ITAT Dismisses Revenue Appeal on ‘Additional Evidence’ Ground, Upholds CIT(A) Direction for Full Form-26AS TDS Credit After Verification [Read Order]

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeals challenging the order directing verification and grant of full tax deducted at source credit for three assessment years, in accordance with Form-26AS.

The appeals were filed by the Assistant Commissioner of Income Tax, Panvel Circle, against Gateway Terminals India Pvt. Ltd. of Navi Mumbai. The company operates and maintains container port terminal facilities under a licence agreement with the Government of India through the Jawaharlal Nehru Port Trust.

The dispute arose after the Central Processing Centre restricted tax deducted at source credit in the intimation dated 22 September 2022 issued under Section 143(1) of the Income Tax Act, 1961, for the Assessment Year (A.Y.) 2021-22, holding that the figures in Form 26AS exceeded the revenue reported in the return. The assessee filed appeals before the Additional/Joint Commissioner of Income Tax (Appeals)-9, Delhi, who directed the Assessing Officer (AO) to verify and allow full tax deducted at source credit for A.Y. 2021-22 to 2023-24.

Represented by Amol Khairnar and Rajesh Gawali, the Revenue contended that the appellant authority erred by relying on additional documents that were produced for the first time during the appeal and had not been furnished before the AO. It was further argued that full credit for the tax deducted at source could not be granted unless the assessee offered the entire revenue corresponding to the tax deducted at source, and that the mismatch between financial statements and Form 26AS prevented such grant.

The assessee, represented by Manish Kanth, submitted that Form 26AS reflected total tax deducted at source of approximately ₹14.97 crore for the A.Y. 2021-22 and argued that the Central Processing Centre erroneously restricted the tax deducted at source credit by forming an incorrect assumption regarding the relationship between the revenue declared and the figures in Form 26AS. He asserted that the entitlement to full tax deducted at source credit must be determined in accordance with Section 199 read with Rule 37BA of the Income Tax Rules.

The Bench comprising Vice President R. K. Panda and Judicial Member Astha Chandra held that since the appellate authority had merely restored the matter to the AO for verification of the tax deducted at source and directed credit to be allowed only after such verification, the Revenue had no real grievance.

The Tribunal noted that the direction was limited to granting full credit for tax deducted at source reflected in Form 26AS after confirming that such tax deducted at source related to income offered to tax in accordance with Section 199 read with Rule 37BA.

In view of this reasoning, the Bench dismissed all three appeals filed by the Revenue for A.Y. 2021-22, 2022-23 and 2023-24. The cross-objections filed by the assessee for the same assessment years were dismissed as not pressed.

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