TaxTMI 
TaxTMI 
2025 (8) TMI 685
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....egime without assigning proper reasons and justification. 3. The ADDL./JCIT (A)-2, Lucknow erred in confirming the passing of the order u/s 200A of the Act in quantifying the interest on "Short Deduction" to the tune of Rs. 22,800/- under TDS regime without assigning proper reasons and justification. 4. The ADDL./JCIT (A)-2, Lucknow failed to appreciate that having not shown the reasons for reckoning the appellant as a defaulter while quantifying the default of Short deduction and consequential interest there on while passing the order under Section 200A(1) of the Act, the disputed adjustment made in gross violation of principles of natural justice and fairness in taxation should be reckoned as bad in law. 5. The ADDL./JCIT (A)-2, Lucknow failed to appreciate that the reasons for the default under TDS regime were not examined and ought to have appreciated that in the absence of inbuilt mechanism for automatic issuance of the impugned order, the complete defiance of principles of natural justice would be explicit, there by vitiating the impugned order. 6. The ADDL./JCIT (A)-2, Lucknow failed to appreciate that the presumption of applicability of t....
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....the consequential assessment passed should be reckoned as bad in law. 13. The ADDL./JCIT (A)-2, Lucknow failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law." 2. The assessee is an individual. The assessee purchased the residential property at Chennai on 05.07.2023 from the family consisting of four co-owners including one co-owner who is a non-resident. The assessee while making the payment to resident individuals deduced tax at 1% and filed Form-26QB on 04.07.2023. The assessee also filed Form 27Q with regard to the payment to the non-resident co-owner where tax was deducted at 22.88% by the assessee. Subsequently, the assessee received an intimation under section 200A of the Act raising a demand of Rs. 22,80,000/- for short deduction of tax at source. Aggrieved the assessee filed further appeal before the FAA. Before the FAA the assessee submitted that TDS has been deducted correctly as per the provisions of section 194IA of the Act on the payments made to Mrs. Marathasmariam Pillai Scholastica one of the co-owners of the propert....
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.... the payment system did not throw any error with regard to the inactive status of the payee and therefore the assessee was not in a position to know that the payee has not linked the Aadhar and PAN and that her PAN is not inactive. The ld. AR drew our attention to the various Circulars issued by CBDT to submit that the date for compliance of linking PAN and Aadhar is extended in order to address the grievances raised by the tax payers with regard to receipt of notices intimating default of short deduction/collection of TDS / TCS while carrying out transactions where the PAN of the deductee were inoperative. The ld. AR argued that the intention is to ensure that the tax payer complies with the mandate of linking PAN and Aadhar and the intention is not to put undue hardship on the payer. The ld. AR further argued that the compliance as mandated by the various Circulars should be harmoniously interpreted keeping in mind the above intention of the legislature. The ld. AR further drew our attention to the fact that Mrs. Marathasmariam Pillai Scholastica has already filed the return of income including the gain on impugned transaction (page 28 to 67 of PB) and has claimed credit towards ....
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.... the PAN and Aadhar and one such consequence being deduction of tax at source at higher rate. Circular No.6 of 2024 dated 23.04.2024 stated that for transactions entered into up to 31.03.2024 if the PAN-Aadhar linking is completed by 31.05.2024 then the deductor will not face any consequences even if tax has not been deducted at a higher rate as prescribed for payees with inactive PAN. Circular No.9 of 2025 dated 21.07.2025 further relaxed the compliance for transaction entered into between 01.04.2024 to 31.07.2025 stating that there will not be any consequence in the hands of the payer if the payee updates the PAN-Aadhar linking by 30.09.2025. The circular also provides that for all transactions after 01.08.2025 there is a window of 2 months for the payer to update the PAN-Aadhar and in that case there will not be any consequence towards short deduction in the hands of the payer. The argument of the ld AR is that it is the spirit of the circular that needs to be looked into and it should be considered harmoniously while examining the compliance. In assessee's case the transaction happened before 31.03.2024 and according to Circular No.6, the assessee would get the relief from ....