Assessee wins appeal against TDS non-compliance under sections 194C, 201(1) and 201(1A) with proof of payment

The ITAT Agra allowed the assessee's appeal against proceedings under sections 201(1) and 201(1A) for alleged non-compliance of TDS provisions under section 194C. The assessee produced TDS payment challans, Form 27A, and Form 16A downloaded from TRACES for Q4 FY 2016-17, demonstrating TDS was deducted and deposited for payments to PNC Infratech Ltd. Since these documents were filed for the first time before ITAT, the tribunal directed the AO to verify the documents and grant appropriate credit for TDS and interest deposited by the assessee.

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Issues:
Assessment of assessee as assessee-in-default for non-deduction of TDS under Section 194C of the Income-tax Act, 1961.

Analysis:
The appeal arose from an order passed by the Assessing Officer holding the assessee as assessee-in-default for not complying with the provisions of Section 194C of the Income-tax Act, 1961. The assessee contended that TDS was duly deducted and deposited within the stipulated time. The Assessing Officer raised a demand of Rs. 4,99,030 against the assessee. The Commissioner of Income Tax (Appeals) affirmed the order of the Assessing Officer, stating that the assessee failed to provide verifiable proof of TDS deposit. The assessee then appealed to the ITAT, submitting documents for the first time, including challans, TDS returns, and Form 16A, to prove TDS compliance. The ITAT allowed the appeal, directing the AO to verify the newly submitted documents and grant appropriate credit for TDS and interest deposited by the assessee.

The ITAT observed that the assessee, engaged in road construction, failed to comply with notices issued by the AO and was treated as an assessee-in-default for non-deduction of TDS on subcontract payments. The CIT(A) dismissed the appeal due to lack of evidence substantiating TDS deposits. The ITAT, considering the new evidence submitted by the assessee, allowed the appeal and directed the AO to verify the documents and grant credit for TDS and interest deposited. The ITAT criticized the authorities for dismissing the assessee's contentions without utilizing available technology for verification, highlighting the unnecessary litigation costs incurred.

In conclusion, the ITAT allowed the appeal of the assessee, subject to verification of the newly submitted documents by the AO. The ITAT emphasized the need for authorities to utilize available technology for verification to avoid unnecessary litigation and costs.

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