TDS Credit cannot be denied to the Deductee due to the Mistake Committed by the Deductor: ITAT Bangalore [Read Order]

In iGate Infrastructure Management Services Ltd v. DCIT, the division bench of the ITAT, Bangalore held that mistake committed by the Deductor cannot be a reason to deny TDS Credit to the assessee and the AO should allow the same after verifying all the records.

The name and PAN number of the assessee was changed. After this, the assessee filed its return in its new name. Unfortunately some of the payers have deducted TDS and deposited in the erstwhile name of assessee with old PAN number.

The credit of TDS deducted and deposited in the old name and old PAN No. and the AO refused to give the TDS credit to the assessee due to mismatch, though entity is the same.

Before the ITAT, the assessee relied on the Circular issued by the CBDT vide Instruction No.5/2013 dated 8.7.2013, through which it has been clarified that if the assessee approaches the AO with requisite details and particulars in the form of TDS as an evidence against any mismatched amount, the said Assessing Officer will verify whether or not the deductor has made the payment of the TDS in the Government account and if the payment has been made, credit of the same should be given to the assessee. It was contended that the AO, while rejecting the credit does not verified the records produced before him.

Allowing the appeal, the bench clarified that “undisputedly there is a mistake committed by the deductor while deducting and depositing the TDS, but it does not mean that deductee should suffer for the act of deductor. When there is mismatch in the TDS accounts, the AO should make necessary verification and if it is found that TDS was deducted and paid in the Government account, credit of the same should be given to the deductee. This aspect was also clarified by the CBDT by issuing Instruction No.5/13.”

Read the full text of the Order below.