The Pune bench of Income Tax Appellate Tribunal ( ITAT ) recently held that benefit of Tax deduction at source should not be allowed in intimation under section 143(1) of Income Tax Act 1961 if it was not deposited.
143(1) of Income Tax Act 1961 provides income tax department within one year from the end of the financial year shall send intimation for which return being filed.
Assessee Mukesh Padamchand Sogani, has been an employee of Earth Water Limited (‘EWL’) working as Chief Operating Officer.Assessee furnished return of income under the head ‘Salaries’ also claiming credit for deduction of tax on such salary income. The return was processed under section143(1) Income Tax Act 1961 allowing credit for tax deducted at source from salary only to the tune of Rs.83,483/.Further the assessing officer found some mismatches on the remaining amount of the assessee .Hence the amount did not allowed. Against the order assessee filed an appeal before ITAT.
Dinesh Ramesh Gulabani counsel for the assessee submits that employer Company deducted tax at source from the salary but failed to deposit the same from May, 2018 onwards. It was further submitted that the employer had not paid salary from October, 2018.
Ramnath P. Murkunde counsel for the revenue countenced Intimation under section 143(1) Income Tax Act 1961 in not allowing credit for Rs.8, 21,149 because of Form No.26AS not reflecting the same.”
After considering the contentions of the both parties the division bench of ITAT comprising R.S. Syal, (Vice President) and Partha Sarathi Chaudhury, (Judicial Member) allowed the appeal filed by the assessee and observed that “Requirement for allowing credit was only the amount of tax deducted at source and not the amount eventually getting deposited with the Government after deduction. Since a sum of Rs.8,21,149/- was duly deducted at source by the employer from the salaries credited/paid to the assessee for the year under consideration and the benefit of such tax deducted at source has to be allowed in Intimation under section 143(1) of the Income Tax Act 1961 notwithstanding the fact that it was not deposited”.
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