Nirav Mahendrabhai Tamboli Vs ITO (ITAT Panaji)
Panaji ITAT Remands ₹42.45-Lakh TDS Demand Computed on Gross Salary, Rent and Staff-Accommodation Payments
Summary: The assessee, a partnership firm engaged in the hotel business in Goa, challenged a demand of ₹42,45,351, comprising ₹23,07,236 under Section 201(1) for non-deduction of tax at source and ₹19,38,079 under Section 201(1A) as interest, for Assessment Year 2018-19.
The TDS Officer had issued a compliance notice under Section 133(6) on 16.11.2022. The assessee did not comply, stating that the hotel was not operational when the notices were issued. The Assessing Officer, based on information appearing in the balance sheet, computed the TDS liability on salary, rent and staff-accommodation payments. The CIT(A) subsequently passed an ex parte order confirming the demand after the assessee did not respond to notices fixed for 17.07.2025, 27.08.2025 and 24.10.2025.
Before the Tribunal, the assessee submitted that it could not respond to the notices due to bona fide and reasonable cause. On merits, it contended that the TDS liability had been calculated on the gross amounts of salary, rent and staff accommodation, whereas payment-wise details were available to establish that payments to individuals and accommodation providers did not exceed the applicable limits requiring deduction of tax at source. The assessee therefore sought another opportunity to furnish the relevant details.
The Tribunal first considered the 60-day delay in filing the appeal and, finding reasonable cause, condoned the delay and admitted the appeal for adjudication, relying upon the judgments of the Hon’ble Supreme Court in Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors., reported in (1987) 2 SCC 107, and Inder Singh Vs. State of Madhya Pradesh, judgment dated 21.03.2025, reported as 2025 INSC 382.
Without dwelling upon the merits, the Panaji ITAT granted one more opportunity and remitted the issues to the Assessing Officer (TDS Ward) for examination of the details and fresh adjudication in accordance with law. The Assessing Officer was directed to provide the assessee a reasonable opportunity of being heard. The assessee was also directed to provide updated email and contact details to the Department, remain vigilant and avoid adjournments unless required for reasonable cause.
The Tribunal set aside the impugned order and allowed the effective grounds of appeal for statistical purposes. The appeal was accordingly allowed for statistical purposes. The order was pronounced on 21.08.2026.
The assessee, a partnership firm operating a hotel in Goa, faced a demand of ₹42.45 lakh, comprising ₹23.07 lakh under Section 201(1) for alleged non-deduction of TDS and ₹19.38 lakh as interest under Section 201(1A).
The TDS Officer issued a notice under Section 133(6), but the assessee failed to respond, reportedly because the hotel was not operational at that time. Based solely on figures appearing in the balance sheet, the officer computed TDS liability on the gross amounts of salary, rent and staff-accommodation expenditure. The CIT(A) subsequently confirmed the demand through an ex parte order after further non-compliance.
Before the Tribunal, the assessee contended that payments to individual employees, landlords and accommodation providers did not cross the applicable monetary thresholds requiring TDS deduction and that documentary details were available to substantiate this position.
Without expressing any opinion on the merits, the Panaji ITAT set aside the impugned order and restored the entire matter to the TDS Officer for examination of the payment-wise details and fresh adjudication after giving the assessee a reasonable opportunity of being heard.
The Tribunal also condoned the 60-day delay in filing the appeal, finding that reasonable cause existed, while directing the assessee to provide updated contact details, remain vigilant and avoid unnecessary adjournments.
List of Cases Discussed / Relied Upon
- Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors.,(1987) 2 SCC 107 — relied upon for adopting a justice-oriented approach in condoning the 60-day delay in filing the appeal.
- Inder Singh Vs. State of Madhya Pradesh,judgment dated 21.03.2025, 2025 INSC 382 — relied upon while considering the assessee’s application for condonation of the 60-day delay.
FULL TEXT OF THE ORDER OF ITAT PANAJI
The captioned appeal at the instance of assessee pertaining to A.Y. 2018-19 is directed against the order dated 28.10.2025 framed by Addl/JCIT(A)-1, Pune arising out of Penalty Order dated 26.03.2025 passed u/s.201(1) & 201(1A) of the Income Tax Act, 1961 (in short ‘the Act’).
2. Registry has pointed out that the appeal is barred by limitation by 60 days in filing of appeal before this Tribunal.
The assessee has filed a condonation application along with an Affidavit stating the reasons for delay. Ld. Counsel for the assessee referring to the condonation petition prayed for condoning the delay of 60 days as ‘reasonable cause’ exists for not filing the appeal in time.
3. After hearing both the sides going through the averments made in the condonation petition, we find that due to ‘reasonable cause’ assessee was prevented from filing the appeal within the stipulated time. Therefore, taking justice oriented approach, the delay of 60 days occurred in preferring the appeal before this Tribunal is condoned placing reliance on the judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382 and admit the appeal for adjudication.
4. The grievance of the assessee is against the demand of Rs.42,45,351/- raised by the Ld. Income Tax Officer, TDS Ward for non- deduction of tax at source u/s.201(1) at Rs.23,07,236/- and interest payable u/s.201(1A) of the Act at Rs.19,38,079/-.
5. We have heard the rival contentions and perused the record placed before us. We observe that the assessee is a partnership firm engaged in the business of Hotel based in Goa. On account of alleged discrepancies, the respective Income Tax Officer, TDS Ward issued compliance notice u/s.133(6) to the deductor on 16.11.2022. There was no compliance from the side of assessee and the reason for the same is stated that Hotel was not running at the time when notices were issued. However, ld. Assessing Officer based on the information appearing in the balance sheet calculated shortfall of TDS not deducted on Salary, Rent, Staff Accommodation and calculated the TDS liability of Rs.23,07,236/- and also interest payable at Rs.19,38,079/-. Thereafter, assessee preferred appeal before ld.CIT(A) but again failed to respond to the notices fixed for hearing on 17.07.2025, 27.08.2025 and 24.10.2025 due to which ld.CIT(A) passed an exparte order confirming the action of the Assessing Officer.
6. Before us, ld. Counsel for the assessee submitted that due to bonafide and reasonable cause, assessee could not respond to the notices. He submitted that TDS liability deserves to be cancelled on account of the reason that ld. Assessing Officer has calculated the TDS liability on the gross amount of salary, rent and staff accommodation whereas the assessee possesses all the details to show that the payment to the individuals/accommodation are not exceeding the permissible limit which requires deduction of tax at source and therefore prayed for affording one more opportunity to go before ld. Assessing Officer to provide the details. Ld. Sr. DR supported the orders of the lower authorities.
7. Considering the factual matrix, prayer made by ld. Counsel for the assessee and without dwelling upon the merits of the case, we in the larger interest of justice grant one more opportunity and remit back the issues raised in the instant appeal to the file of ld. Assessing Officer (TDS Ward) for examination of the details and decide them in accordance with law. Needless to mention that ld. Assessing Officer (TDS Ward) in the set aside proceedings shall afford reasonable opportunity to the assessee. Assessee is directed to provide updated email id and contact detail to the department for receiving the notices from ITBA portal. Assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause. Impugned order is set aside and the effective grounds of appeal raised by the assessee is allowed for statistical purposes.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 21st day of August, 2026.
