The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that denial of Tax Deducted at Source (TDS) credit on mistake or misconception of assessee is impermissible.
The assessee, Kunvarji Fincorp Pvt. Ltd., in the present case was a NBFC engaged in the business of financing against stock and commodities. The assessee in the year under consideration filed a return of income under section 139 of the Income Tax Act 1961, dated 11-09-2012 declaring few losses only.
There was credit of tax deducted at source which was inadvertently not claimed as refund in the return filed under section 139 of the Income Tax Act. However, the return of the assessee was processed without grating the refund of the tax credit reflecting in form 26AS by the computerized processing cell (CPC).
The assessee e-filed rectification application under section 154 of the Income Tax Act dated 17-02-2017 before the CPC which was also rejected by the CPC stating the reason that the issue had been assigned to the jurisdictional AO.
Biren Shah, on behalf of the assessee contended that the assessee should be allowed the benefit granted under the statute. As such the assessee should not be made to suffer on account of the mistake committed by it.
Rakesh Jha, on behalf of the revenue contended that the assessee had not challenged the application rejected under the provisions of section 119(2)(b) of the Income Tax Act. Thus, the assessee should not be given the benefit of the TDS credit.
The two-member Bench of Waseem Ahmed, (Accountant Member) and Madhumita Roy, (Judicial Member) allowed the appeal filled by the assessee directing to grant benefit of the TDS credit which was inadvertently not claimed in the return of income.
The Bench following the decision of Gujarat High Court in S.R. Koshti Vs. CIT it was observed that, “Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected.”
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