The TDS officer says I should have deducted under section 194-IA on land I bought, and has applied twenty per cent under section 206AA because the farmer-sellers had no PAN. The land is agricultural. Does that answer the demand?
Yes, if you can prove the land is rural agricultural land. The Tribunal dismissed the Revenue's appeal and upheld the deletion of a Rs 1,69,34,640 demand, holding that the lands qualified as rural agricultural land and fell outside the scope of section 194-IA, so the assessee could not be treated as an assessee in default under section 201(1) and the section 201(1A) interest was not sustainable either.
Decided by the ITAT (Dr. B.R.R. Kumar, Vice-President and Ms Suchitra Kamble, Judicial Member (order per Dr. B.R.R. Kumar, Vice-President), Income Tax Appellate Tribunal, 'B' Bench, Ahmedabad) on 2026-03-26, reported as I.T.A. No. 2549/Ahd/2025; Assessment Year 2015-16; date of hearing 17 February 2026, order pronounced 26 March 2026. It bears on section 194-IA, section 201(1), section 201(1A), section 206AA, section 2(14), section 143(3), section 250 of the Income Tax Act 1961, in TDS Defaults, Evidence & Burden of Proof and Capital Gains matters.
Section 194-IA is expressed not to reach agricultural land, and Explanation (a) defines that by reference to items (a) and (b) of section 2(14)(iii) — the distance-and-population test. This decision shows how that test is won and lost on evidence, and it is a Revenue-side loss on the evidential burden rather than on construction. The Assessing Officer had aggregated the consideration across buyers and sellers, applied section 206AA at twenty per cent for want of PAN, and made no field verification of the nature or location of the land. The Commissioner (Appeals) accepted certificates from the Gandhinagar Urban Development Authority and the revenue Talati together with census population figures; the Tribunal held that the Assessing Officer had brought no authenticated distance measurement or certificate to displace those findings, so the factual finding could not be disturbed. It also refused to remand on the Revenue's Rule 46A objection, because the material relied on was official documents issued by competent authorities and the Revenue had shown no prejudice. That combination — official distance certificate plus census population plus an Assessing Officer who did nothing — is the template.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, an individual, filed a return declaring total income of Rs 3,30,16,670 for AY 2015-16, and the assessment under section 143(3) was completed on 28 December 2017 without any addition or adverse observation about his purchases of immovable property. Proceedings under sections 201 and 201(1A) were later initiated by the TDS Officer on the footing that he had failed to deduct tax under section 194-IA on the purchase of certain land parcels — five parcels in the villages of Basan, Palaj and Sargasan. The Assessing Officer held that the total consideration exceeded Rs 50 lakh, treated the assessee as an assessee in default, and by order dated 29 March 2022 raised a demand of Rs 1,69,34,640 including interest; he also invoked section 206AA to apply a twenty per cent rate because certain sellers had not quoted PAN. The Commissioner (Appeals) (Addl/JCIT(A)-2, Pune), by order dated 31 October 2025, held that section 194-IA did not apply and deleted the demand, relying on certificates of the Gandhinagar Urban Development Authority and the revenue Talati that the lands were agricultural and lay beyond the prescribed distance from the nearest municipal limits, and on the line of Tribunal decisions holding the threshold to operate per buyer-seller combination. On the Revenue's own grounds as reproduced by the Tribunal, the distances in issue were eight kilometres from the nearest local limit of the Ahmedabad Municipal Corporation (Motera and Chandkheda, brought into that Corporation by the notification dated 17 January 2008) and six kilometres from the nearest local limit of the Gandhinagar Municipal Corporation (constituted by the notification dated 16 March 2010, its Census 2011 population being more than one lakh). The Revenue appealed on three grounds: violation of Rule 46A in admitting additional evidence, error in accepting the Junior Town Planner's letter as to the nature of the property, and failure to consider Urban Development Department notifications of 17 January 2008 and 16 March 2010 bearing on the nearest municipal limits.
