Srirangapattinam Desigan Srinivasan 23A, Flat v. Deputy Commissioner Of Income Tax Centralized Processing Cell – Tdstds, Cpc, Aaykar Bhawan, Sector-3Vaishali, Ghaziabad,Uttar Pradesh

W.P.No.1457 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 06.09.2024 Coram The Honourable Mr.Justice Krishnan Ramasamy W.P.No.1457 of 2024andW.M.P.No.1481, 1482 & 1483 of 2024 Srirangapattinam Desigan Srinivasan 23A, Flat No.11Sri Sathyasai Baba Flats,Virugambakkam, Venkatesh Nagar Main Road,Chennai – 600 092. ...Petitioner Vs. Deputy Commissioner of Income Tax Centralized Processing Cell – TDSTDS, CPC, Aaykar Bhawan, Sector-3Vaishali, Ghaziabad,Uttar Pradesh- 201010. ...Respondent Prayer Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari to call for records contained inNoticedated03.12.2023bearing No.TDS/2023/AK13255141/D/100001442737 issued by the respondent to the petitioner and to quash the same as arbitrary. 1/11 W.P.No.1457 of 2024 For Petitioner: Mr.Suhrith Parthasarathy For Respondent : Mr.Dr.B.Ramaswamy Senior Standing Counsel Order The challenge in this Writ Petition is to the demand notice dated 03.12.2023 issued by the respondent-Income Tax Department and to quash the same. 2. Mr.Suhrith Parthasarathy, learned counsel appearing for the petitioner would submit that the petitioner has linked PAN with Aadhaar Number, only in the event, the petitioner has not linked his PAN with Aadhar Number, then, the petitioner is supposed to deduct TDS at the higher rate, which is well within the knowledge of the petitioner, in which case, the demand raised by the respondent is justifiable, whereas, in the present case, the petitioner's vendor has failed to link PAN with Aadhar Number, for which, the petitioner cannot be mulcted with any liability on behalf of the vendor, since, the petitioner had no occasion to come to know as to whether the vendor had linked his PAN with Aadhar Number, since the petitioner had reliably informed by the vendor that vendor' PAN was also 2/11 W.P.No.1457 of 2024 linked with Aadhaar Number, however, the petitioner to their shock and surprise, slapped with the impugned demand for the failure on the part of the petitioner to deduct TDS at the higher rate owing to the fault on the part of the petitioner's vendor in having failed to link PAN with Aadhar Number. 2.1 The learned counsel for the petitioner further submitted that though the impugned demand was justified by the respondent by stating that the demand is in terms of CBDT's notification No.15 of 2023 dated 28.03.2023, subsequent to that, based on the hardship expressed by the Public, the Income Tax Department vide Circular No.3 of 2023 dated 23.04.2024 clarified that for the transaction entered into upto 31.03.2024 and in cases, where, the PAN becomes operative, (as a result of linkage with Aadhaar) on or before 31.05.2024, there shall be no liability on the deductor/collector to deduct/collect the tax under Section 206 AA/206CC. Therefore, the learned counsel submitted that based on the said subsequent Notification, dated 23.04.2024, the respondent-Department also issued an e-mail to the petitioner dated 11.05.2024, stating that ''the statement has been reprocessed as a new payment via. subsequent payment challan or demand 3/11 W.P.No.1457 of 2024 payment challan as received after previous processing''. Hence, the learned counsel would submit that by virtue of the said subsequent Notification dated 23.04.2024, no demand would arise against the petitioner and further, subsequent to the purchase of the property, the Aadhaar Number of the petitioner's Vendor has also been linked with PAN, and hence, prays for setting aside the impugned demand. 3. Mr.Dr.B.Ramaswamy, learned Senior Standing Counsel for the respondent would fairly submit that the respondent-Department would go by their e-mail sent to the petitioner dated 11.05.2024, and therefore, left it open to the Court to pass appropriate orders. 3/11 W.P.No.1457 of 2024 payment challan as received after previous processing''. Hence, the learned counsel would submit that by virtue of the said subsequent Notification dated 23.04.2024, no demand would arise against the petitioner and further, subsequent to the purchase of the property, the Aadhaar Number of the petitioner's Vendor has also been linked with PAN, and hence, prays for setting aside the impugned demand. 3. Mr.Dr.B.Ramaswamy, learned Senior Standing Counsel for the respondent would fairly submit that the respondent-Department would go by their e-mail sent to the petitioner dated 11.05.2024, and therefore, left it open to the Court to pass appropriate orders. 4. I have given due considerations to the submission made by the lcp and lssc for respondent and perused the materials available on record. 5. The petitioner is an assessee on the files of the respondent under the Income Tax Act, 1961 (for short, I.T.Act). During the Financial Year 2023-24, i.e. relevant to the AY 2024-24, the petitioner purchased a parcel 4/11 W.P.No.1457 of 2024 of land for a total sale consideration of Rs.1,40,00,000/-; that while paying the said sale consideration, the petitioner paid TDS at 1% to the credit of the Central Government account-Income Tax Department for the credit of the vendor on 22.11.2023, and duly submitted Form 26QB, providing all the details, such as PAN, Aadhaar Numbers and the Vendor's PAN and Aadhaar Numbers. However, owing to the fault on the part of the petitioner's vendor, in failing to link his PAN with Aadhaar Number, the petitioner is supposed to deduct TDS at the higher rate in terms of CBDT's notification No.15 of 2023 dated 28.03.2023. However, since the petitioner has deducted TDS only at 1%, the present impugned demand has been raised. 