Karmyogi Shankarraoji Patil SSK Ltd. Vs ACIT (ITAT Pune)
Pune ITAT Restores Section 40(a)(ia) Disallowance for Fresh Adjudication After Assessee Seeks Opportunity to Contest TDS Liability Under Section 194Q
The Pune ITAT held that, in the interest of substantial justice, the assessee deserved one more opportunity to contest the disallowance of ₹2.89 crore under section 40(a)(ia) arising from the alleged failure to deduct tax at source under section 194Q on purchases exceeding the prescribed threshold. The Tribunal noted that the Assessing Officer had disallowed 30% of purchases aggregating to ₹9.65 crore on the ground that the assessee had failed to deduct TDS at 0.1% under section 194Q, while the CIT(A) had merely affirmed the disallowance because the assessee, despite seeking adjournments, failed to furnish supporting submissions during the appellate proceedings. Accepting the assessee’s request for a fresh opportunity, the Tribunal set aside the order of the CIT(A) and restored the matter for de novo adjudication, directing the appellate authority to call for a remand report from the Jurisdictional Assessing Officer, permit the assessee to rebut the findings, and thereafter decide the issue in accordance with law after granting a reasonable opportunity of hearing.
FULL TEXT OF THE ORDER OF ITAT PUNE
The captioned appeal at the instance of assessee pertaining to A.Y. 2023-24 is directed against the order dated 07.11.2025 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment order dated 21.03.2025 passed u/s.143(3) r.w.s.144B of the Act.
2. The sole issue for our consideration is that whether ld.CIT(A) erred in confirming the disallowance made by the Assessing Officer u/s.40(a)(ia) of the Act at 2,89,72,480/-.
3. We have heard the rival submissions and perused the record placed before us. We notice that assessee is an Association of persons registered under the Maharashtra Cooperative Societies Act, 1960 and filed its return of income for A.Y. 2023-24 on 27.10.2023 declaring Nil income. Case selected for scrutiny through CASS followed by validly serving statutory notices for carrying out reassessment proceedings. In the course of assessment proceedings, after considering the submissions filed by the assessee, ld. Assessing Officer concluded the proceedings making disallowance u/s.40(a)(ia) of the Act for non deduction of tax at source u/s.194Q of the Act with regard to the purchase of goods, value of which exceeds Rs.50.00 lakh and that the tax @0.1% of such sum exceeding Rs.50.00 lakh is required to be deducted. Ld. Assessing Officer made disallowance for non-deduction of tax u/s.194Q of the Act at Rs.2,89,72,480/- being 30% of the purchase of Rs.9,65,74,932/-. Income assessed at Rs.2,89,72,840/-. We further observe that assessee preferred appeal before ld.CIT(A) but failed to respond to the notices of hearing on 18.07.2025, 23.09.2025, 08.10.2025. Assessee sought adjournment on two occasions however assessee did not file any details before ld.CIT(A) in support of its grounds of appeal and failed to discharge its Thus, ld.CIT(A) affirmed the action of the Assessing Officer.
4. Before us, ld. Counsel for the assessee has prayed for affording one more opportunity so that the details can be submitted even though ld. DR has strongly opposed the submissions, we in the larger interest of justice deem it appropriate to restore the issues raised in the instant appeal to the file of CIT(A) giving one more opportunity to the assessee. Needless to mention that ld.CIT(A) in the set aside proceedings shall afford reasonable opportunity to the assessee. Ld.CIT(A) shall call for a remand report from the ld. Jurisdictional Assessing Officer and after giving opportunity of rebuttal to the assessee, shall adjudicate the issues in accordance with law. 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 raised by the assessee are allowed for statistical purposes.
5. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 28th day of July, 2026.
