MOHAN LAL TALESARA,UDAIPUR vs. DCIT, CPC / ITO, WARD-1(1), UDAIPUR

The assessee has taken only sole ground: “1. That the Learned CIT A has wrongly confirmed that application filed u/s 154 by appellant is rightly rejected, as the AO has acted only on available data. I he Ld, CIT A has wrongly confirmed action of AO that TDS deductor has rightly withdrawn Tax Deducted al Source of Rs 4.92.990/- which were earlier provided. Hence Ld. AO be directed allow TDS Credit of Rs 4.92.990/- in the hands of appellant.”

Brief fact of the case is that the assessee has filed the returnon dated 29.10.2017 for A.Y. 2017-18, declaring total income of Rs.48,79,550/-. The return was processed, and intimation U/s 143(1) of the Act was originated on 31.05.2018 and assessee was allowed to refund amount of Rs.6,18,838/-. Later on, the ld. AO issued intimation u/s 154 on dated 30.09.2020 and proposed to withdraw tax credit amount of Rs.492,990/- on account of withdrawal of tax credit by the deductor bearing TAN No. DELM2416D, which was deducted by the M/s MACRO Commerce Private Ltd. u/s 194J for providing software services by the assessee. In TDS return the party transferred this aforesaid amount to another company CONSOFT Solutions Private Ltd, which was incorporated on 29.03.2017. Without considering the assessee’s reply the ld. AO had finally withdrawn the credit and raised the demand amount of Rs.4,68,850/-. Aggrieved assessee filed an appeal before the ld. CIT(A). But the ld. CIT(A) upheld the order of the ld. AO. Being aggrieved assessee filed an appeal before us.

The ld. AR filed the written submissions which are kept in the record. The ld. AR vehemently argued and placed that the assessee provided software services to the company MACRO Commerce Private Ltd. and accordingly, the bills were raised. Copies of the service bills are enclosed in APB page 11 to 15. The amount was also credited in 26AS during this impugned assessment year. Copy of the Form 26AS reflecting TDS credit is enclosed in APB page nos. 6 to 10.Finally, the ld. AR invited our attention in bank statement and agreement with party bearing APB page nos. 25 to 72. Therefore, the entire withdrawal of TDS is arbitrary and the ld. AO without considering the submission of the assessee, rejected the claim of TDS amount to Rs.4,92,990/- and thereafter the order u/s 154 was passed. The ld. AR further argued that the ld. AO wrongly passed the order u/s 154 for withdrawing the TDS of the assessee after the two years. So, the entire demand is bad in law.

The ld. DR vehemently argued and fully relied on the order of the revenue authorities. 6. We heard the rival submission and considered the documents available in the record. First, we observed that the appeal order, the relevant paragraph 4 is duly reproduced as below: “4. Held: It is noticed that order of the AO is based on the facts of the case. As ld. AO noticed that the deductor has not given benefit of taxes deducted to the assessee, so the Ld. AO decided accordingly. The appellant has also raised points to examine on the basis of work done by Appellant for the deductor, which has no relevance in the present case. The credit of such TDS has steady been claimed by some other person, hence, double credit cannot be given. The order of the AO required no interference and is upheld. Keeping in view of the above, the appeal of the appellant is dismissed, 6.1 The assessee filed the return alongwith the relevant documents for executing the contract with the party which enclosed in APB. The relevant payment is also reflected in the bank account. Only for filing of TDS return and withdrawing the credit, the ld. AO has acted beyond jurisdiction to execute the withdrawal of credit and reduced the refund u/s 154. We find that rectification is only related to intimation U/s 143(1) of the Act read with section 139(1) of the Act. We find that there is a lack of verification in the point of the ld. AO section 154 is only restricted to filing of return u/s 139 and processing of intimation u/s 143(1). So, withdrawal of TDS is a separate activity of the deductor. The mere rejection of TDS credit is not serving the purpose. The transaction, execution of works and other evidence should be considered during withdrawn of TDS credit after processing of return U/s 143(1). The execution of section 154 can not be mechanical purpose. The ld. AO has acted beyond jurisdiction and rejection of TDS credit after issuance intimation U/s 143(1) is not come under the purview