Penalty u/s 234E confirmed for delay in Form 26QB for TDS voluntarily deducted

Penalty / Late Fee u/s 234E confirmed for delay in filing Form 26QB for TDS voluntarily deducted u/s 194IA on purchase of property though it was an agricultural land

In a recent judgment, ITAT Ahmedabad confirmed penalty / Late fee u/s 234E for delay in filing TDS return Form 26QB for TDS voluntarily deducted u/s 194IA on purchase of property though it was an agricultural land and no TDS was required to be deducted.

ABCAUS Case Law Citation:
4383 (2025) (01) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) NFAC in confirming penalty/Late fee u/s 234E for late furnishing TDS Form No. 26QB towards TDS deducted on purchase of land u/s 194IA of the Income Tax Act, 1961 (the Act).

The case of the assessee was that of since the property purchased was an Agriculture Land which is out side the purview of provision of section 1941A of the Act, no penalty u/s 234E was justified when the assessee deducted TDS voluntarily.

The assessee had purchased an Agricultural land and voluntarily deducted TDS @ 1% under section 194IA of the Act. Since the property was agricultural land the assessee deposited TDS late and also filed Form 26QB late.

The CPC-TDS Ghaziabad processed the return of TDS and imposed the Late filing fee u/s. 234E of the Act in respect of delay in filing of Form 26QB for the relevant Assessment Year.

Before the Tribunal, the assessee submitted that he had jointly purchased the agricultural land and voluntarily deducting TDS @ 1% u/s 194IA of the Act on his share of purchase. It was submitted that as per the law, the TDS should not have been deducted as the land was an agricultural one. 

The assesse relied upon the decision of the Bench wherein the penalty imposed u/s 234E of the Act was cancelled by the Tribunal observing that the assessee was not liable to deduct any TDS u/s 194IA of the Act and when the assessee was not liable to deduct the TDS under the provision of the Act, no penalty u/s.271E of the Act can be imposed for late filing of TDS return.

On the other hand the Revenue contended that once the TDS had been deducted, the assessee was supposed to deposit the TDS amount within the time frame given by the statute of Income Tax, but the assessee failed to deposit the TDS within time as well as not filed Form 26QB within the stipulated/statutory period. Thus, there was failure on part of the assessee and the order passed u/s. 200A was correct.

The Tribunal opined that though the CIT(A) had observed that the claim that the land was an agricultural land had not been established through documents by the assessee. However, the fact remained that the assessee deducted the TDS at the time of paying consideration and not deposited the TDS within the statutory time which denied the credit to deductor for his tax purpose. The decision of the Tribunal relied upon by the assessee was not applicable as in the said case the TDS was deposited within time, only Form 26QB was filed late. But in the present assessee’s case the TDS was deposited belated as well as Form 26QB.  The purpose of depositing the TDS within the stipulated/statutory time is to allow the credit to the other party i.e. deductee, once it is deducted by the deductor.  But in the present case the deductee could not avail the same.

Accordingly, the Tribunal held that CPC-TDS had rightly imposed the penalty u. 234E of the Act.

In result, the appeal of the assessee was dismissed.

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