AO Neither Rejects Nor Accepts Rectification Application on TDS credit: ITAT Remands Rs. 35k TDS Credit of Trust for Reassessment [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has remanded the matter to the Assessing Officer (AO) for fresh adjudication, directing verification of a Tax Deducted at Source (TDS) credit claim of Rs. 35,493 for Assessment Year (AY) 2020-21.

Urmilaben H. Dave Disc Family Trust (assessee), a trust filed its income tax return for AY 2020-21 on 24.10.2020, declaring a total income of Rs. 3,52,130 and claiming a refund of Rs. 30,026. The AO issued an intimation disallowing the TDS credit of Rs. 35,493.

The assessee filed a rectification application which was supported by Form 26AS of trustee Hasmukhbhai S. Dave, asserting that the TDS was deducted in the trustee’s name but belonged to the trust. The AO neither accepted nor rejected the application.

The assessee also filed a CPGRAM grievance which was closed on 23.04.2024, rejecting the TDS credit claim and raising a demand of Rs. 5,470. Aggrieved by the order, the assessee filed an appeal to the Commissioner of Income Tax (Appeals) [CIT(A)].

The CIT(A) dismissed the appeal, citing a 919-day delay from the intimation and also stated that the CPGRAM closure was not an appealable order. Aggrieved by the CIT(A)’s order, the assessee filed an appeal to the ITAT.

The assessee argued that the rectification application was filed within time, considering the Supreme Court’s exclusion of the COVID-19 period for limitation purposes until 28.02.2022. The assessee further contended that the TDS credit was validly claimed, as the trustee had not claimed it for AY 2020-21, and relevant evidence was submitted.

The two-member bench, comprising Dr. BRR Kumar (Vice President) and Suchitra Kamble (Judicial Member), observed that the CIT(A) failed to address the merits of the TDS credit claim and dismissed the appeal solely on procedural grounds.

The Tribunal observed that the AO had not passed a rectification order and simply closed the CPGRAM grievance without proper adjudication. The tribunal held that the matter required re-examination, particularly to verify whether the TDS credited in the trustee’s name was deposited into the trust’s account.

The tribunal remand the matter to the AO with directions to verify the assessee’s claim for TDS credit of Rs. 35,493 for AY 2020-21 and to grant due credit if the funds were credited to the trust’s account. The appeal of the assessee was partly allowed for statistical purposes.

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