The appeal filed by the Revenue was dismissed. Ground 1 (Rule 46A) failed because the evidence relied on consisted of official documents issued by competent authorities, no prejudice had been shown, and the issue could be decided on the material on record (paragraph 6.1). Grounds 2 and 3 failed because the Assessing Officer had carried out no independent verification and brought no conclusive or authenticated evidence to show that the lands fell within the prescribed distance, so the Commissioner (Appeals)'s factual finding could not be disturbed; consequently the lands qualify as rural agricultural land and fall outside the scope of section 194-IA (paragraphs 7.1, 7.2 and 8.1). Since the lands are agricultural and outside section 194-IA, the assessee cannot be treated as an assessee in default under section 201(1) and the interest charged under section 201(1A) is also not sustainable (paragraph 9).
On Rule 46A the Tribunal accepted that the Commissioner (Appeals)'s order does not record a remand report having been called for, but held that the certificates of the Gandhinagar Urban Development Authority and other revenue authorities are official documents issued by competent authorities, that the Revenue had not shown any specific prejudice from their admission, and that the evidences go to the root of the matter, so no purpose would be served by restoring the appeal on a procedural ground (paragraph 6.1). On the merits it held that the Commissioner (Appeals) had based his conclusion on official certificates, revenue records and census data, that the Assessing Officer had carried out no independent verification and produced nothing conclusive, and that reliance on another communication was not sufficient to dislodge a factual finding in the absence of proper verification or corroborative evidence (paragraphs 7.1 and 7.2). On the notifications relied on by the Revenue, the Tribunal held that the Commissioner (Appeals) had taken the population criterion and the distance from municipal limits into account on official certificates and records, and that the Revenue's contention remained unsupported by any authenticated distance measurement or certificate (paragraph 8.1). The section 201 consequence followed from the absence of any obligation (paragraph 9).
Consequently, the lands qualify as rural agricultural land and fall outside the scope of section 194-IA.
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Handle my notice → Ask a CA on WhatsAppYes, if you can prove the land is rural agricultural land. The Tribunal dismissed the Revenue's appeal and upheld the deletion of a Rs 1,69,34,640 demand, holding that the lands qualified as rural agricultural land and fell outside the scope of section 194-IA, so the assessee could not be treated as an assessee in default under section 201(1) and the section 201(1A) interest was not sustainable either. This was decided by the ITAT (Dr. B.R.R. Kumar, Vice-President and Ms Suchitra Kamble, Judicial Member (order per Dr. B.R.R. Kumar, Vice-President), Income Tax Appellate Tribunal, 'B' Bench, Ahmedabad) and bears on section 194-IA, section 201(1), section 201(1A), section 206AA, section 2(14), section 143(3), section 250 of the Income Tax Act 1961. It is reported as I.T.A. No. 2549/Ahd/2025; Assessment Year 2015-16; date of hearing 17 February 2026, order pronounced 26 March 2026. Section 194-IA is expressed not to reach agricultural land, and Explanation (a) defines that by reference to items (a) and (b) of section 2(14)(iii) — the distance-and-population test. This decision shows how that test is won and lost on evidence, and it is a Revenue-side loss on the evidential burden rather than on construction. The Assessing Officer had aggregated the consideration across buyers and sellers, applied section 206AA at twenty per cent for want of PAN, and made no field verification of the nature or location of the land. The Commissioner (Appeals) accepted certificates from the Gandhinagar Urban Development Authority and the revenue Talati together with census population figures; the Tribunal held that the Assessing Officer had brought no authenticated distance measurement or certificate to displace those findings, so the factual finding could not be disturbed. It also refused to remand on the Revenue's Rule 46A objection, because the material relied on was official documents issued by competent authorities and the Revenue had shown no prejudice. That combination — official distance certificate plus census population plus an Assessing Officer who did nothing — is the template. If it applies to you, the first step is this: Get the distance certificate from the development authority or the competent town planning authority, stating the aerial distance from the local limits of each relevant municipality or cantonment board, and get it for every land parcel separately.
