# Wrong TDS on a Flat Deal: Two ITAT Orders on Form 26A By Saurabh Garg, founder·7 min read·Published 2026-10-06 **Short answer:** Two Income Tax Appellate Tribunal orders from the last week of September 2026 turn on the same document, the Form 26A accountant certificate. On 28 September ITAT Chennai sent back a Rs 14,45,600 TDS shortfall raised against a buyer who deducted 1% instead of the 20% plus cess due on a purchase from an NRI, because he produced the NRI seller's ITR-2 and Form 26A. On 29 September ITAT Jodhpur deleted a Rs 1,12,500 Section 271C penalty on a non-resident buyer who deducted no TDS, because the seller had reported the sale, paid tax, and Form 26A was on record. Neither order says the deduction was optional. # A Buyer Got TDS Wrong on a Property Deal. In Two ITAT Orders, the Seller's Form 26A Decided the Outcome. **On 28 and 29 September 2026, two benches of the Income Tax Appellate Tribunal ruled on property buyers who had not deducted the right TDS. In Chennai the seller was an NRI and the buyer deducted 1% instead of 20% plus cess. In Jodhpur the buyer was a non-resident who deducted nothing. Both buyers got relief for the same reason: the seller had filed a return, paid the tax, and a chartered accountant had certified it in Form 26A.** ## Chennai: 1% deducted where the NRI seller's rate applied The order is ITA No. 297/Chny/2026, *Subramanian Aravind v. Income Tax Officer, Ward-1, Tuticorin*, assessment year 2018-19, ITAT 'C' Bench, Chennai. George George K, Vice President, and Gagan Goyal, Accountant Member, heard it on 27 August 2026. Gagan Goyal wrote the order, pronounced on 28 September 2026. It runs to 5 pages. The facts are in paragraph 2. The buyer bought two properties from an NRI, on 17 April 2017 for Rs 52 lakh and on 18 June 2017 for Rs 20 lakh. The tribunal records that under Section 195, "since the seller is a non-resident the rate of TDS applicable will be 20% plus education cess, i.e. Rs. 14,97,600/-". The buyer deducted Rs 52,000, which is 1% on the Rs 52 lakh purchase. An order dated 10 July 2023 fixed the shortfall at Rs 14,45,600. The Additional/Joint Commissioner (Appeals), Gurugram, dismissed his appeal on 12 November 2025. The tribunal did not excuse him. "It is observed that technically the assessee under consideration was at fault," it says in paragraph 3. Before the tribunal, though, he filed Form 26A under the first proviso to Section 201(1), with a petition to admit it as additional evidence under Rule 29 of the ITAT Rules, 1963. The bench admitted it, and looked at the Form 26A and the ITR-2 that the seller, Muthusamy Veerabahu, filed for assessment year 2018-19 (paragraph 4). It sent the case back to the tax officer "for reconsideration of the matter in the light of Form No. 26A" and told the buyer "to produce Form No. 26A along with relevant documents before the AO without fail and without seeking any adjournment" (paragraph 5). The appeal was allowed for statistical purposes (paragraph 6). The shortfall is not deleted. The tax officer decides it again. ## Jodhpur: a non-resident buyer who deducted nothing The order is ITA No. 314/JODH/2024, *Jagadish Panchal v. Additional Commissioner of Income Tax (TDS), Udaipur*, assessment year 2016-17, heard on 17 August 2026 by Annapurna Gupta, Accountant Member, and T.R. Senthil Kumar, Judicial Member, who wrote the order. It was pronounced on 29 September 2026 and runs to 6 pages. The buyer and his wife bought a property on 25 June 2015 for Rs 2,25,00,000 from Daljeet Singh Bhandari. He "failed to deduct tax at source of Rs.1,12,500/- u/s 194IA of the Act", and the tax officer imposed a penalty of the same amount under Section 271C (paragraph 3). The appeals commissioner confirmed it. His appeal reached the tribunal 329 days late. He said in a notarised affidavit "that, he is a non-resident and he was out of India for business purposes", and the tribunal condoned the delay (paragraphs 2 and 2.1). His wife had already won the same point. The appeals commissioner's order in her case, quoted in paragraph 6, records that the seller "has duly shown the entire sale consideration" in his return and claimed a Section 54 deduction, that Form 26A and the seller's ITR were on record, and that interest of Rs 14,626 had been paid under Section 201(1)/201(1A). It also records her statement that she and her family are NRIs who "left India 50 to 55 years ago". The tribunal followed that order. It found that the seller had shown the full consideration and paid tax before filing his return, that the seller's Form 26A had been filed, and that interest of Rs 14,626 was paid. "Thus, there is no tax evasion in the above said sale transaction," it held (paragraph 8). It saw no difference between the two co-owners and deleted the penalty (paragraphs 8.1 and 9). ## What it means for an NRI owner Neither order says TDS was optional. Chennai calls the buyer "at fault", and the appeals order that Jodhpur followed says a buyer who does not deduct "is liable to be treated as assessee in default". What saved both buyers was the seller's paperwork, produced years after the sale. If you sell as an NRI, the buyer carries the deduction