LAXMI NARAYAN CHOUDHARY,BIKANER vs. INCOME TAX OFFICER, BIKANER

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ITA 346/JODH/2026Status: DisposedITAT Jodhpur27 October 2026AY 2023-145 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's appeal should be allowed. Following the decisions of coordinate benches in similar cases and relying on CBDT Circular No. 452 dated March 17, 1986, the Tribunal directed the Learned AO to examine and verify the contents of Form 26AS at the time of giving appeal effect. The AO was instructed to grant credit for any TDS mismatch to the appellant assessee. The reasoning was based on the principle that a 'Kaccha Arhatia' acts as an agent and not a principal, and sales made on behalf of principals should not be included in the agent's turnover. The Tribunal acknowledged that the TDS credit is dependent on the filing of TDS statements by the deductor and that the assessee has the liberty to get rectified TDS statements issued. The ratio decidendi is that TDS credit should be allowed if the corresponding income is offered for taxation, and the AO must verify Form 26AS and grant credit for TDS mismatch after due verification, considering the nature of business as an agent.

What were the facts?

The assessee, Laxmi Narayan Choudhary, filed an appeal against the order dated January 15, 2026, passed by the JCIT(A), Visakhapatnam. The primary grievance of the assessee was the disallowance of credit for Tax Deducted at Source (TDS) amounting to ₹1,01,811, which was reflected in Form 26AS. The assessee contended that this TDS was deducted under Section 194Q and should be allowed. The assessee also argued that sales made for his principal should not be included in his turnover, citing CBDT Circular No. 452 dated March 17, 1986, and that the disallowance was made without a specific show-cause notice. The revenue relied on the impugned order of the JCIT(A). The assessment year in question is 2023-24.

What were the issues?

1. Whether the Tribunal had to decide whether the assessee was eligible for credit of TDS amounting to ₹1,01,811, as reflected in Form 26AS, for Assessment Year 2023-24, turning on the provisions of Section 194Q and Section 199 of the Income Tax Act, 1961, and Rule 37BA of the Income Tax Rules. Assessee's Contentions: The assessee argued that the TDS credit of ₹1,01,811, deducted under Section 194Q and available in Form 26AS, should be allowed. The assessee further contended that sales made on behalf of his principal are not part of his turnover, citing CBDT Circular No. 452 dated March 17, 1986, and that the disallowance by the CPC and JCIT(A) was unjustified, illegal, and made without a specific show-cause notice. The assessee relied on coordinate bench decisions in the cases of Rajender Kumar Legha, Brijesh Kumar Agni (HUF), Amrit Lal Jain, and Ratnesh Garg. Revenue's Contentions: The revenue relied on the impugned order passed by the JCIT(A).

Which sections of the Income-tax Act were involved?

Section 194Q,Section 199,Section 37BA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

For Appellant: Shri Shafi Mohammad Chouhan
For Respondent: Ms. Prerna Choudhary, Addl. CIT-DR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SMT ANNAPURNA GUPTA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA No. 346/Jodh/2026 (Assessment Year – 2023-24) LAXMI NARAYAN CHOUDHARY Income Tax Officer, Ward No 1(2), 36, Wool Mandi, Pugal Road, Bikaner Bikaner - 334001 PAN No. AATPC 8470 B Assessee by Shri Shafi Mohammad Chouhan, Advocate (Physically) Revenue by Ms. Prerna Choudhary, Addl. CIT-DR (Through V.C.) Date of Hearing 14 / 09 / 2026. Date of Pronouncement 27 / 10 / 2026. ORDER PER SUDHIR PAREEK, JUDICIAL MEMBER The aforetitled appeal has been preferred by the appellant against the order dated 15th January 2026 passed by Officer of Commissioner of Income Tax Appeal, Addl/JCIT (A)-2 Visakhapatnam [for the sake of convenience, hereinafter referred to as JCIT(A)].

2.

The appellant has raised various grounds of appeal, primarily challenging the action of the Ld. CPC as well as the Ld. CIT(A) in not allowing the credit of TDS

2 ITA No. 346/Jodh/2026 Asst. Year: 2023-24 amounting to ₹1,01,811/-, which, according to the assessee, is duly reflected in Form No. 26AS.

3.

Reiterating the grounds of appeal, the Ld. AR expressed grievance that the Ld. CPC as well as Ld. CIT(A) erroneously disallowed the claim of TDS of Rs. 1,01,811/- deducted under Section 194Q which is available in form 26AS and denied the eligibility of the assessee. It is also submitted that as per circular no. 452 dated 17.03.1986 the sales made for his principle is not included in the turnover of the agent, hence the turnover declared by the assessee is correct and he is also eligible for the benefit of TDS as available in form 26AS, therefore, the act of the Ld. CPC and Ld. CIT(A) is unjustified and against the circular of CBDT and it is otherwise illegal as without any specific show cause notice.

