ITAT Sets Aside Order Passed by CIT(A) for Ignoring Assessee's Consistent Business Practice: Directs Re-examination of TDS Claim [Read Order]

In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Pune Bench has set aside the order passed by the Commissioner of Income Tax (Appeals), CIT(A) and directed a fresh examination of the Tax Deducted at Source (TDS) claim made by the assessee. The tribunal found that the CIT(A) had failed to consider the consistent business practices of the assessee and the precedent set by previous assessment orders.

The assessee, a registered trust under the Bombay Public Trust Act, 1950, is engaged in the harvesting and transportation (H&T) of sugarcane on behalf of Mula Sahakari Sakhar Karkhana. The trust facilitates payments to labor contractors for harvesting and transportation activities, and the corresponding expenses are reimbursed by the sugar factory. The assessee earns administrative and supervision charges for its role in coordinating these activities.

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For the Assessment Year 2018-19, the assessee filed a revised return of income declaring NIL income but claimed a refund of TDS amounting to Rs.1,18,77,593(1.18 crore) as reflected in Form 26AS. However, the Centralized Processing Center (CPC) did not allow the TDS credit, which led to an appeal before the CIT(A), who upheld the CPC’s decision without providing a detailed justification for disallowing the refund.

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The assessee also highlighted that the tax department had accepted the same practice in earlier assessments from AY 2009-10 to 2016-17. The assessment orders for these years confirmed that refunds were granted after scrutiny, establishing a precedent.

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The ITAT Bench composed of R K Panda ( Vice-President ) and Vinay Bhamore ( Judicial Member ) found that the CIT(A) failed to consider these past assessments and inconsistently denied the claim for AY 2018-19. The tribunal emphasized that when there is no change in facts or business operations, the tax department cannot take a different view for a single year.

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The tribunal also noted that the CPC had provided a reason for denying the TDS claim, stating that the amounts deducted were unmatched. However, since the trust submitted Form 26AS, showing the deductions, the ITAT directed a fresh examination of the claim.

In its ruling, the ITAT remanded the case back to CIT(A) for a re-evaluation based on facts and law, considering past assessments. The tribunal also instructed the assessee to fully cooperate by providing necessary documents and avoiding delays.

In Conclusion, the appeal was partly allowed for statistical purposes, providing relief to the assessee while ensuring proper verification of the TDS claim.

To Read the full text of the Order CLICK HERE

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