TDS Credit cannot be Denied when Form 26AS along with Reconciliation of Income as per Books are Produced before AO: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Hyderabad Bench, has recently, in an appeal filed before it, held that TDS Credit cannot be Denied when Form 26AS along with Reconciliation of Income as per Books, are Produced before the AO.

The aforesaid observation was made by the Hyderabad ITAT, when an appeal was preferred before it by the Revenue, as against the order dated 10/08/2022, passed by the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi (CIT(A)), for the assessment year 2017-18.

The only issue involved in the matter being as to whether the TDS in form 26AS is allowable to the assessee, the brief facts of the case were that in the return of income filed on 31/3/2018 for the assessment year 2017-18, the assessee had claimed a refund of the tax deducted at source (TDS) to the tune of Rs. 3,42,845/, in accordance with the entries in form 26AS as on the date.

According to the assessee, form 26AS was revised letter and the tax deducted at source was increased to Rs. 2,00,71,893/. Further, the assessee submitted, during the assessment proceedings, a reconciliation of income as per books and form 26AS, but the Assessing Officer restricted the TDS credit to Rs. 3,42,845/- as claimed in the return of income and refused to consider the TDS reflected in the revised form 26AS.

Subsequently, the assessee filed a rectification application claiming the TDS, wherein the Assessing Officer rejected the same stating that the same as non- claimed during the scrutiny proceedings.

Thereafter, the assessee preferred an appeal against the order dated 28/08/2010 passed under section 154 of the Income Tx Act, wherein the CIT(A) directed theAssessing Officer to allow credit of TDS if corresponding income was also shown in the ITR.  And it is being aggrieved by such a direction issued by the CIT(A) to the Assessing Officer that the Revenue has preferred the instant appeal before the Hyderabad ITAT.

With Shri Kumar Aditya, the DR for the Revenue having submitted that the excess claim of TDS made by the assessee was not claimed by the assessee in the return of income nor during the assessment proceedings, he added that in such a situation, the Assessing Officer being bound by the decision of the Apex Court in the case of M/s. Goetze (India) Ltd. Vs. CIT, has rightly refused to consider the claims beyond the return of income either original or revised, as the case may be.

Per contra, it was the submission by Shri Pratik Shah, the AR that when once the Assessing Officer considered the corresponding income for taxing the same, it is not open for the Assessing Officer to refuse to allow the credit of the corresponding TDS. He further added thattherefore, the CIT(A) has rightly followed the circular of CBDT and, hence that no interference is required.

Hearing the opposing contentions of either sides, and thereby perusing the materials available on record, the ITAT Bench observed:

“We have gone through the record in the light of the submissions made on either side. It is an admitted fact that for taxation purpose, the learned Assessing Officer considered the income relevant for the TDS reflected in form 26AS as revised.”

“It is, therefore, clear that when the learned Assessing Officer considered the corresponding income and has before him all the relevant facts in the shape of form 26AS as on the date of assessment, he is duty bound to assist the assessee, if the assessee is not aware of the discrepancy in respect of the income as per books and as per form 26AS. When form 26AS along with the reconciliation of income as per books and form 26AS was produced before him, the learned Assessing Officer cannot accept the income for tax purpose and refuse to allow credit of corresponding TDS. Both must go hand in hand.”,quoting the explanation given by Circular No. 14(XL-35), dated 11/04/1955 issued by Board of Revenue under Income tax Act, 1922, the ITAT Bench further commented.

Thus, dismissing the Revenue’s appeal, the Hyderabad ITAT Panel comprising of Rama KantaPanta, the Accounting Member, along with K Narasimha Chary, the Judicial Member, held:

“With this view of the matter, we do not find any illegality or irregularity in the findings of the learned CIT(A) and accordingly decline to interfere with his findings. Appeal is devoid of merits and consequently dismissed”.

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