I bought a flat, deducted one per cent under s.194-IA, and CPC has hit me with a demand because the seller's PAN was not linked to Aadhaar. Is there a High Court decision I can put in front of the officer?
Yes. The Madras High Court disposed of a writ against exactly such a demand by holding that nothing survived for adjudication once Circular No. 6/2024 applied and the department had itself reprocessed the statement and reported no defaults. The judgment is worth having chiefly because it reproduces Circular No. 6/2024 in full, with its file number and date, which is otherwise hard to source.
Decided by the High Court (Krishnan Ramasamy J) on 2024-09-06, reported as W.P. No. 1457 of 2024 and W.M.P. Nos. 1481, 1482 and 1483 of 2024 (Madras High Court). It bears on section 206AA, section 206CC, section 194-IA, section 200A, section 154, section 139AA of the Income Tax Act 1961, in TDS Defaults, Demand, Recovery & Stay and Appeals matters.
Two things make this the most useful single document on the inoperative-PAN demand. First, it is a High Court judgment, and the reported Tribunal orders on the point are only persuasive. Second, and more practically, the judgment sets out the whole of Circular No. 6/2024 — F. No. 275/4/2024-IT(B), dated 23 April 2024 — including paragraph 3, in which the Board itself records that grievances were received from taxpayers receiving short-deduction and short-collection notices 'while carrying out the transactions where the PANs of the deductees/collectees were inoperative', and paragraph 4, in which it specifies the relief. That is the department's own acknowledgement, in its own words, that this is a systemic problem of its own making, and it is more effective in a reply than any argument of hardship. Note what the Court did NOT decide: the Senior Standing Counsel fairly submitted that the department would go by its own e-mail of 11 May 2024 reporting no defaults, and the Court disposed of the petition by directing the department to act in consonance with that e-mail. There is no ratio here on whether section 206AA can be applied to a deductor who could not have known; the case is authority for the circular's text and for the outcome where the circular applies, and should be cited for that and not for more.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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During the financial year 2023-24 the petitioner purchased a parcel of land for a total sale consideration of Rs.1,40,00,000. On 22 November 2023 he paid tax at one per cent to the credit of the Central Government for the credit of the vendor and submitted Form 26QB giving the particulars, including his own and the vendor's permanent account and Aadhaar numbers. The vendor had not linked his permanent account number with his Aadhaar number, so that under the notification of 28 March 2023 the petitioner was required to deduct at the higher rate; having deducted only one per cent, he was served with a demand notice dated 3 December 2023 by the Centralized Processing Cell – TDS. He filed a writ petition under Article 226 to quash it. His case was that he had linked his own permanent account number, that the failure was the vendor's, that he had been told by the vendor that the vendor's number was linked, and that he had no means of knowing otherwise. After the petition was filed the Board issued Circular No. 6 of 2024 dated 23 April 2024, and the department sent the petitioner an e-mail on 11 May 2024 stating that the regular statement for acknowledgement number AS13255141 had been reprocessed under section 154 read with section 200A and that no defaults had been identified. The vendor's Aadhaar number was subsequently linked with his permanent account number. The Senior Standing Counsel for the department fairly submitted that the department would go by its e-mail of 11 May 2024 and left it to the Court to pass appropriate orders.
The writ petition was disposed of with a direction to the respondent department to act in consonance with its e-mail dated 11 May 2024, no costs, and the connected miscellaneous petitions were closed. The Court held that in view of Circular No. 6 of 2024, under which for transactions entered into up to 31 March 2024 and where the permanent account number becomes operative on or before 31 May 2024 there is no liability on the deductor or collector to deduct or collect tax under section 206AA or section 206CC, together with the department's own e-mail reporting no defaults and its counsel's fair submission, nothing survived in the writ petition for any adjudication (para 5.4 and para 6).
