Non Deduction of TDS or Non Collection of TCS: Form No. 26A / 27BA can be furnished at Appellate stage also


Non Deduction of TDS or Non Collection of TCS: Form No. 26A / 27BA can be furnished at Appellate stage also

There are various cases wherein the TDS is not done by the payer on the interest payment to the NBFC under the pretext that it is a payment to the bank or financial institutes and so not liable for TDS. Another reason for not doing TDS is the fact that the EMI is pre-decided & is automatically debited by the bank and so the payer doesn’t get an opportunity to do the TDS.


Same is the case of transportation wherein the TDS is not done by the oral commitment by the transporter that they will give the declaration of owning not more than 2 trucks and subsequently they don’t provide the declaration.


Even interest is also paid on unsecured loans on the pretext that the lender will give form No. 15G/15H and they fail to give this.


In all above cases, the expenses / payment is disallowed U/s 40(a)(ia) by the assessing officer during the course of the assessment.  Even the tax auditor while finalising the audit also disallows the same.

Same is the case with the TCS provision wherein the non-payment results in being treated as “Assessee in default” resulting in the recovery and other proceeding on the defaulter.


The mode to avoid the disallowance or being treated as assessee in default is by providing form No. 26A (for TDS default) or Form No. 27BA (for TCS default). It may be noted that section U/s 201 & section 206C (6A) provides that the assessee may not be treated as Assessee in default if the buyer has furnished his return with tax payment thereon by incorporating all the income on which TDS/TCS is not done and a certificate to this effect from an accountant in the prescribed form (Form No. 26A or Form No. 27BA) has been furnished by the other side.

Assessee can submit the prescribed form No. 27BA or Form No. 26A in accordance with the proviso of Section 201 or section 206C (6A) and as a result the Assessee may not be treated as “Assessee in Default.


At the time of income tax assessment, the assessee often fails to produce the Form No. 26A from the payee due to lack of time or lack of proper coordination. The same can be done in an appellate proceeding as well. Even the assessee can avoid the disallowance by the tax auditor also by furnishing the Form NO. 26A during the course of the audit to the tax auditor.

Recently, ITAT has also admitted the appeal and remanded back for passing the appropriate order of assessee not being treated as Assessee in default for non-payment of TCS during the sale of coal. In this case, Form No. 27BA could not be produced before AO & CIT(A). The same were admitted as “Additional Evidence” in view of the Rule 29 of the ITAT Rules. The matter was argued by me at the Nagpur ITAT. The copy of the order is attached hereunder:


ITAT Order Copy_compressed (1)