TaxTMI 
TaxTMI 
2026 (8) TMI 1171
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....4, Chennai Order dated 28.03.2023 under sections 201(1) and 201(1A) 870/Jodh/2024 2012-13 Order dated 21.09.2022 passed by the CIT(A), NFAC Order dated 31.12.2018 under sections 201(1) and 201(1A) 872/Jodh/2024 2012-13 Order dated 06.06.2024 passed by the CIT(A), NFAC Penalty order dated 05.10.2020 under section 271C Condonation of delay in ITA No. 870/Jodh/2024 3. At the outset, it is noticed that ITA No. 870/Jodh/2024 has been filed belatedly. The assessee has filed an application seeking condonation of delay, supported by an affidavit of the Branch Manager of State Bank of India, Pal Link Road Branch, Jodhpur. It has been stated in the affidavit that the order dated 21.09.2022 passed by the learned CIT(A) came to the knowledge of the assessee only on 16.10.2024, when the Income Tax Officer contacted the branch regarding payment of the outstanding demand. The assessee has further explained that its TDS functions had been centralised with effect from 01.04.2017 and that the login credentials pertaining to TAN JDHS09836B were not available with the concerned branch. Consequently, the branch could not access the e-filing portal or ascertain the statu....
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....the Joint Commissioner of Income Tax (JCIT) or Additional Commissioner of Income Tax (ACIT). Therefore, the action of the AO is without legal authority, and the assessment order passed is invalid and unsustainable in law. 3. Without prejudice to the GOA-1 to 2, under the facts and circumstances, the Hon'ble CIT (Appeals) erred in confirming the order dated 28.03.2023, as the reference number (DIN) was affixed manually which is in violation of the CBDT Circular No.19/2019 dated 14th August, 2019. Thus, the proceedings and order were not in accordance to CBDT Circular and judicial pronouncements and therefore, the action of the Ld. A.O. was illegal and therefore deserves to be quashed or set aside. 4. Without prejudice to the GOA-1 to 3, under the facts and circumstances of the case the Ld. AO grossly erred in issuing a show-cause notice and initiating proceedings under Section 201(1) and 201(1A) of the Income Tax Act, 1961. Section 201 is a substantive provision that deals with the consequence of failure to deduct tax at source. It does not confer procedural powers to issue showcause notices or adjudicate such matters. Consequently, the entire proceedings are witho....
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....circumstances of the case the Ld. A.O. erred in initiating the proceedings against the bank as he was not the jurisdictional A.O. Thus, the proceedings initiated by the Ld. AO and the assessment concluded thereafter was illegal and void-ab in-itio and not a curable defect u/s 292BB therefore, the Order u/s-201/201(A) dated 31-12-2018 deserves to be set aside and quashed. 2. Without prejudice to the GOA-1, on the facts and circumstances of the case, the assessment u/s 201(1)/201(1A) can maximum be concluded within two years from the date of filing the return. The assessment completed on 31-12-2018 was time barred and void ab-initio. 3. Without prejudice to the GOA-1-2, under the facts and circumstances of the case, the Ld. AO erred in passing the assessment order on the assessee-in default (deductor bank) without generating the DIN. The order made by the Ld. A.O. was illegal and against the CBDT guidelines and judicial precedents. The action of the Ld. A.O. was unjustified and illegal and therefore, the same deserves to be quashed and set-aside. 4. Without prejudice to the GOA-1 to 3, under the facts and circumstances of the case, the Ld. AO erred in raisi....
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.....03.2015, 13.07.2015, 05.08.2015, 06.02.2018 and 28.02.2018 requiring the assessee to furnish Form No. 16 issued to the employee, a break-up of the reimbursed expenditure and an explanation as to why the assessee should not be treated as an assessee in default. According to the Assessing Officer, the required details were not furnished. The proceedings were, therefore, concluded on the basis of the material available on record. The Assessing Officer found that the employee had undertaken a journey to Port Blair through Kuala Lumpur and Bangkok. Out of the total reimbursement of Rs. 4,61,770/-, the Assessing Officer allowed Rs. 63,632/- as relating to travel within India and treated the balance amount of Rs. 3,98,138/- as taxable salary. The assessee was held to be an assessee in default for failure to deduct tax under section 192. The Assessing Officer computed the liability under section 201(1) at Rs. 82,017/- and interest under section 201(1A) at Rs. 67,253/-, resulting in an aggregate demand of Rs. 1,49,270/-. 7. The assessee carried the matter in appeal. The learned CIT(A) found that the first appeal had been filed with a delay of 131 days and declined to condone that delay.....
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....n the applicable service rules, circulars and interim orders passed in the proceedings instituted by the employees' associations. The assessee-bank had also been restrained from making recoveries from its employees. It was contended that the employees who had received and enjoyed the benefit of LFC were primarily liable to discharge the corresponding tax liability under sections 4 and 191 of the Act. Therefore, the assessee-bank could not mechanically be treated as an assessee in default under section 201(1) without examining whether the tax had been paid by, or could be recovered from, the concerned employees. 13. The learned AR further submitted that the controversy stood covered in favour of the assessee by the decisions of the Jaipur Bench of the Tribunal in the assessee's own case in State Bank of India v. ACIT/DCIT (TDS), ITA No. 728/JPR/2024, A.Y. 2014-15, order dated 07.01.2025, and State Bank of India v. JCIT holding charge of DCIT, Circle-TDS, ITA No. 1391/JPR/2024, A.Y. 2016-17, order dated 13.03.2025. It was submitted that in ITA No. 1391/JPR/2024, the coordinate Bench had considered an identical controversy concerning non-deduction of tax at source from LFC reimburs....
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....nd 201(1A). The coordinate Bench considered the respective obligations of the employer and employees under sections 4, 191, 192 and 201. The relevant findings recorded in paragraphs 7 and 8 of that order read as under: 7. The scheme of the assessment proceedings can't be equated with the scheme as envisaged in section 201(1) and 201(1A) of the Act. The liability of the deductor u/s. 201(1) of the Act is not automatic, the department must verify and bring on record, whether action against the beneficiary has been initiated and due taxes by them have been paid or not. If the deductee had paid taxes, this will automatically absolve the deductor and if not still, the deductee is liable to pay as per section 4 of the Act. 8.Without being prejudice to the above factual and legal observation, it is also brought to our notice (Before the Ld. CIT (A) also) that the SLP (C) No. 16734/2023 is pending before the Hon'ble Apex Court, wherein the Hon'ble Apex Court has restrained the deductor Bank from making any recovery from its beneficiary employees during the pendency of the SLP mentioned (supra). In this SLP Ld. Commissioner of Income Tax (TDS), Chennai is also a party as r....
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....for the purpose of deduction under section 192. In these circumstances, its compliance with the subsisting judicial direction could not constitute a failure attracting section 201(1). The subsequent determination of the substantive taxability of foreign-leg LFC does not retrospectively render the assessee an assessee in default for the period during which the interim direction remained operative. Consequently, the demand under section 201(1), as well as the corresponding interest under section 201(1A), cannot be sustained. 22. Judicial discipline requires consistency in adjudication, particularly where the controversy arises in the case of the same assessee and the material facts and statutory provisions are substantially the same. Respectfully following the decision of the coordinate Jaipur Bench in ITA No. 1391/JPR/2024, dated 13.03.2025, we hold that the assessee cannot be treated as an assessee in default on the basis adopted by the Assessing Officer in the present cases. 23. Accordingly, the orders passed under sections 201(1) and 201(1A) in ITA Nos. 52/Jodh/2025 and 870/Jodh/2024 are quashed and the corresponding demands are deleted. The substantive grounds concerning t....