The assessee, an individual, filed a return declaring total income of Rs 3,30,16,670 for AY 2015-16, and the assessment under section 143(3) was completed on 28 December 2017 without any addition or adverse observation about his purchases of immovable property. Proceedings under sections 201 and 201(1A) were later initiated by the TDS Officer on the footing that he had failed to deduct tax under section 194-IA on the purchase of certain land parcels — five parcels in the villages of Basan, Palaj and Sargasan. The Assessing Officer held that the total consideration exceeded Rs 50 lakh, treated the assessee as an assessee in default, and by order dated 29 March 2022 raised a demand of Rs 1,69,34,640 including interest; he also invoked section 206AA to apply a twenty per cent rate because certain sellers had not quoted PAN. The Commissioner (Appeals) (Addl/JCIT(A)-2, Pune), by order dated 31 October 2025, held that section 194-IA did not apply and deleted the demand, relying on certificates of the Gandhinagar Urban Development Authority and the revenue Talati that the lands were agricultural and lay beyond the prescribed distance from the nearest municipal limits, and on the line of Tribunal decisions holding the threshold to operate per buyer-seller combination. On the Revenue's own grounds as reproduced by the Tribunal, the distances in issue were eight kilometres from the nearest local limit of the Ahmedabad Municipal Corporation (Motera and Chandkheda, brought into that Corporation by the notification dated 17 January 2008) and six kilometres from the nearest local limit of the Gandhinagar Municipal Corporation (constituted by the notification dated 16 March 2010, its Census 2011 population being more than one lakh). The Revenue appealed on three grounds: violation of Rule 46A in admitting additional evidence, error in accepting the Junior Town Planner's letter as to the nature of the property, and failure to consider Urban Development Department notifications of 17 January 2008 and 16 March 2010 bearing on the nearest municipal limits. The matter was decided on 2026-03-26 by the ITAT (Dr. B.R.R. Kumar, Vice-President and Ms Suchitra Kamble, Judicial Member (order per Dr. B.R.R. Kumar, Vice-President), Income Tax Appellate Tribunal, 'B' Bench, Ahmedabad). On those facts the ITAT held as follows. The appeal filed by the Revenue was dismissed. Ground 1 (Rule 46A) failed because the evidence relied on consisted of official documents issued by competent authorities, no prejudice had been shown, and the issue could be decided on the material on record (paragraph 6.1). Grounds 2 and 3 failed because the Assessing Officer had carried out no independent verification and brought no conclusive or authenticated evidence to show that the lands fell within the prescribed distance, so the Commissioner (Appeals)'s factual finding could not be disturbed; consequently the lands qualify as rural agricultural land and fall outside the scope of section 194-IA (paragraphs 7.1, 7.2 and 8.1). Since the lands are agricultural and outside section 194-IA, the assessee cannot be treated as an assessee in default under section 201(1) and the interest charged under section 201(1A) is also not sustainable (paragraph 9).
On Rule 46A the Tribunal accepted that the Commissioner (Appeals)'s order does not record a remand report having been called for, but held that the certificates of the Gandhinagar Urban Development Authority and other revenue authorities are official documents issued by competent authorities, that the Revenue had not shown any specific prejudice from their admission, and that the evidences go to the root of the matter, so no purpose would be served by restoring the appeal on a procedural ground (paragraph 6.1). On the merits it held that the Commissioner (Appeals) had based his conclusion on official certificates, revenue records and census data, that the Assessing Officer had carried out no independent verification and produced nothing conclusive, and that reliance on another communication was not sufficient to dislodge a factual finding in the absence of proper verification or corroborative evidence (paragraphs 7.1 and 7.2). On the notifications relied on by the Revenue, the Tribunal held that the Commissioner (Appeals) had taken the population criterion and the distance from municipal limits into account on official certificates and records, and that the Revenue's contention remained unsupported by any authenticated distance measurement or certificate (paragraph 8.1). The section 201 consequence followed from the absence of any obligation (paragraph 9). In the words reproduced by the source cited on this page: "Consequently, the lands qualify as rural agricultural land and fall outside the scope of section 194-IA."
