ITAT Remands 26AS Mismatch to AO for Verification of Actual Receipts and TDS Credits for Accurate Income Reporting [Read Order]
ITAT orders fresh verification of 26AS rent–interest entries, holding that TDS credits cannot be denied or income added without confirming the assessee’s actual receipts.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) partly allowed the appeal after finding that the issue of mismatch between Form 26AS receipts and income actually received required factual verification.
The assessee, Dattani Construction, a partnership firm engaged in real estate development had filed its return declaring income of ₹4,64,557 for Assessment Year 2011–12.
During scrutiny, the Assessing Officer (AO) noted that Form 26AS reflected rent and interest receipts aggregating to ₹10,48,326, along with Tax Deducted at Source (TDS) of ₹1,04,834, whereas the assessee had declared only ₹6,42,499 as income.
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The AO held that since full TDS credit was claimed, the assessee was bound to declare the corresponding gross receipts, and treated the balance ₹4,05,826, which comprising rent of ₹3,82,492 and interest of ₹23,334 as undisclosed income, making the addition.
Before the CIT(A), the assessee explained that except for rent of ₹6,00,000 from Selvel Publicity, no rent was received from Kavveri Telecom Infrastructure Ltd. and no interest was received from Aditi Fastfood Pvt. Ltd., and that only the TDS component, which was mistakenly credited to its PAN, had been shown.
The assessee argued that the entries in 26AS did not correspond to real income. The CIT(A), however, rejected the contention, holding that the assessee failed to prove who actually received the amounts corresponding to the TDS claims and upheld the addition.
Before the Tribunal, the assessee reiterated that only TDS amounts were reflected, not actual receipts, and that the mismatch was due to deductors uploading details in their TDS returns against the assessee’s PAN.
The Bench comprising Om Prakash Kant (Accountant Member) and Raj Kumar Chauhan (Judicial Member) observed that whether the assessee actually received the rental and interest amounts shown in Form 26AS was a pure matter of factual verification.
The Tribunal held that the AO must verify whether the deductors actually paid or credited the rent/interest to the assessee, they claimed such expenditure in their books of the account, and only the TDS amount was settled between the parties.
The Tribunal further directed that if the assessee did not receive any amount other than the TDS, the AO must grant appropriate TDS credit after accounting for the income actually received.
The Tribunal thus set aside the addition, restoring the matter to the AO for fresh adjudication with specific directions for verification and after providing the assessee a reasonable opportunity of being heard.
The appeal was accordingly allowed for statistical purposes.
The assessee was represented by Prateek Jain, while Annavaram Kasuri appeared for the Revenue.
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