5.1 However, based on the hardship expressed by the Public, the Income Tax Department as partial modification and in continuation of the Circular No.3 of 2023 dated 28.03.2023, vide Circular No.6 of 2024, dated 23.04.2024 clarified that for the transaction entered into upto 31.03.2024 and in cases, where, the PAN becomes operative, (as a result of linkage with Aadhaar) on or before 31.05.2024, there shall be no liability on the deductor/collector to deduct/collect the tax under Section 206 AA/206CC. 5/11 W.P.No.1457 of 2024 In this context, the said Notification dated 23.04.2024 is reproduced as under:- '''' Circular No. 6/2024 F.No. 275/4/2024-IT(B)Government of India Ministry of Finance Department of RevenueCentral Board of Direct TaxesDATED : 23.04.2024 Sub: Partial modification of Circular No. 3 of 2023 dated 28.03.2023 regarding consequences of PAN becoming inoperative as per rule 114AAA of the Income- tax Rules, 1962- reg. Circular No. 3 of 2023 dated 28.03.2023 issued by the Board details the consequences of PAN becoming inoperative as under: "Consequent to the notification substituting rule 114 AAA of the Income-tax Rules, 1962 (the Rules) vide notification no. 15 of 2023 dated 28th March, 2023, it is hereby clarified that a person who has failed to intimate the Aadhaar number in accordance with section 139AAA of the Income-tax Act, 1961 (the Act) read with rule 114AAA shall face the following consequences as a result of his PAN becoming inoperative: (i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him; 6/11 (ii) interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative; (iii) where tax is deductible under Chapter XVII-B in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA; (iv) where tax is collectible at source under Chapter XVII-BB in case of such person, such tax shall be collected at higher rate, in accordance with the provisions of section 206CC." (i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him; 6/11 (ii) interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative; (iii) where tax is deductible under Chapter XVII-B in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA; (iv) where tax is collectible at source under Chapter XVII-BB in case of such person, such tax shall be collected at higher rate, in accordance with the provisions of section 206CC." As per sub-rule (4) of rule 114AAA of the Income-tax Rules, 1962, the above consequences shall have effect from the date specified by the Board. The Board vide Circular No. 03 of 2023 dated 28th March, 2023 had specified that the consequences shall take effect from 1st July, 2023 and continue till the PAN becomes operative. 3. Several grievances have been received from the taxpayers that they are in receipt of notices intimating that they have committed default of 'short- deduction/collection' of TDS/TCS while carrying out the transactions where the PANS of the deductees/collectees were inoperative. In such cases, as the deduction/collection has not been made at a higher rate, demands have been raised by the Department against the deductors/collectors while processing of TDS/TCS statements under section 200A or under section 206CB of the Act, as the case maybe. 4 With a view to redressing the grievances faced by such deductors/collectors, the Board, in partial modification and in continuation of the Circular No. 3 W.P.No.1457 of 2024 of 2023, hereby specifies that for the transactions entered into upto 31.03.2024 and in cases where the PAN becomes operative (as a result of linkage with Aadhaar) on or before 31.05.2024, there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC, as the case maybe, and the deduction/collection as mandated in other provisions of Chapter XVII-B or Chapter XVII-BB of the Act, shall be applicable. 5.Hindi version to follow.'' 5.2 On perusal of the above Notification dated 23.04.2024, it is clear that for the transactions entered into upto 31.03.2024 and in cases, where, the PAN becomes operative (as a result of linkage with Aadhaar) on or before 31.05.2024, there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206C. 5.3 The learned counsel appearing for the petitioner submitted that subsequent to the purchase of the property, the Aadhaar Number of the Vendor has been linked with PAN. Thus, by virtue of subsequent Notification dated 23.04.2024, no demand could be raised against the petitioner, and the respondent, has, infact, also issued an e-mail dated 11.05.2024, to the petitioner, wherein, it is stated as follows;- 8/11 ''Mr/Ms/M/s.Srirangapattinam Desigan Srinivasan, Regular Statement for Acknowledgement Number AS13255141 filed by you through E-filing has been reprocessed by Income Tax Department (ITD) under Section 154 r.w.s 200 A and no defaults have been identified for this statement. The statement has been reprocessed as a new payment via. Subsequent payment chellan or demand payment challan as received after previous processing '' 8/11 ''Mr/Ms/M/s.Srirangapattinam Desigan Srinivasan, Regular Statement for Acknowledgement Number AS13255141 filed by you through E-filing has been reprocessed by Income Tax Department (ITD) under Section 154 r.w.s 200 A and no defaults have been identified for this statement. The statement has been reprocessed as a new payment via. Subsequent payment chellan or demand payment challan as received after previous processing '' 5.4 Thus, in view of the subsequent notification dated 23.04.2024, based on which, the respondent-Department also issued an e-mail to the petitioner on 11.05.2024 stating that, ''... no defaults have been identified for this statement and that the statement has been reprocessed as a new payment via. subsequent payment chellan or demand payment challan as received after previous processing,'' and the learned Senior Standing Counsel also made a fair submission that the respondent-Department would proceed by their e-mail dated 11.05.2024, this Court is of the view that nothing survives in this Writ Petition for any adjudication. 9/11 W.P.No.1457 of 2024 6. Accordingly, this Writ Petition is disposed of with a direction directing the respondent-Department to act in consonance with the e-mail sent by them to the petitioner dated 11.05.2024. No costs. Consequently, connected Miscellaneous Petitions are closed. 06.09.2024 sd Index : yes/noNeutral Citation : yes/no To Deputy Commissioner of Income Tax Centralized Processing Cell – TDSTDS, CPC, Aaykar Bhawan, Sector-3Vaishali, Ghaziabad,Uttar Pradesh- 201010. Krishnan Ramasamy,J., sd 10/11 https://www.mhc.tn.gov.in/judis 11/11 https://www.mhc.tn.gov.in/judis W.P.No.1457 of 2024 W.P.No.1457 of 2024 06.09.2024