The assessees purchased a residential flat and deducted tax at source at 1% as mandated under section 194-IA after the vendor furnished his PAN, which was duly mentioned in Form 26QB and accepted by the Department’s system. The CPC-TDS passed orders alleging short deduction by invoking section 206AA on the ground that the vendor’s PAN was invalid. The High Court held that section 206AA was not attracted as the vendor had linked PAN with Aadhaar, paid the prescribed late fee and the PAN was accepted by the Department’s portal without any indication of invalidity. In absence of any failure to furnish PAN and without affording proper opportunity, the impugned orders were contrary to facts and violative of principles of natural justice and hence quashed.
Harsha Sunil Shah v. ACIT(2025) 478 ITR 413 (Mad)(HC). Sunil Navin Chandra Shah v. ACIT (2025) 478 ITR 413 (Mad)(HC).
S.206AA: Requirement to furnish Permanent Account Number-Deduction of tax at source-Immoveable property-Where purchasers deducted tax at source at 1% under section 194-IA on sale consideration and vendor had furnished PAN which was accepted by the Department’s portal, subsequent demand treating PAN as invalid and alleging short deduction at 20% under section 206AA was unjustified-PAN had been linked with Aadhaar and late fee paid by vendor-No failure on part of deductors-Orders passed without considering relevant material and in violation of principles of natural justice were quashed. [S.194-IA, Income-tax Rules, 1962 r.30(2A), Art.226
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