2025 (2) TMI 399 - AT - Income Tax

CIT(A) exceeded jurisdiction directing AO re-compute TDS demand under Section 194C instead of 194I after HC quashed original order

Emaar India Limited Versus DCIT Circle- 74 (1), Delhi

ITAT Delhi held that CIT(A) exceeded jurisdiction by directing AO to re-compute TDS demand under Section 194C instead of 194I for External Development ... Validity order u/s 250 - TDS u/s 194C or 194I - payment of External Development Charges (‘EDC’) - demand u/s 201(1)/201(1A) - change the provision of law on which the assessment was made - order on Section 194C instead of Section 194I thereby changing the provision of law of the transaction basis which assessment/verification was concluded while passing the impugned order. HELD THAT:- As per the provision of Section 251 of the Act, the powers of CIT(A) in the Appeal filed under section 250 of the Act are co-terminus with that of the AO, due to which CIT(A) has power of enhancement of assessment and penalty and can also reduce the amount of refund which AO also can do. The said power can be exercised by the CIT(A) only when there is an existence of enforceable order of the AO and which should have been impugned before the CIT(A). When there is no existence of the Order of the AO, which has been quashed by the Hon'ble High Court, the question of exercising the power confirmed under section 251 of the Act doesn’t arise. In the present case the Ld. CIT(A) directed the AO to re-compute the demand raised considering the applicability of TDS rate of 2% as per Provisions of Section 194C of the Act by sitting on the Judgment of the Hon’ble Jurisdiction High Court wherein the Hon’ble High Court has quashed the very order of the AO dated 25/03/2022.Thus, Ld. CIT(A) committed grave error in directing the A.O. to re-compute the demand. Appeal of the Assessee is allowed. The present appeal was filed by the Assessee against the order of the Commissioner of Income Tax Appeals-23, Delhi for the Assessment Year 2015-16. The key issues raised in the appeal were related to the incorrect application of TDS provisions by the Ld. CIT(A) and the Assessee's liability to deduct TDS on payments made to the Director of Town and Country Planning ('DTCP') through Haryana Urban Development Authority ('HUDA').The Assessee contended that the Ld. CIT(A) erred in law by concluding the order on Section 194C instead of Section 194I, changing the provision of law on which the assessment was made. The Assessee also argued that the Ld. CIT(A) disregarded the decision of the Hon'ble ITAT of Chennai and the judgment of the Hon'ble High Court of Delhi, which dismissed the revenue's plea in the Assessee's case. Additionally, the Assessee challenged the Ld. CIT(A)'s decision to hold the Assessee liable to deduct TDS on EDC payments to DTCP through HUDA.The Ld. CIT(A) directed the Assessing Officer to re-compute the demand considering the applicability of TDS at the rate of 2% under Section 194C of the Act. The Assessee argued that the A.O.'s order had been quashed by the High Court, making the appeal in-fructuous. The Tribunal ruled that the Ld. CIT(A) committed a grave error in directing the A.O. to re-compute the demand based on the quashed order. Therefore, the Tribunal set aside the Ld. CIT(A)'s order and allowed the Assessee's appeal.In conclusion, the Tribunal held that the Assessee's appeal was allowed, and the order was pronounced on 7th February 2025.