Short Grant of Income Tax TDS Credit on Property Sale: ITAT Orders Refund of ₹37.88 Lakh Within One Month [Read Order]

Amardeep Sandhu,appellant-assessee,was a Canadian non-resident who sold a house in Chandigarh for ₹4.65 crore in AY 2023-24, on which ₹1.20 crore was deducted as TDS at 26%. He filed his return on 19-12-2023 declaring taxable income of ₹3.71 crore, including long-term capital gains, and claimed a refund of ₹37.88 lakh.

However, CPC issued an intimation under section 143(1) on 19-01-2024 raising a demand of ₹29.95 lakh after reducing the TDS credit to ₹63.27 lakh by applying Rule 37BA(2)(i). The return and Form 26AS clearly showed the correct income and TDS, but the error occurred because the TIS wrongly reflected the same property transaction twice.

The tribunal examined the record with the assistance of the representative and noted inconsistencies between the CPC’s intimation under section 143(1) and the order of the Commissioner of Income Tax (Appeals)[CIT(A)]. The CIT(A) had rejected the claim for full TDS credit on the ground that part of it belonged to another person, Mehtab Kaur, and also cited non-submission of the bank statement.

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The two member bench comprising Rajpal Yadav (Vice President) and Krinwant Sahay (Accountant Member) found this reasoning vague, as it did not explain how another person’s name appeared in the TDS credit or why the explanation given was not acceptable. It observed that the CIT(A) ought to have verified the complete record before deciding the matter.

Holding that the CPC wrongly curtailed the TDS credit and the CIT(A) unnecessarily confirmed it, the tribunal allowed the appeal and directed the department to refund ₹37,88,470 within one month.

Accordingly,the appeal was allowed.

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