A Mumbai individual who bought property in Gujarat has lost his appeal before the Income Tax Appellate Tribunal, Mumbai. The tribunal held that delay in depositing 1% TDS and filing Form 26QB after a property purchase is enough to trigger statutory interest and late fee — even if the tax is paid in the same financial year, the seller gets credit, and the buyer says the lapse was bona fide.
The “F” Bench of ITAT Mumbai (Judicial Member Challa Nagendra Prasad and Accountant Member Makarand Vasant Mahadeokar) pronounced the order on 16 September 2026 in ITA No. 3596/Mum/2026 for Assessment Year 2025-26. The appeal of Varun Atul Jain, a resident of Savoy Residency, Santacruz (West), was dismissed. The tribunal upheld the demand raised by CPC-TDS and confirmed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi.
Net demand: ₹57,140 — interest of ₹21,144 under section 201(1A) and late filing fee of ₹36,000 under section 234E.
The transaction
During FY 2024-25, the assessee purchased immovable property at Survey No. 190, City Survey No. NA 190, Mouje Village, Palaj, Gandhinagar, Gujarat, for ₹1,76,25,000.
- The entire consideration was paid to the seller on 8 August 2024.
- The sale deed was executed and registered in the buyer’s name on 8 October 2024.
- TDS of ₹1,76,250 (1% under section 194-IA) was deposited and Form 26QB was furnished only on 29 March 2025.
CPC-TDS processed Form 26QB under section 200A and issued an intimation dated 2 April 2025 charging interest and fee. After rounding off, the demand stood at ₹57,140.
What Form 26QB is for
Form 26QB is not a regular quarterly TDS return like Form 26Q. It is a challan-cum-statement prescribed only for TDS on purchase of immovable property (other than agricultural land) under section 194-IA.
When the sale consideration is ₹50 lakh or more, the buyer must deduct 1% tax at the time of payment or credit to the seller, whichever is earlier. Form 26QB is the single electronic document through which the buyer:
- reports the transaction (buyer and seller PAN, property details, consideration, date of payment);
- pays the TDS to the government; and
- files the statutory TDS statement for that deduction.
After the form is processed, the buyer must generate Form 16B (TDS certificate) and issue it to the seller, generally within 15 days from the due date of Form 26QB. The seller uses that credit in his income-tax return.
TAN is not required for section 194-IA. The buyer’s PAN is used.
Where the TDS is deposited and where the form is filed
Both payment and filing happen in the Income Tax Department system — not with the stamp office, sub-registrar, or any State housing regulator.
- Form 26QB is filed electronically on the Income Tax e-filing portal.
- The deducted tax is paid electronically to the credit of the Central Government through the authorised bank / RBI / SBI channel linked to that form.
- The statement is processed by CPC-TDS (Centralized Processing Cell-TDS). In this case the intimation under section 200A was issued by the Assistant Commissioner of Income-tax, CPC-TDS.
- Form 16B is generated from the department’s TDS system (TRACES / e-filing).
There is no separate paper challan route that replaces Form 26QB for this type of TDS.
The prescribed time
Rule 31A(4A) of the Income-tax Rules, 1962 is specific. A person deducting tax under section 194-IA must furnish Form 26QB within 30 days from the end of the month in which the deduction is made. The same 30-day window applies to depositing the tax.
Deduction is triggered at the earlier of:
- credit of the amount to the seller; or
- actual payment (cash, cheque, transfer or any other mode).
The date of registration of the sale deed does not reset the clock if payment has already been made.
Applied to this case
- Full consideration was paid on 8 August 2024.
- Deduction therefore occurred in August 2024.
- Due date for deposit + Form 26QB: 30 September 2024 (30 days from 31 August).
The buyer filed Form 26QB and deposited the tax only on 29 March 2025. That is the delay CPC-TDS, CIT(A) and ITAT treated as established.
The sale deed was registered later, on 8 October 2024. That later date does not extend the due date once payment has already been made.
From the due date of 30 September 2024 to actual filing on 29 March 2025, the default ran for about six months. Fee under section 234E is ₹200 per day of delay, subject to a ceiling equal to the TDS amount. Here the fee was computed at ₹36,000. Interest under section 201(1A) was computed at ₹21,144 for the period the tax remained unpaid after it was due.
What the buyer argued
Before CIT(A) and again before ITAT, the authorised representative submitted that:
- the delay was neither intentional nor wilful;
- the buyer was unaware of the prescribed timelines;
- the accountant handling his tax work was unavailable because of medical exigencies in the accountant’s family;
- on noticing the lapse during year-end verification, the buyer immediately deposited ₹1,76,250 and filed Form 26QB on 29 March 2025;
- credit reached the seller in the same financial year, so there was no loss to the deductee or to the Revenue;
- interest and fee caused undue hardship and should be deleted because the levies are compensatory and should be applied benevolently where the default is bona fide.
What CIT(A) and ITAT held
CIT(A) refused to waive either levy. Interest under section 201(1A) was treated as statutory, mandatory and automatic once delay is proved. Fee under section 234E could be computed while processing the statement under section 200A because the statement related to a period after 1 June 2015. Reasonable cause or hardship, CIT(A) said, is not a ground to delete the statutory fee.
ITAT agreed on both counts.
On interest under section 201(1A), the bench held that liability follows by operation of law once the amount of tax and the period of delay are undisputed. Lack of awareness, the accountant’s family medical situation, absence of mala fide intent, and deposit in the same financial year do not extinguish interest. Interest compensates the government for the period the money was not with it. Compliance within the same financial year cannot substitute compliance within the time fixed by the Act and the Rules. No error in computation was shown. Ground 1 was dismissed.
On fee under section 234E, the bench held that the fee is linked to delay in furnishing the TDS statement and operates independently of whether any loss of revenue is proved. Section 200A permits the fee to be computed while processing Form 26QB for periods after 1 June 2015. The statute does not give the Assessing Officer or the appellate authority discretion to waive the fee only because there was reasonable cause or hardship. Filing in the same financial year does not cure the missed due date. No error in the period, daily rate or calculation was pointed out. Ground 2 was dismissed.
Ground 3, which repeated the plea of bona fide conduct, no loss to Revenue and hardship, was also dismissed. The appeal was dismissed in full.
Why this order matters to property buyers
The case is a reminder that section 194-IA compliance is tied to the month of payment, not to registration, possession, or 31 March.
A buyer who pays the seller in August must generally finish both the deposit and Form 26QB by the end of September. Waiting for the deed, the year-end CA review, or “when the accountant is back” is how a one-time individual purchaser ends up with a five-figure demand on top of stamp duty and registration.
ITAT has treated both charges as statutory. In this order, “I did not know the rule,” “my accountant was unwell,” and “the seller got credit in the same year” were not enough.
For readers: if consideration is ₹50 lakh or more, deduct 1% at the time of payment (or each instalment, if the price is paid in parts), file Form 26QB on the income-tax portal within 30 days from the end of that month, and issue Form 16B to the seller. The department that receives the money and the form is the Income Tax Department through CPC-TDS — not the registrar’s office.
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