at the rate that applies to a non-resident seller, and our guide on [TDS when buying property from an NRI](/guides/tds-on-buying-property-from-nri) sets out how that works. If the buyer gets it wrong, the department can come back to that buyer for the shortfall, and the buyer will come back to you for your return and a Form 26A. In the Chennai case that request came about six years after the purchase. If you buy in India as a non-resident, Jodhpur shows a penalty under Section 271C can follow a missed deduction. The buyer there was cleared only because the seller had paid tax, Form 26A was on record and interest had been paid. Both orders were decided under the Income-tax Act, 1961, for assessment years 2016-17 and 2018-19. Neither discusses the forms in use today, which our note on [Forms 128 and 144](/guides/nri-property-tax-forms-128-144-jun-2026) covers. For the seller's side of a sale, see our guide on [TDS on sale of property by an NRI](/guides/tds-on-sale-of-property-by-nri). ## FAQ **What did ITAT Chennai decide on 28 September 2026?** It admitted the buyer's Form 26A as additional evidence and sent the Rs 14,45,600 TDS shortfall back to the tax officer to reconsider in light of it. It did not delete the shortfall, and it recorded that the buyer was at fault. **What did ITAT Jodhpur decide on 29 September 2026?** It deleted a Rs 1,12,500 penalty under Section 271C on a buyer who had not deducted TDS under Section 194-IA. The seller had declared the full sale consideration and paid tax, Form 26A was on record, and interest of Rs 14,626 had been paid. **What is Form 26A?** It is the accountant's certificate under the first proviso to Section 201(1) of the Income-tax Act, 1961. It certifies that the payee filed a return, included the sum in it, and paid the tax due. When it is furnished, the person who failed to deduct is not treated as an assessee in default for that tax. **Do these orders apply to sales after 1 April 2026?** Both were decided under the Income-tax Act, 1961, for assessment years 2016-17 and 2018-19. Neither order discusses the law or forms that apply to a sale today. **Was anyone in these cases an NRI?** In Chennai the seller was an NRI. In Jodhpur the buyer stated on affidavit that he is a non-resident, and his wife's order records that the family are NRIs. *66 MG Road newsdesk* ## Sources - *Subramanian Aravind v. Income Tax Officer, Ward-1, Tuticorin*, ITA No. 297/Chny/2026, AY 2018-19, ITAT 'C' Bench Chennai, George George K (VP) and Gagan Goyal (AM), heard 27 August 2026, pronounced 28 September 2026, 5 pages, signed 1 October 2026 (digital signature). Full text read on 6 October 2026: [https://indiankanoon.org/doc/60134705/](https://indiankanoon.org/doc/60134705/) - *Jagadish Panchal v. Additional Commissioner of Income Tax (TDS), Udaipur*, ITA No. 314/JODH/2024, AY 2016-17, ITAT Jodhpur, Annapurna Gupta (AM) and T.R. Senthil Kumar (JM), heard 17 August 2026, pronounced 29 September 2026, 6 pages. Full text read on 6 October 2026: [https://indiankanoon.org/doc/179945484/](https://indiankanoon.org/doc/179945484/) - The Chennai order calls the 10 July 2023 order one "u/s. 201(1A)". The Jodhpur order does not say whether the seller was resident, and does not explain why the TDS was Rs 1,12,500 on a Rs 2.25 crore purchase. We have not filled either gap. About the author: [Saurabh Garg](/about) Saurabh Garg has run the venture studio C4E for twenty years. He founded 66 MG Road in 2026, reads every proposal request, and replies within one business day. [saurabhgarg.com](https://saurabhgarg.com) · [@saurabh](https://x.com/saurabh) · [LinkedIn](https://www.linkedin.com/in/saurabhgarg) Information on this page is as on 2026-10-06. Rules, rates, deadlines and government portals change without notice, so verify against the official source before you act. This page is for information only. It is not tax or legal advice, and it is not a substitute for a qualified adviser who knows your position. ## Related guides - [Buying Property From an NRI Seller: The TDS the Buyer Must Handle (Form 141 or Form 144)](/guides/tds-on-buying-property-from-nri) - [TDS on Sale of Property by an NRI: How Much the Buyer Deducts, and the Form 128 Fix](/guides/tds-on-sale-of-property-by-nri) - [Lower TDS Certificate for NRI Property Sale: How Form 13 (Now Form 128) Stops the Over-Deduction](/guides/lower-tds-certificate-form-13-nri) - [Your NRI Property Tax Forms Were Renumbered: Form 128 and Form 144 in 2026](/guides/nri-property-tax-forms-128-144-jun-2026) ## Compare and cost - [The NRI Property Management Companies in India: A Comparison You Can Check](/guides/best-nri-property-management-companies-india) - [What NRI Property Management Costs in India: The Four Models and What Hides in Each](/guides/nri-property-management-cost-india) - [NoBroker NRI Services Review: What the Pages Promise and What They Leave Out](/guides/nobroker-nri-services-review) --- Source: [https://66mgroad.com/guides/nri-property-tds-default-form-26a-itat-chennai-jodhpur-sep-2026](https://66mgroad.com/guides/nri-property-tds-default-form-26a-itat-chennai-jodhpur-sep-2026) · 66 MG Road. Full LLM brief: https://66mgroad.com/llms.txt