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Facts
The assessee filed a return of income, which was processed u/s.143(1). Subsequently, a rectification order u/s.154 was passed regarding TDS credit. The assessee claimed TDS credit for rental income, but it did not appear in Form 26AS. The tenant had deducted TDS but allegedly not deposited it. The assessee provided documentary evidence, including bank statements, to support the claim.
Held
The Tribunal noted that the CIT(A) denied TDS credit for want of a bank statement to prove receipt of rent net of TDS. The assessee has now furnished this as additional evidence. The Tribunal found that this evidence goes to the root of the matter and admitted it. It directed the Assessing Officer to verify the facts regarding the TDS credit claim.
Key Issues
Whether credit for TDS deducted by the tenant, but not reflected in Form 26AS and allegedly not deposited by the tenant, can be allowed to the assessee when income has been offered to tax.
Sections Cited
143(1), 154, 205
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
Present for: Assessee : Shri RajanRaichura, CA Revenue : Shri Hemanshu Joshi, SR DR Date of Hearing : 11.06.2025 Date of Pronouncement : 24.07.2025 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. CIT (A)- 53, Mumbai, vide order no. ITBA/APL/S/250/2024- 25/1073317639(1), dated 15.02.2025passed against the assessment order by Assessing Officer, u/s. 154of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 25.01.2024 for Assessment Year 2011-12.
Grounds taken by the assessee are reproduced as under: "1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in not allowing credit of tax deducted at source, merely for non-furnishing of bank statement to establish the fact that the tax was deducted at source but not credited to the government by the deductor and despite other supporting evidences that were provided during the course of e-proceedings and being fact finding authority should have sought the details of the same from the assessee, before passing the order. 2. Your appellant craves leave to add, alter or amend any of the above grounds of appeal or take a fresh ground(s) of appeal on or before the date of hearing."
3.1. Brief facts of the case are that assessee filed the return of income on 21.06.2011, reporting total income at Rs.4,59,68,846/-, which was processed u/s.143(1) by accepting the income so returned. Subsequently, an order u/s.154 was passed on 25.01.2024 rectifying the mistake, pursuant to application for rectification made by the assessee in respect of credit for TDS. Claim of the assessee is that tax payable on the returned income was Rs.1,40,53,995/- against which there was claim of TDS credit of Rs.1,00,58,720/- and advance tax of Rs.49,00,000/-. This resulted into a claim of refund of Rs.9,04,725/-. However, despite processing the return by accepting the income so reported, a demand of Rs.13,37,890/- was created because of non- granting of credit of certain TDS done by one Perception Hospitality Pvt. Ltd. from whom, assessee had earned rental income. Assessee had offered the said rental income for tax in the return so filed.
3.2. Assessee demonstrated by various corroborative documentary evidences that rent received is net of TDS but the credit for TDS does not appear in Form No.26AS for the year under consideration. From the same tenant, assessee had been receiving rent in the preceding years also, on which it has done TDS and which appears in Form No. 26AS for those years, i.e., Assessment Years 2010-11 and 2011-12. It is only for this year under consideration, i.e., Assessment Year 2011- 12, though the TDS has been done on the payment of rent to the assessee but the credit for the said TDS does not appear in Form No. 26AS.
3.3. Assessee has also placed on record copy of Leave and Licence agreement entered into with the tenant along with copies of ledger account and invoices raised by the assessee for the rent charged. Before the ld. CIT(TDS), assessee had submitted that the tenant, i.e., Perception Hospitality Pvt. Ltd. had deducted tax while making the payment but had not deposited the same to the government treasury, for which no action had been taken. In the rectification application moved by the assessee u/s.154, assessee claimed that TDS of Rs.19,85,400/- has not been allowed merely on account of the reason that it is not reflecting in ITBA system/in Form No.26AS. According to ld. Assessing Officer, TDS done by the tenant was not deposited into the government treasury.
3.4. Assessee placed reliance on the provisions contained in section 205 of the Act which states that “Where tax is deductible at source under the foregoing provisions of this chapter, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income”. To this effect, assessee referred to the bank statements and pointed out to the credit entries for receipt of rent which is net of TDS done by the tenant. Assessee thus asserted that TDS done by the tenant though not appearing in Form No.26AS, ought to be allowed so as to vacate the demand raised by the ld. Assessing Officer.
From the perusal of the order of ld. CIT(A), it is noted that the reason for denying the credit of TDS is that it is not substantiated through copy of bank statement. In this regard, assessee submitted that it had furnished a copy of one cheque received from the tenant as a sample to demonstrate that the receipt of rent is net of TDS. Assessee had also furnished copy of ledger in this regard. Since ld. CIT(A) insisted upon copy of bank statement, assessee has now furnished the same as additional evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 (ITAT Rules), vide application dated 04.04.2025.
We have heard both the parties and perused the material on record.The issue pertains only in respect of grant of credit for TDS done by the tenant in respect of which the income has already been offered to tax in the return filed by the assessee. Assessee had corroborated the claim by documentary evidences placed on record. However, ld. CIT(A) held against the assessee for want of copy of bank statement to establish that the assessee is in receipt of rent, net of TDS. Assessee has placed the same under Rule 29 of ITAT Rules.Since this evidence goes to the root of the matter though the other documentary evidences are already on record the same is admitted. This need verification at the end of the ld. Assessing Officer.
Accordingly, in the interest of justice and fair play, we find it appropriate to remit the matter back to the file of Ld. Jurisdictional Assessing Officer (JAO) for the limited purpose of verification to establish the facts in respect of claim of the credit for TDS done by the tenant. Ld. JAO is directed to verify the same and allow the claim of the assessee. Accordingly,grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 24th July, 2025