It was decided by the ITAT on 2026-03-26 and is reported as I.T.A. No. 2549/Ahd/2025; Assessment Year 2015-16; date of hearing 17 February 2026, order pronounced 26 March 2026. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 194-IA, section 201(1), section 201(1A), section 206AA, section 2(14), section 143(3), section 250, 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 appeal filed by the Revenue was dismissed. Ground 1 (Rule 46A) failed because the evidence relied on consisted of official documents issued by competent authorities, no prejudice had been shown, and the issue could be decided on the material on record (paragraph 6.1). Grounds 2 and 3 failed because the Assessing Officer had carried out no independent verification and brought no conclusive or authenticated evidence to show that the lands fell within the prescribed distance, so the Commissioner (Appeals)'s factual finding could not be disturbed; consequently the lands qualify as rural agricultural land and fall outside the scope of section 194-IA (paragraphs 7.1, 7.2 and 8.1). Since the lands are agricultural and outside section 194-IA, the assessee cannot be treated as an assessee in default under section 201(1) and the interest charged under section 201(1A) is also not sustainable (paragraph 9). It arises in TDS Defaults, Evidence & Burden of Proof and Capital Gains matters, on section 194-IA, section 201(1), section 201(1A), section 206AA, section 2(14), section 143(3), section 250 of the Income Tax Act 1961, and was decided by Dr. B.R.R. Kumar, Vice-President and Ms Suchitra Kamble, Judicial Member (order per Dr. B.R.R. Kumar, Vice-President), Income Tax Appellate Tribunal, 'B' Bench, Ahmedabad. 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. Get the census population figure for the municipality against which the distance is measured, because the permitted distance under section 2(14)(iii)(b) steps from two to six to eight kilometres with population. Identify the NEAREST municipal limit, not the obvious one — in this case the Revenue argued that Ahmedabad Municipal Corporation limits at Chandkheda and Motera were nearer than Gandhinagar for one village. Deal with that before the Assessing Officer does. Put the revenue records — 7/12 extracts, Talati certificate, the sale deed's own description of the land — on record at the first appellate stage and be ready to meet a Rule 46A objection by showing the documents are official and go to the root of the matter. Press the point that the Assessing Officer made no verification: the burden of displacing an official certificate is on the Revenue, and an unsupported contrary letter will not do it. Take section 206AA separately: it prescribes a higher rate where tax is otherwise deductible, so if section 194-IA does not apply there is nothing for it to enhance. If the sellers are agriculturists without PAN, collect Form 60 declarations at the time of purchase; the Commissioner (Appeals) here criticised the automatic twenty per cent applied without verifying them.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator search (doc 29269179, confirmed as 'Income Tax Officer (TDS-3), Ahmedabad ... vs Tarun Santramdas Varma, Ahmedabad on 26 March, 2026') returns nothing. A second probe found a Gujarat High Court decision in this assessee's name dated 15 April 2026, three weeks after this order, and it was opened and read to make sure it was not a reversal. It is not. Tarun Santramdas Varma v ACIT Circle 4(1)(1) is Special Civil Application No. 2899/2026, a writ petition for AY 2021-22 quashing a s.148 reassessment notice of 30 March 2025 as founded on 'conjectures and surmises'; it does not arise from any Tribunal order and does not touch s.194-IA or TDS on rural agricultural land. The s.194-IA holding therefore stands unreviewed. Nothing overruling, doubting or distinguishing it was found, and no appeal to a High Court against it is disclosed on the record searched. 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.
