SHREE GAUTAM CONSTRUCTION COMPANY LIMITED,GUWAHATI vs. ACIT CIR-2, GUWAHATI

That the CIT(A) erred in law in holding that the credit of TDS shall be granted in the year of its appearance in the Form 26AS irrespective of the year in which the said income is offered for taxation.

That the CIT(A) is erred in law in holding that no TDS credit would be available if the same is not appearing in Form 26AS even if the same has been deducted from the income of the appellant.

That the AO is not justified in not giving the credit of TDS/ TCS on account of non appearance in year in which income is offered for taxation as well as non appearance at all.

That the AO is not justified in raising the demand in respect of TDS deducted and TCS collected in contravention of provision of section 205 of the Income Tax Act, 1961. 5. That the appellant craves leave to add and / or alter any of the grounds of appeal on or before the date of hearing of the appeal."

Brief facts of the case are that the assessee is a company engaged in the execution of government works contracts, had filed its return of income for AY 2019-20 claiming a TDS credit of ₹10,54,20,694/- and a TCS credit of ₹22,91,537/-. During the processing of the return u/s 143(1) of the Act, the CPC allowed a TDS credit of ₹10,25,86,616/- and a TCS credit of ₹14,93,345/-, denying the balance on the ground that it did not match with the Form No. 26AS for the relevant year. Subsequently, the assessee filed a rectification petition u/s 154 of the Act, which was disposed of by the Assessing Officer (hereinafter referred to as Ld. 'AO') on 31.08.2023, who reiterated the same position and issued a deductor-wise statement indicating that the disputed credits either pertained to other assessment years or did not appear in Form No. 26AS at all. Aggrieved with the rectification order, the assessee filed an appeal before the Ld. CIT(A) who observed that a portion of the disputed tax credits was duly reflected in Form No. 26AS for other assessment years, establishing that while the tax had been deposited, it was reported by the deductors in different years, making the credit inadmissible for AY 2019-20. Regarding the remaining amounts not appearing in Form No. 26AS for any assessment year, the Ld. Addl/JCIT(A) noted that the assessee had failed to produce any independent evidence to prove that the tax had actually been paid to the credit of the Central Government. The Ld. Addl/JCIT(A) held that the basic statutory condition u/s 199 of the Act remained unfulfilled, and the assessee could only seek credit in the respective years where the tax is reflected or after correction by the deductor in accordance with law. Accordingly, the Ld. Addl/JCIT(A) confirmed the action of the Ld. AO and dismissed the appeal of the assessee.

Aggrieved with the order of the Ld. Addl/JCIT(A), the assessee has filed the appeal before the Tribunal.

None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. DR. The assessee sought adjournment by filing an application but since there was no justification for seeking the adjournment, therefore, the same was rejected and the appeal was heard with the assistance of the Ld. DR.

The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). In the Statement of Facts submitted before the Ld. CIT(A), the assessee had submitted that it is a limited company engaged in the business of execution of works contracts of various Government Departments. The return of income for the impugned assessment year was filed claiming TDS credit of Rs. 10,54,20,694/- and TCS credit of Rs. 22,91,537/- besides credit of advance tax and self assessment tax. The appellant was given the full credit of advance tax and self assessment tax but was given the TDS credit of Rs. 10,25,86,616/- and TCS credit of Rs. 14,93,345/- only. Therefore, the appellant filed the rectification petition seeking to rectify the above mistake apparent from the records u/s 154 of the Act, but the same was disposed of without giving the full credit of the TDS / TCS as prayed for. Before the Ld. CIT(A), the assessee filed the details of TDS brought forward from earlier years and also filed evidence. It was also stated that the details shown are also appearing in Form No. 26ASs of the respective years. It was submitted that the assessee is engaged in the business of execution of works contracts of various Government Departments and in the process it receives some advances and TDS is deductible at the time of making the advances whereas the income pertaining to some of such advances are offered for taxation in the subsequent years and hence TDS is carried forwarded to the subsequent years and claimed in the year in which the income pertaining to TDS is offered for taxation. It submitted that in the similar set of facts, ITAT Pune Bench “B”, Pune in the case of M/s Mahesh Software Systems Pvt Ltd vs ACIT, Circle-11(2), Pune (ITA No.1288/PUN/2017) held that the “It is, ergo, abundantly clear from the mandate of Rule 37BA(3)(i) that the benefit of TDS is to be given for the assessment year for which the corresponding income is assessable. Since the income of Rs.84.10 lakh, on which tax of Rs.8,41,050/- was deducted at source, is patently assessable in the year under consideration, we hold that the benefit of the TDS should also be allowed in the same year, namely, the year under consideration. We, therefore, overturn the impugned order and direct accordingly.” As regards the credit for TCS, it was submitted that the concerned department had collected the said but had not deposited to the credit of the government and therefore, the assessee should not be penalised for the default of the collector. Reliance was placed upon the decision of Honourable High Court of Bombay in the case of YASHPAL SAHNI vs. REKHA HAJARNAVIS, ASSISTANT COMMISSIONER OF INCOME TAX & ORS (2007) 293 ITR 539 (Bom) in which it has been held that “From the language of s. 205, it is clear that once the tax is deducted at ITA No(s). 88/GTY/2026 Assessment Year(s) 2019-20 source, the same cannot be levied once again on the assessee who has suffered the deduction. Once it is established that the tax has been deducted at source from the salary of the employee, the bar under s. 205 of the Act comes into operation and it is immaterial as to whether the tax deducted at source has been paid to the Central Government or not, because elaborate provisions are made under the Act for recovery of tax deducted at source from the person who has deducted such tax”. The Bench was of the view that the claim of TDS ought to have been allowed as per the year in which the income is declared. Further, in view of the decision of Hon'ble Bombay High Court relied upon by the assessing, once the tax is collected at source, the assessee should be granted the credit for the same. Hence, the order of the Ld. CIT(A) is set aside and the issue is remanded to the Ld. AO. The assessee is directed to furnish the required evidence that TDS and TCS was collected in the earlier and current years and also file evidence that the same was not claimed as a deduction in earlier years and has been claimed in the impugned assessment year in which the income has been shown. Upon being satisfied on the basis of the evidence filed, the Ld. AO is directed to grant the credit as per law. Hence, all the Grounds of appeal are partly allowed for statistical purpose.

In the result, the appeal filed by the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 2nd June, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 02.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Guwahati Benches, Guwahati.

Guard File. //// By order