The Court set out the sequence at paras 5 to 5.4. The petitioner had deducted at one per cent under the ordinary provision; because the vendor had not linked his number, the higher rate was attracted in terms of the notification of 28 March 2023, and that is what produced the demand. The Board then issued Circular No. 6 of 2024 in partial modification of and in continuation of Circular No. 3 of 2023, which the Court reproduced in full, and on perusing it the Court recorded that for transactions entered into up to 31 March 2024 and where the permanent account number becomes operative on or before 31 May 2024 there is no liability on the deductor or collector under section 206AA or section 206CC. The department had itself acted on that circular by reprocessing the statement and intimating that no defaults had been identified, and its counsel undertook that the department would proceed on that e-mail. On those facts the Court did not need to decide any contested question and disposed of the petition by holding the department to its own communication.
this Court is of the view that nothing survives in this Writ Petition for any adjudication
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Handle my notice → Ask a CA on WhatsAppYes. The Madras High Court disposed of a writ against exactly such a demand by holding that nothing survived for adjudication once Circular No. 6/2024 applied and the department had itself reprocessed the statement and reported no defaults. The judgment is worth having chiefly because it reproduces Circular No. 6/2024 in full, with its file number and date, which is otherwise hard to source. This was decided by the High Court (Krishnan Ramasamy J) and bears on section 206AA, section 206CC, section 194-IA, section 200A, section 154, section 139AA of the Income Tax Act 1961. It is reported as W.P. No. 1457 of 2024 and W.M.P. Nos. 1481, 1482 and 1483 of 2024 (Madras High Court). Two things make this the most useful single document on the inoperative-PAN demand. First, it is a High Court judgment, and the reported Tribunal orders on the point are only persuasive. Second, and more practically, the judgment sets out the whole of Circular No. 6/2024 — F. No. 275/4/2024-IT(B), dated 23 April 2024 — including paragraph 3, in which the Board itself records that grievances were received from taxpayers receiving short-deduction and short-collection notices 'while carrying out the transactions where the PANs of the deductees/collectees were inoperative', and paragraph 4, in which it specifies the relief. That is the department's own acknowledgement, in its own words, that this is a systemic problem of its own making, and it is more effective in a reply than any argument of hardship. Note what the Court did NOT decide: the Senior Standing Counsel fairly submitted that the department would go by its own e-mail of 11 May 2024 reporting no defaults, and the Court disposed of the petition by directing the department to act in consonance with that e-mail. There is no ratio here on whether section 206AA can be applied to a deductor who could not have known; the case is authority for the circular's text and for the outcome where the circular applies, and should be cited for that and not for more. If it applies to you, the first step is this: Use this judgment as your source for the text of Circular No. 6/2024 — quote paragraph 4 of the circular as reproduced at para 5.1 of the judgment, with the file number F. No. 275/4/2024-IT(B) and the date 23 April 2024.
During the financial year 2023-24 the petitioner purchased a parcel of land for a total sale consideration of Rs.1,40,00,000. On 22 November 2023 he paid tax at one per cent to the credit of the Central Government for the credit of the vendor and submitted Form 26QB giving the particulars, including his own and the vendor's permanent account and Aadhaar numbers. The vendor had not linked his permanent account number with his Aadhaar number, so that under the notification of 28 March 2023 the petitioner was required to deduct at the higher rate; having deducted only one per cent, he was served with a demand notice dated 3 December 2023 by the Centralized Processing Cell – TDS. He filed a writ petition under Article 226 to quash it. His case was that he had linked his own permanent account number, that the failure was the vendor's, that he had been told by the vendor that the vendor's number was linked, and that he had no means of knowing otherwise. After the petition was filed the Board issued Circular No. 6 of 2024 dated 23 April 2024, and the department sent the petitioner an e-mail on 11 May 2024 stating that the regular statement for acknowledgement number AS13255141 had been reprocessed under section 154 read with section 200A and that no defaults had been identified. The vendor's Aadhaar number was subsequently linked with his permanent account number. The Senior Standing Counsel for the department fairly submitted that the department would go by its e-mail of 11 May 2024 and left it to the Court to pass appropriate orders. The matter was decided on 2024-09-06 by the High Court (Krishnan Ramasamy J). On those facts the High Court held as follows. The writ petition was disposed of with a direction to the respondent department to act in consonance with its e-mail dated 11 May 2024, no costs, and the connected miscellaneous petitions were closed. The Court held that in view of Circular No. 6 of 2024, under which for transactions entered into up to 31 March 2024 and where the permanent account number becomes operative on or before 31 May 2024 there is no liability on the deductor or collector to deduct or collect tax under section 206AA or section 206CC, together with the department's own e-mail reporting no defaults and its counsel's fair submission, nothing survived in the writ petition for any adjudication (para 5.4 and para 6).
