RINKOO PROCESSORS LIMITED,AHMEDABAD vs. CIRCLE 3(1)(1), AHMEDABAD

The Learned NATIONAL FACELESS APPEAL CENTRE (NFAC) DELHI has erred in not considering the fact that we had already settled the accounts of Goyal Developers and Goyal Developers has not claimed the TDS of Rs. 3,50,000/-.”

The brief facts of the case are that the assessee-company filed its return of income for the year under consideration on 30.09.2015 declaring total income of Rs.93,83,540/-. The assessment was originally completed under section 143(3) of Rinkoo Processors Ltd Vs. ITO - 2– the Act on 10.11.2017 determining the total income at Rs.95,29,988/-. Subsequently, the assessment was reopened u/s 147 of the Act on the basis of information available in the ITS records that TDS of Rs.3,50,000/- u/s 194IA of the Act had been reflected in the assessee's Form No.26AS in respect of an immovable property transaction. During the reassessment proceedings, the assessee explained that it had not sold any property. On the contrary, it had purchased an immovable property from M/s Goyal Developers for a consideration of Rs.3,50,00,000/- and while deducting tax under section 194IA of the Act, an inadvertent mistake occurred in Form No.26QB whereby the PAN of the assessee was quoted in the seller's PAN column instead of the PAN of M/s Goyal Developers. Consequently, the TDS credit of Rs.3,50,000/- came to be reflected in the assessee's Form No.26AS.

1 The Assessing Officer held that since the assessee was the purchaser of the property, it was not entitled to the TDS credit u/s 199 of the Act and he accordingly denied the TDS credit of Rs.3,50,000/-.

Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Ld. CIT(A), who, directed the Assessing Officer to drop the penalty proceedings, however, confirmed the action of the Assessing Officer in denying the TDS credit.

Aggrieved by the order of the Ld. CIT(A) confirming the disallowance of TDS credit, the assessee is now in appeal before the Tribunal.

Before us, the Ld. AR submitted that the assessee had duly deducted and deposited TDS of Rs.3,50,000/- u/s 194IA of the Act; however, while filing Form No.26QB, the assessee inadvertently quoted its own PAN instead of the PAN of the seller, i.e. M/s Goyal Developers, due to which the TDS credit was reflected in the assessee's Form No.26AS. It was submitted that the error was purely clerical and bona fide, the seller has not claimed the impugned TDS credit and the entire transaction stood fully settled between the parties. The Ld. AR, therefore, Rinkoo Processors Ltd Vs. ITO - 3– contended that the issue is procedural in nature and requires correction of the departmental records. Reliance was placed on the decision of the Hon'ble Delhi High Court in the case of Parag Keshav Bopardikar vs. ITO & Ors. [TS-727-HC- 2025 DEL, decided on 27.05.2025] in support of the contention that a procedural error in Form No.26QB should not result in denial of relief where the tax has admittedly been deposited with the Government.

The Ld. DR, on the other hand, relied upon the orders of the Assessing Officer and the Ld. CIT(A). It was submitted that under section 199 of the Act read with Rule 37BA of the Rules, the TDS credit is allowable only to the person from whose income tax has been deducted and, therefore, the authorities below were justified in denying the claim of the assessee.

We have heard the rival submissions and perused the material available on record.

1 The undisputed facts emerging from the record are that the assessee had purchased an immovable property from M/s Goyal Developers for a consideration of Rs.3,50,00,000/- and had deducted tax at source of Rs.3,50,000/- u/s 194IA of the Act. It is equally undisputed that the said tax was deposited into the Government account. The controversy has arisen only because while furnishing Form No.26QB, the PAN of the assessee was inadvertently quoted in place of the PAN of the seller, as a result whereof the TDS credit came to be reflected in the assessee's Form No.26AS. The Assessing Officer has denied the TDS credit on the ground that the assessee, being the purchaser, is not entitled to such credit and that the seller ought to have sought correction of the TDS particulars. The Ld. CIT(A) has affirmed the said action.

2 From the material available before us, we find that there is no dispute regarding the actual deduction and deposit of tax with the Central Government. There is also no finding recorded by the Revenue authorities that the tax has not been deposited or that any double credit has been claimed. The controversy is confined only to an inadvertent mistake committed while quoting the PAN in Rinkoo Processors Ltd Vs. ITO - 4– Form No.26QB. Before us, the assessee has contended that the mistake was bona fide and clerical in nature, that the seller has not claimed the impugned TDS credit.

3 The entire legal sequence of issue and the remedy accorded is as under:-  STATUTORY OBLIGATION U/S 194IA: As the buyer, the assessee was under statutory obligation under Section 1941A of the Act to deduct tax @1% on the property consideration. The assessee duly deducted tax of Rs. 3,50,000/- and deposited the same with the Government treasury within the prescribed period. The deposit of this tax is not disputed by the Revenue and a matter of record.

4 In view of above, in our considered opinion, the present issue is essentially procedural in nature. Therefore, in the interest of justice, we deem it appropriate to set aside the impugned order of the Ld. CIT(A) on this limited issue and restore the matter to the file of the Juri ictional Assessing Officer. The Juri ictional Assessing Officer shall verify the factual position regarding the inadvertent quoting of the wrong PAN, the actual deposit of TDS amounting to Rs.3,50,000/- and check as to whether the corresponding TDS credit has been claimed by any other person or not. Upon such verification, the Juri ictional Assessing Officer shall carry out the necessary manual rectification for rectifying the bona fide mistake and grant consequential relief to the assessee in accordance with law.

5 Even otherwise, we hold that the reasons recorded by the Assessing Officer while issuing notice u/s 147 mentions that the assessee had sold the property, whereas, the assessee had purchased the property, rendering the issue of notice invalid.

In the result, the appeal of the assessee is allowed for statistical purposes.