Artha Real Estate Corporation Ltd. Vs DCIT (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT), Bangalore, examined an appeal filed by the assessee against the order of the National Faceless Appeal Centre (NFAC) dated 26.06.2025 for the assessment year 2018–19. The dispute arose from proceedings initiated under Section 201 of the Income Tax Act, 1961, wherein the assessee was treated as an “assessee in default” for failure to deduct tax at source (TDS) on certain transactions.
The assessee, engaged in the real estate business, had filed its tax audit report in Form 3CA. Based on this report, the Assessing Officer (AO) observed that TDS had not been deducted on certain expenses and on the purchase of land. Specifically, the AO found that the assessee had purchased land worth ₹4.81 crore but deducted TDS at 1% only on ₹1.43 crore under Section 194IA. A show cause notice was issued regarding the non-deduction of TDS on the remaining ₹3.38 crore. The assessee failed to provide satisfactory explanations and instead sought adjournment. Consequently, the AO treated the assessee as in default under Section 201. This decision was upheld by the CIT(A).
Before the Tribunal, the assessee argued that no TDS was required on the land purchase because the amount had been charged to the profit and loss account. It also contended that TDS obligations arise only when expenses crystallize and become payable, and not on mere provisions recorded in the books. The assessee further submitted that some provisions had been reversed in subsequent years, and TDS had been deducted and deposited later. It also raised procedural concerns, stating that the CIT(A) failed to consider additional evidence submitted during appellate proceedings.
