. Coordinate bench precedent supported similar relief. Impugned order quashed.

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Issues:
Challenge to proceedings under Section 201(1)/201(1A) for non-deduction of TDS on lease rent paid to NOIDA Authorities.
Validity of second round of proceedings under the same provisions of the Act without notice under Section 148 or 263.

Analysis:
The appeal pertains to challenges against orders of the Commissioner of Income Tax (Appeals) dated 29.06.2022 arising from orders passed by the Assessing Officer under Section 201(1)/201(1A) of the Income Tax Act, 1961 concerning A.Y. 2012-13. The appeal involves issues related to non-deduction of TDS on lease rent paid to NOIDA Authorities, leading to the demand raised on the assessee. The appellant contests the action of the AO and CIT(A), arguing that the first and second round of proceedings under Section 201(1)/201(1A) were unjustified, citing the judgment in Rajesh Projects (India) Pvt. Ltd. vs. CIT (TDS)-II & Ors. The appellant claims to have acted in good faith based on communications from NOIDA Authorities regarding the non-applicability of TDS provisions on lease rentals.

The appellant asserts that the order under Section 201(1)/201(1A) in the first round covered all defaults in TDS deduction, making the second round unnecessary without proper notice under Section 148 or 263. The Revenue, however, supports the First Appellate Order, citing the judgment in Rajesh Projects. After considering the submissions and evidence, the Tribunal finds merit in the appellant's arguments. It acknowledges the appellant's bona fide belief and the prospective nature of the judgment in Rajesh Projects, which limits its applicability to the relevant assessment year. The Tribunal also notes a similar relief granted in a Co-ordinate Bench decision, leading to the setting aside of the impugned orders under Section 201(1) and 201(1A) for A.Y. 2012-13.

In a related case, ITA No.1900/Del/2022, with identical issues, the Tribunal applies the same reasoning and quashes the order under Section 201(1)/201(1A) dated 25.03.2019. Consequently, both appeals of the assessee are allowed, providing relief in the matter. The Tribunal's decision is based on the appellant's good faith belief, the prospective nature of the relevant judgment, and the absence of a valid cause of action for the Revenue in the given assessment year.

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