The Court set out the sequence at paras 5 to 5.4. The petitioner had deducted at one per cent under the ordinary provision; because the vendor had not linked his number, the higher rate was attracted in terms of the notification of 28 March 2023, and that is what produced the demand. The Board then issued Circular No. 6 of 2024 in partial modification of and in continuation of Circular No. 3 of 2023, which the Court reproduced in full, and on perusing it the Court recorded that for transactions entered into up to 31 March 2024 and where the permanent account number becomes operative on or before 31 May 2024 there is no liability on the deductor or collector under section 206AA or section 206CC. The department had itself acted on that circular by reprocessing the statement and intimating that no defaults had been identified, and its counsel undertook that the department would proceed on that e-mail. On those facts the Court did not need to decide any contested question and disposed of the petition by holding the department to its own communication. In the words reproduced by the source cited on this page: "this Court is of the view that nothing survives in this Writ Petition for any adjudication" The decision followed or applied CBDT Circular No. 6 of 2024, F. No. 275/4/2024-IT(B), dated 23 April 2024 — reproduced in full and applied; CBDT Circular No. 3 of 2023 dated 28 March 2023 — recited within Circular No. 6/2024; Notification No. 15 of 2023 dated 28 March 2023 substituting rule 114AAA — recited.
It was decided by the High Court on 2024-09-06 and is reported as W.P. No. 1457 of 2024 and W.M.P. Nos. 1481, 1482 and 1483 of 2024 (Madras High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 206AA, section 206CC, section 194-IA, section 200A, section 154, section 139AA, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was disposed of with a direction to the respondent department to act in consonance with its e-mail dated 11 May 2024, no costs, and the connected miscellaneous petitions were closed. The Court held that in view of Circular No. 6 of 2024, under which for transactions entered into up to 31 March 2024 and where the permanent account number becomes operative on or before 31 May 2024 there is no liability on the deductor or collector to deduct or collect tax under section 206AA or section 206CC, together with the department's own e-mail reporting no defaults and its counsel's fair submission, nothing survived in the writ petition for any adjudication (para 5.4 and para 6). It arises in TDS Defaults, Demand, Recovery & Stay and Appeals matters, on section 206AA, section 206CC, section 194-IA, section 200A, section 154, section 139AA of the Income Tax Act 1961, and was decided by Krishnan Ramasamy J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Before anything else, check the department's own portal and TRACES for a reprocessing intimation: here the demand evaporated because the statement was reprocessed under s.154 read with s.200A and 'no defaults have been identified'. Ask for reprocessing in terms rather than filing an appeal on merits. Plead and prove the two facts the circular turns on — that the transaction was entered into on or before 31 March 2024, and that the deductee's PAN became operative on or before 31 May 2024. Note that the Court made no finding on the second: para 5.3 records only that the vendor's Aadhaar was linked with his PAN 'subsequent to the purchase of the property', without a date, and the disposal rests on the department's own e-mail and its counsel's fair submission rather than on findings that the circular's conditions were satisfied. Where the department has already conceded in correspondence, put that correspondence at the front of the petition or appeal — the disposal here rests on the department's own e-mail and its counsel's fair submission, not on a contested finding. Do not read this case as deciding that a buyer is never liable for a seller's unlinked PAN. It decides nothing about a transaction outside the circular windows.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision citing this judgment has been found, and a search on the name returns only the judgment itself; no later treatment of what it says about s.206AA and inoperative permanent account numbers, and no Supreme Court matter, is on record here. Read the status with the nature of the disposal in mind. This is not a judgment that decides anything contested. The department had already reprocessed the statement under s.154 read with s.200A and had intimated that no defaults were identified, its counsel undertook that it would proceed on that communication, and the Court disposed of the petition by directing the department to act in consonance with its own e-mail. There is accordingly no ratio here on whether s.206AA can be applied to a deductor who had no means of knowing that the deductee's permanent account number was inoperative, and the case should not be cited for that. What it is worth is twofold. It is a High Court judgment, where the other authority on the point is at Tribunal level and only persuasive. And it sets out the whole of Circular No. 6 of 2024, which is the operative document: for transactions entered into up to 31 March 2024, where the permanent account number becomes operative on or before 31 May 2024, there is no liability on the deductor or collector to deduct or collect at the higher rate under s.206AA or s.206CC. Two limits follow from that. The relief is confined by those two dates, so a transaction after 31 March 2024, or a number that became operative after 31 May 2024, is outside the circular and outside this judgment. And the circular is a Board circular: it binds the Department but does not bind the courts, and it does not answer the question of liability where its conditions are not met. