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<h1>TDS assessment set aside after denying proper hearing opportunity and ignoring documentary evidence under sections 201(1) and 201(1A)</h1> <h3>Siby Mining and Infrastructure Private Limited Versus The Commissioner of Income Tax (TDS), Hyderabad.</h3> The Tribunal condoned a 181-day delay in filing appeal before CIT(A) and set aside the assessment order under sections 201(1) and 201(1A) of the Income ... Condonation of delay of 181 days in filing the appeal before CIT(A) - Whether CIT(A) has dismissed the appeal in limine without condoning the delay even though the assessee has sought for personal hearing through video conferencing to explain the case - assessee has submitted all the details. HELD THAT:- We find that, admittedly, CIT(A) has dismissed the appeal of assessee in limine without condoning the delay. The Assessing Officer also made the impugned addition without appreciating the relevant documents such as relevant quarterly returns along with challans and also party-wise TDS statements to prove TDS deduction on various payments including salary u/sec.192B, TDS on contract payments u/sec.194C, TDS on interest on loan u/sec.195 etc., made by the assessee. We, therefore, after considering the reasons given by the assessee, condone the delay of 181 days in filing the appeal before the learned CIT(A) and deem it fit and appropriate to remit the matter back to the file of Assessing Officer for fresh verification. The assessee is directed to file all the documents including relevant quarterly returns etc., to prove it’s case in consequential proceedings. Accordingly, the grounds of the assessee are allowed for statistical purposes. ISSUES PRESENTED AND CONSIDERED 1. Whether the delay of 181 days in filing the appeal before the first appellate authority should be condoned on the ground of 'sufficient and reasonable cause'. 2. Whether the assessment order recording short deduction of TDS and interest under sections 201(1) and 201(1A) is sustainable where the assessee had filed quarterly TDS returns, challans and party-wise TDS statements before the Assessing Officer but was allegedly not given a reasonable opportunity of hearing. 3. Whether the matter should be remitted to the Assessing Officer for fresh verification and adjudication where relevant records/evidence were available before the Assessing Officer but not considered. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Condonation of delay in filing appeal before the first appellate authority Legal framework: The appellate regime permits condonation of delay in filing appeals if sufficient and reasonable cause is shown; the question is whether the reasons presented justify such condonation to enable adjudication on merits. Precedent Treatment: No precedents were cited or applied by the authorities below in the impugned orders; the Tribunal did not rely on or distinguish earlier cases. Interpretation and reasoning: The Tribunal examined the reasons tendered for delay and weighed them against the interests of substantial justice. It noted that the first appellate authority dismissed the appeal in limine for want of condonation, despite the assessee having sought an opportunity (including by video-conference) and having set out documentary material relevant to the contested TDS computation. The Tribunal treated the denial of a hearing and the existence of prima facie documentary material as factors favouring relief from procedural default. Ratio vs. Obiter: Ratio - where a delay is explained and the appellant has presented prima facie material bearing on substantive issues, the Tribunal may condone delay to secure adjudication on merits. Obiter - the Tribunal's comments about adequacy of the reasons given by the assessee before the first appellate authority are contextual and not intended as a comprehensive test for condonation in other fact situations. Conclusion: Delay of 181 days in filing the appeal before the first appellate authority is condoned to enable disposal on merits and in the interest of substantial justice. Issue 2 - Validity of assessment for short deduction of TDS (sections 201(1) and 201(1A)) where TDS records were available Legal framework: Liability for short deduction and consequential interest under sections 201(1) and 201(1A) arises where tax is not deducted or not deposited as statutorily required; however, assessment must proceed after appreciation of relevant records and giving reasonable opportunity to explain and substantiate compliance. Precedent Treatment: No appellate jurisprudence was cited by the authorities; the Tribunal proceeded on the basis of fact-driven review of procedural fairness and evidentiary record. Interpretation and reasoning: The Tribunal found that on the date of survey under section 133A(2A) the assessee had produced quarterly returns, challans and party-wise TDS statements indicating deductions under sections 192B, 194C and 195. The Assessing Officer, however, proceeded to compute short deduction and interest without considering those documents and-according to the Tribunal-without affording an adequate opportunity for explanation. The Tribunal treated failure to consider available documentary evidence and absence of adequate hearing as infirmities warranting fresh adjudication rather than sustaining the substantive addition. Ratio vs. Obiter: Ratio - an assessment that imposes liability for short deduction of TDS without considering the taxpayer's contemporaneous TDS returns and challans and without providing adequate opportunity of hearing is unsustainable and warrants remand for fresh verification. Obiter - observations that the produced documents, once considered, will necessarily negate the addition are prospective and contingent on the Assessing Officer's fresh adjudication. Conclusion: The assessment for short deduction of TDS and interest under sections 201(1) and 201(1A) cannot be sustained on the existing record; the matter requires fresh verification after consideration of the quarterly returns, challans and party-wise TDS statements. Issue 3 - Remand to Assessing Officer for fresh verification and filing of documents Legal framework: When procedural defects or non-consideration of material evidence taint an assessment, appellate remand to the Assessing Officer for fresh consideration is an appropriate remedy to secure adjudication on merits. Precedent Treatment: No precedents were cited; the Tribunal exercised its adjudicatory discretion to remit for fresh verification consistent with principles of fair hearing and evidentiary examination. Interpretation and reasoning: Given the combined facts of (a) dismissal in limine by the first appellate authority without condoning delay, (b) the Assessing Officer having framed short-deduction liability despite contemporaneous TDS records being produced, and (c) the assessee's request for opportunity to be heard (including by video-conference), the Tribunal concluded that remand was necessary to enable the Assessing Officer to re-examine the material and afford a proper hearing. The Tribunal directed the assessee to file all relevant documents before the Assessing Officer in sequel to the remand. Ratio vs. Obiter: Ratio - where material evidence bearing on liability was filed but not appreciated and procedural opportunity was not afforded, remand for fresh verification is the appropriate remedy. Obiter - procedural directions about mode of hearing (e.g., video-conferencing) are ancillary guidance and not a binding rule of general application. Conclusion: The matter is remitted to the Assessing Officer for fresh verification and adjudication after allowing the assessee to place on record all relevant quarterly returns, challans and party-wise TDS statements; the appeal is allowed for statistical purposes to give effect to this remand.