Sanchit Gupta Vs DCIT (ITAT Delhi)
The ITAT Delhi restored to the Assessing Officer the issue relating to higher TDS demand raised under Section 206AA read with Rule 114AAA(3) due to non-linking of the seller’s PAN with Aadhaar. The assessee had purchased immovable property for Rs.30.60 lakh in August 2023 and deducted TDS at 1% under Section 194IA. However, since the seller’s PAN was inoperative owing to non-linking with Aadhaar, CPC-TDS applied TDS at 20% and raised a demand of Rs.5.87 lakh including interest under Section 200A. The Tribunal observed that statutory provisions required higher TDS where PAN remained inoperative and noted that the assessee was not eligible for relief under later CBDT extensions because the PAN was linked only in August 2024. At the same time, the Tribunal held that the department should have incorporated system-based alerts or red-flagging for inoperative PANs while filing Form 26QB. The Tribunal further observed that no higher TDS liability should be imposed if the seller had disclosed the property transaction in her income tax return and paid due taxes. The matter was remanded to the AO for fresh verification and adjudication.
Issue: Whether higher TDS under section 206AA read with Rule 114AAA(3) was applicable on purchase of immovable property where the seller’s PAN was inoperative due to non-linking with Aadhaar, and whether demand for short deduction could survive if the seller had already disclosed the transaction and paid taxes.