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment runs to six numbered paragraphs with sub-paragraphs 2.1 and 5.1 to 5.4, and the disposal is at paragraph 6. THREE DEFECTS IN THE REPORT a reader should know about. (1) At paragraph 2.1 counsel's submission is recorded as relying on 'Circular No.3 of 2023 dated 23.04.2024', which merges the number of one circular with the date of another; the Court states it correctly at paragraph 5.1 as 'Circular No.6 of 2024, dated 23.04.2024'. Anyone quoting paragraph 2.1 will cite a circular that does not exist. (2) The circular text as reproduced refers to 'section 139AAA of the Income-tax Act, 1961' where the Act says section 139AA — plainly a transcription slip in the report, and one to correct silently rather than reproduce. (3) Paragraph 5 records the year as 'the Financial Year 2023-24, i.e. relevant to the AY 2024-24', which should read assessment year 2024-25. THE PARTICULARS RECORDED IN THE JUDGMENT are these: consideration of Rs.1,40,00,000; tax deducted at one per cent and paid on 22 November 2023 in Form 26QB; the demand notice under challenge dated 3 December 2023, No. TDS/2023/AK13255141/D/100001442737; and the department's e-mail of 11 May 2024 reporting that the regular statement for acknowledgement number AS13255141 had been reprocessed under section 154 read with section 200A and that no defaults had been identified. The two acknowledgement numbers differ by a character between the demand notice and the e-mail as printed, which the judgment does not reconcile. WHAT THE ENTRY IS FOR. The judgment's value is that it reproduces Circular No. 6 of 2024 — F. No. 275/4/2024-IT(B), dated 23 April 2024 — in full, including paragraph 3, where the Board records that grievances were received from taxpayers receiving short-deduction and short-collection notices 'while carrying out the transactions where the PANs of the deductees/collectees were inoperative', and paragraph 4, which specifies the relief. The official court copy has not been opened independently, so the circular's wording should be checked against the Board's own copy before it is quoted in a proceeding. And the Court decided no contested question: the departmental counsel fairly submitted that the department would go by its own e-mail, and the petition was disposed of by holding the department to it. So the judgment is authority for the circular's text and for the outcome where the circular applies, and for nothing wider; there is no ratio in it on whether s.206AA can be applied to a deductor who could not have known that the deductee's number was inoperative, and a reply that cites it for that will be met on the facts. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was disposed of with a direction to the respondent department to act in consonance with its e-mail dated 11 May 2024, no costs, and the connected miscellaneous petitions were closed. The Court held that in view of Circular No. 6 of 2024, under which for transactions entered into up to 31 March 2024 and where the permanent account number becomes operative on or before 31 May 2024 there is no liability on the deductor or collector to deduct or collect tax under section 206AA or section 206CC, together with the department's own e-mail reporting no defaults and its counsel's fair submission, nothing survived in the writ petition for any adjudication (para 5.4 and para 6).
TaxSphere, “Srirangapattinam Desigan Srinivasan v DCIT (CPC-TDS)”, https://taxnotice.vittsphere.com/caselaw/case/srirangapattinam-desigan-srinivasan-v-dcit-cpc-tds-inoperative-pan-circular-6-2024/ (validity last checked 2026-09-08)
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CPC has raised a short-deduction demand on me because my payee's PAN was inoperative for want of Aadhaar linking. What exactly does an inoperative PAN do, and is there any Board relief?
The CIT(A) refused me the benefit of the PAN-Aadhaar circular because he said I was relying on the wrong circular. Is there a Tribunal order that simply directs the officer to apply the extended date?
I bought a flat and deducted 1 per cent under s.194-IA. CPC has raised a 20 per cent short-deduction demand because the seller's PAN was inoperative for want of Aadhaar linking. The seller has since linked it. Is there any way out?
Do I still have to run the compliance check and deduct at the higher non-filer rate, and does my client still have to collect TCS on his sales of goods?
