Delhi ITAT Quashes TDS Demand, Says Dept. Cannot Invoke Multiple Provisions to Fasten Liability on EDC Payments to HUDA
Pranav B Prem
The Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘G’, has ruled that the Department cannot take advantage by citing multiple provisions of the Income Tax Act in show-cause notices when only one provision is finally invoked in the assessment order. The Tribunal held that fastening tax liability based on shifting statutory provisions is impermissible in law. As a result, the orders treating the appellant as an ‘assessee-in-default’ were quashed.
The Division Bench of Anubhav Sharma (Judicial Member) and Manish Agarwal (Accountant Member) considered two appeals filed by M/s Cogent Realtors Pvt. Ltd., a real estate company. The case originated from a survey under Section 133A conducted at the premises of the Haryana Urban Development Authority (HUDA) in February 2017. Based on information gathered during the survey, the Assessing Officer alleged that the appellant had paid External Development Charges (EDC) amounting to ₹9.40 crores to HUDA without deducting TDS.
Proceedings were initiated under Sections 201(1) and 201(1A), and the Assessing Officer issued show-cause notices invoking Section 194I. On a “without prejudice” basis, the notices also mentioned Section 194C, though the final orders relied solely on Section 194I to declare the appellant in default. The Commissioner (Appeals) upheld this approach, leading to the present appeals for Assessment Years 2014–15 and 2015–16.
Before the Tribunal, the appellant argued that Section 194I had no application to EDC payments and placed reliance on the decision of the Delhi High Court in DLF Home Panchkula Pvt. Ltd. v. JCIT (OSD) (459 ITR 773), where it was held that EDC paid to HUDA is not in the nature of rent and therefore does not attract Section 194I. The SLP against this judgment had been dismissed by the Supreme Court, lending finality to the legal position.
The Tribunal observed that while the show-cause notice mentioned both Sections 194I and 194C, the assessment orders categorically invoked only Section 194I to hold the appellant in default. The Bench noted that the Department cannot justify the assessment retrospectively by referring to an alternative provision when the concluded order applies only one statutory section. The Bench emphasised that the revenue authorities cannot “call for an advantage” by citing multiple provisions at the notice stage but fastening liability under only one in the final order.
On examining the impugned orders, the Tribunal found that Section 194I was exclusively relied upon at the stage of conclusion. Since the Delhi High Court has conclusively held that Section 194I does not apply to EDC payments made to HUDA, the Tribunal concluded that the demand could not be sustained. The Bench rejected the Department’s contention that reference to Section 194C in the notice cured the defect, as the assessment order itself was grounded solely in Section 194I.
Holding that the Department cannot shift positions between Sections 194I and 194C, and that Section 194I is inapplicable to EDC payments, the Tribunal allowed both appeals. The orders treating the appellant as an ‘assessee-in-default’ were quashed in their entirety.
Appearance
Assessee by: Shri S.S. Nagar, CA
Revenue by: Shri Manish Gupta, Sr. DR
Cause Title: M/s Cogent Realtors Private Limited V. Joint Commissioner of Income Tax
Case No: ITA Nos.1656 and 1657/Del/2025
Coram: Anubhav Sharma (Judicial Member), Manish Agarwal (Accountant Member)