4A. The Learned AR submitted that impugned order deserves to be set aside as issue involved in this appeal has already been decided by Coordinate Bench in the case of Rajender Kumar Legha ITA No. 1038/Jodh/2025 given as under:

“The Ld. AR also submitted that the order passed by the Ld. CIT(A) deserves to be set aside as issue involved in this appeal has already been decided by coordinate bench in the case of Brijesh Kumar Agni (HUF) Vs. ITA in ITA No. 534/Jodh/2024 vide order dated 07.01.2026 in which coordinate observed as under:- On an identical issue and parity of fact, in the case of Amrit Lal Jain Vs. ITO in ITA No. 627/Jodh/2024 for Assessment Year 2023-24 the bench has pronounced an order in Sept.

3 ITA No. 346/Jodh/2026 Asst. Year: 2023-24 2025 by following its own judgement delivered in the case of Ratnesh Garg Vs. ITO, in ITA No. 589/Jodh/2024 for the Assessment Year 2022-23 wherein the coordinate bench has observed as under: Having heard both the sides and perusal of record, we find that AO/CPC has not allowed the full claim of the TDS due to the mismatch of total receipt in ITR and Form-26AS. In this respect, appellant in his submission before Ld. CIT(A) and before us has submitted that he is a "Kaccha Arhatia" registered with Rajasthan Krishi Upaj Mandi and works as a middleman. As per the Circular No. 452(F.No. 201/3/85-/T(A- //)], dated 17.03.1986) the aforesaid Kaccha Arhatia acts only as an agent of his constituent and never acts as a principal. The JCIT(A) has not appreciated the facts of the case in right perspective. Considering the peculiar facts of the present cases, the matter is required to be restored to the AO for limited purpose with the direction to examine the contents of the Form 26AS at the time of giving appeal effect and give credit of TDS mismatch claimed subject to provision of section 199 of the I. T. Act and rule 37BA of the I. T. Rules. Thus, the AO has to verify the total receipts shown in 26AS and ITR and give credit of TDS to the appellant if the corresponding income has been offered either by the assessee, the Kachha Adatiya or its principle by for taxation in his income tax return in the relevant year after due verification. Without prejuaice to above, it is pertinent to mention that appellant is being a kachha arahtia involved in selling crops on behalf of farmers and therefore, only gross commission has to be considered for the purpose of computing the turnover in the light of aforementioned CBDT Circular 452 of 1986 dated 17.03.1986 while computing tax liability. It is clarified that the short credit of TDS granted in respect of TDS deducted against his own is dependent upon the filing of TDS statement by the deductor as mandated u/s 19 and rule 37BA(1). If there is any mismatch in the TDS claim as per the return vis-a-vis the TDS statement filed by the deductor. The assessee has been allowed due liberty by the LD. JCIT(A) that the TDS statement can be rectified by getting appropriate corrected TDS statement issued filed by the deductor. Considering the factual matrix of the case and the CBDT Circular 452 of 1986 dated 17.03.1986, we direct the AO to examine and verify the contents of the Form 26AS at the time of giving appeal effect and give credit of TDS mismatch if any, to the appellant assesses.”

4 ITA No. 346/Jodh/2026 Asst. Year: 2023-24 5. Per contra, the Ld. DR relied upon the impugned order passed by the Ld. CIT(A).

6.

On the basis of submissions advanced on behalf of appellant, fact situation of the case and following the coordinate bench decision as well as the CBDT circular 452 of 1986 dated 17.03.1986, we direct the Learned AO to examine and verify the contents of the Form 26AS at the time of giving appeal effect and give credit of TDS mismatch if any, to the appellant assessee and accordingly the appeal of the assessee deserves to be allowed.

7.

Consequently, the appeal of the assessee is allowed as indicated above.

Order pronounced in Open Court on 27/10/2026

Sd/- Sd/- (ANNAPURNA GUPTA) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 27/10/ 2026. Nimisha, Sr. PS True Copy

5 ITA No. 346/Jodh/2026 Asst. Year: 2023-24

Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File

BY ORDER, SIGN NIMISHA Digitally signed by NIMISHA ARORA ARORA Date: 2026.10.28 10:40:11 +05'30' Sr. Private Secretary ITAT Jodhpur Bench

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