READ THIS BEFORE CITING ANY PARAGRAPH NUMBER. The Tribunal's own numbered paragraphs are 1, 2, 3, 4, 5, 6, 6.1, 7, 7.1, 7.2, 8, 8.1, 9 and 10, established by transcribing the whole document. Everything numbered 9.1, 9.1.1, 9.1.2, 9.1.3, 9.1.4, 9.1.5, 9.1.6 and 9.1.7 is inside paragraph 4 and belongs to the Commissioner (Appeals)'s order, which the Tribunal reproduces. That matters here more than usual, because the passages practitioners will most want — the multiple-buyer/multiple-seller analysis, the reliance on Vinod Soni, Bhikhabhai Hirabhai Patel, Dalpat Singh Nanecha and Oxcia Enterprises, the confirming-party point, and the statement that the proviso inserted by the 2024 amendment 'is prospective from 1 October 2024' — are ALL the Commissioner (Appeals) speaking, not the Tribunal. The Revenue's three grounds of appeal went only to Rule 46A and to the nature and location of the land, so the Tribunal decided only those; it did not decide the multiple-buyer point and nothing in this order should be cited for it. Retrieval and corroboration: the full text was transcribed from https://indiankanoon.org/doc/29269179/?type=print, and the operative sentence at paragraph 8.1 was independently re-fetched through https://indiankanoon.org/docfragment/29269179/?formInput=... , which returned the same words in the same surrounding paragraph. Defects in the QUOTED Commissioner (Appeals) text, which should not be attributed to the Tribunal: a heading reading 'Applicability of Section 296AA' where section 206AA is meant; a statement that rural agricultural land 'is not a capital asset as per section 45(1) of the act', where section 2(14) is meant; a description of section 2(14) as defining 'agricultural income'; and 'section 194-1A' and '1941A' appearing for section 194-IA. The date of the Commissioner (Appeals) order (31 October 2025) and of the Assessing Officer's order (29 March 2022) are as printed. This is a 2026 order on AY 2015-16, so the amendments of 2022 and 2024 formed no part of the decision. A further defect in the source, not to be attributed to the Tribunal: the Revenue's first ground as printed pleads a violation of 'Section 46A', where Rule 46A of the Income-tax Rules, 1962 is plainly meant; the Tribunal deals with it as the Rule 46A objection. 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 appeal filed by the Revenue was dismissed. Ground 1 (Rule 46A) failed because the evidence relied on consisted of official documents issued by competent authorities, no prejudice had been shown, and the issue could be decided on the material on record (paragraph 6.1). Grounds 2 and 3 failed because the Assessing Officer had carried out no independent verification and brought no conclusive or authenticated evidence to show that the lands fell within the prescribed distance, so the Commissioner (Appeals)'s factual finding could not be disturbed; consequently the lands qualify as rural agricultural land and fall outside the scope of section 194-IA (paragraphs 7.1, 7.2 and 8.1). Since the lands are agricultural and outside section 194-IA, the assessee cannot be treated as an assessee in default under section 201(1) and the interest charged under section 201(1A) is also not sustainable (paragraph 9).
TaxSphere, “ITO (TDS-3), Ahmedabad v. Tarun Santramdas Varma (ITAT Ahmedabad) — rural agricultural land is outside section 194-IA, and the Revenue's appeal against deletion of a Rs 1.69 crore section 201 demand was dismissed”, https://taxnotice.vittsphere.com/caselaw/case/tarun-santramdas-varma-194-ia-rural-agricultural-land-revenue-appeal-dismissed/ (validity last checked 2026-09-08)
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I deducted one per cent on a land purchase where the sellers had no PAN, and the officer says I should have deducted twenty per cent under section 206AA. The land was agricultural. Can he charge me the difference because I deducted something?
Four of us bought one flat and each of us paid under fifty lakh rupees. The TDS officer says we should have deducted under section 194-IA. Did we have to, and does the answer depend on when we bought?
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?
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?
