Conner Institute of Health Care and Research Center (P.) Ltd. Vs DCIT (Delhi High Court)
Delhi High Court has quashed a notice issued under Section 201 of the Income Tax Act, 1961, to Conner Institute of Health Care and Research Center (P.) Ltd. The court found that the basis for initiating proceedings for failure to deduct or pay Tax Deducted at Source (TDS) was invalid, as the payee had obtained a certificate for deduction of tax at a lower rate. This ruling emphasizes that an allegation of TDS default must be substantiated and cannot proceed when a valid lower deduction certificate exists.
The petitioner, Conner Institute of Health Care and Research Center (P.) Ltd., challenged a notice dated March 19, 2021, issued under Section 201 of the Income Tax Act, 1961, pertaining to Financial Year (FY) 2015-16. The notice indicated it was for “verification under Section 201(1)/201(1A) of the Act and for furnishing details/information.”
The petitioner’s primary contention was twofold. Firstly, it argued that Section 201(1) of the Act does not contemplate proceedings akin to assessment proceedings for determining the obligation to deduct and deposit TDS. Secondly, and more critically, the petitioner asserted that there was no basis for initiating any proceedings for passing an order under Section 201(1) of the Act, as there had been no failure on its part to deduct and deposit TDS.
