Deepak Shrawan Budhia Vs CIT (ITAT Patna)
Section 263 Invoked for TDS Default on Freight: ITAT Patna Upholds Revisionary Order
The Patna Bench of the ITAT dismissed the assessee’s appeal and upheld the Principal CIT’s revisionary order u/s 263 for AY 2018-19, holding that the reassessment order passed by the AO was erroneous and prejudicial to the interests of the Revenue. The PCIT found that the AO, while completing reassessment u/s 147 r.w.s. 143(3) and 144B, failed to apply TDS provisions on freight payments and consequently did not invoke section 40(a)(ia), despite freight expenses of ₹16.66 lakh where TDS was admittedly deductible.
The Tribunal noted that the assessee itself conceded during arguments that TDS was liable on certain freight payments, and that the AO had ignored the statutory mandate while completing the assessment. In such circumstances, the PCIT was justified in invoking section 263 to direct fresh verification and recomputation, and the action did not amount to a mere change of opinion.
Accordingly, the ITAT found no infirmity in the PCIT’s order and dismissed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT PATNA
This is an appeal filed by the assessee against the order passed u/s 263 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Principal Commissioner of Income Tax, Patna-1 [hereafter “the Ld. Pr.CIT] dated 31.03.2025, DIN & order No. ITBA/COM/F/17/2024-25/1075332349(1) on the following grounds of appeal:
“1. For that, the order passed by The Learned Pr. Commissioner of Income Tax, Patna -1 is against the weight of facts, evidences on record and contrary to the law and circumstances of the case.
2. For that the learned The Ld. Pr. Commissioner of Income Tax has erred in invoking powers u/s 263 and passing order holding the order of assessment to be both erroneous and prejudicial to the interest of the revenue.
3. For that the learned Commissioner of Income Tax has erred in invoking powers u/s 263 and directing the AO to pass fresh assessment order.
4. For that, the order passed u/s 263 of the I.T. Act, 1961 on account of disallowance of expenditure on account of non-deduction of TDS on freight as per provisions of section 40(a)(ia) of the 1. T. Act, 1961 was passed without considering all provisions of Sec 147 and without considering its exemption provisions.
5. For that, the order was passed without considering that no single payment above Rs. 30,000/-or total payment exceeding Rs. 1,00,000/- was paid to a single party during FY 2017-18 other than two parties which have also submitted declaration for non deduction of TDS.
6. For that, the order was passed with a predetermined mindset. The Assessing Officer has totally ignored the evidence submitted at the time of hearing.
7. For that, any other grounds, if any, to be urged at the time of hearing, the order is otherwise bad in law and facts and fit to be quashed.”
2. At the outset, we noted that the appeal filed by the assessee is time barred by 68 days before the ITAT in this regard, the assessee has given explanation which is as under:
“Sub: Application for Condonation of Delay in filing of Appeal against the Order-in-Original bearing DIN & Order No. ITBA/COM/F/17/2024-25/1075332349(1) dated 31/03/2025
Dear Sir,
We have filed the Appeal against the Order-in-Original bearing DIN & Order No. ITBA/COM/F/17/2024-25/1075332349(1) dated 31/03/2025.
This Appeal is being filed on 07/08/25 but it should have been filed within 60 days by 31/05/2025 as per the normal period of limitation prescribed for filing of the Appeal. However, as our Chartered Accountant, CA Vikas Chhapolika was suffering from severe back issues since April onwards and he also had to undergo back surgery in the month of May due to which he was on bed rest for 2 months, the appeal could not be filed within due date.
My affidavit detailing the aforesaid facts is attached herewith. These may kindly be placed before the Hon’ble Appellate Tribunal for condonation of the delay in submission of the appeal.
We humbly request Your Honour to please register the Appeal as regular and allow us an opportunity of hearing on merits of the case in larger interest of justice.
Hoping for an early and favourable action.”
3. On going through the above condonation application, we noted that the assessee has “reasonable cause” for not filing appeal within the specified time, in the case of Collector, Land Acquisition vs Mst. Katiji, (1987) 167 ITR 171 (SC) the hon’ble Apex Court has observed that in case of not filling appeal within the specified period and the appellant had “reasonable cause” then the delay may be condoned. The same judgment was also relied by the assessee. We condone the delay and taking up for adjudication.
