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Facts
The assessee, a legal heir of a deceased consultant, received professional income from which Tax Deducted at Source (TDS) was deducted. However, the TDS credit was not fully granted to the assessee. The assessee had declared income for assessment years 2016-17, 2017-18, and 2018-19, and filed returns which were processed under Section 143(1).
Held
The Tribunal held that the Assessing Officer cannot hold the assessee liable for TDS that was deducted but not deposited into the government treasury by the deductor. Relying on Section 205 of the Act and various High Court decisions, the Tribunal directed the Assessing Officer to grant the necessary TDS credit to the assessee.
Key Issues
Whether the assessee is entitled to TDS credit for amounts deducted but not deposited by the deductor into the government treasury, and whether Section 205 bars the revenue from raising a demand on the assessee for such tax.
Sections Cited
205, 143(1), 143(1)(a), 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI OMKARESHWAR CHIDARA
The assessee is an individual and filed its return of income within the due date for all the years under consideration. It is submitted that, assessee was salaried person till his retirement and post retirement he practiced as consultant in the field marine engineering, naval architecture and management consultancy. It is submitted that, assessee received remuneration from ABG Shipyard Ltd. And Varun Global Ltd., during the years under consideration. It is also submitted that, the assessee expired on 15/01/2022 and is represented by his legal heir. 3.1 The Ld.AR submitted that, the only short issue involved in these three appeals are regarding short credit of TDS for the years under consideration. The Ld.AR submitted that, assessee filed the return declaring following income during the years under consideration. “A.Y. 2016-17 – 80,000 A.Y. 2017-18 – 5,80,000 A.Y. 2018-19 – 1,80,000 ” 3.2 The Ld.AR submitted that, these returns were processed u/s.143(1), wherein the Ld.AR submitted that, TDS credit was not granted completely to the assessee, though it was deducted by the deductors. Aggrieved by the order under 143(1)(a), the assessee preferred appeal before the Ld. CIT(A).
A.Y. 2016-17 to 2018-19 Firuzeh Soli Engineer, Legal Heir of Late Soli Engineer The Ld.CIT(A) referred prefer the matter to further verification, as there was mismatch in the TDS credit claimed by the assessee vis a vis TDS deducted as per 26AS. Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal before this Tribunal.
The Ld.AR furnished charts proving gross invoice raised and the net payment received after the TDS being deducted by the respective deductors. It is submitted that, the amount was deposited, net of TDS in the bank account of the assessee. The Ld.AR submitted that, each and every payment received from ABG Shipyard and Varun Shipping deposited into the account of the assessee after reducing the amount towards TDS. It is submitted that, only few TDS deducted were deposited into the government treasury by the deductors due to which there is mismatch. 4.1 The Ld.AR referred to that, section 205 and submitted that the department cannot make assessee liable for the payment of tax to the extent to which the tax has been deducted at source by the deductors. The Ld.AR also relied on the following decisions that supports this contention: i. Decision of Hon’ble Bombay High Court in case of Yashpal Shani v/s. Hajarnavis, ACIT & Others reported in (293 ITR 539) ii. Decision of Hon’ble Gujarat High Court in the case of MIlind Arvindbhai Patel Vs. ACIT (455 ITR 82) iii. Decision of Hon’ble Delhi High Court in case of BDR Finvest (P) Ltd. V Deputy Commissioner of Income tax, 161 Taxmann.com 583. iv. Decision of Hon’ble Delhi High Court in case of Sanjay Sudan v. Assistant Commissioner of Income Tax (2023) 452 ITR 107.
A.Y. 2016-17 to 2018-19 Firuzeh Soli Engineer, Legal Heir of Late Soli Engineer 4.2 The Ld.AR thus submitted that, assessing officer cannot hold assessee liable for the TDS that was deposited by the deductor into the government treasury though deducted. He also placed reliance on CBDT Instruction dated 01/06/2016 wherein, all Chief Commissioners/Commissioner were directed to cancel the demands in such circumstances. 4.3 On the contrary the Ld.DR submitted that, the issue may be remanded to the Ld.AO for necessary verification and consideration. We have perused the submissions advance by both sides I the light of record placed before us.
Admittedly, the TDS was deducted by the deductor. However, some of the amount was not been deposited into the Government treasury. The bank statement of the assessee filed in the paper book reveals the amount deposited into the assessee’s account net of TDS. The details of the TDS claimed by the assessee in the return of income are as under : For A.Y. 2016-17 Particulars Gross amount (Rs.) TDS @ 10%(Rs.) TDS on Professional Receipts Varun Shipping Co. Ltd 72,00,000 7,20,000 ABG Shipyard Ltd 37,00,000 3,70,000 Adel Shipping & Logistics Ltd. 20,000 2,000 TDS on Professional Fees 10,92,000 Other TDS (Interest Income) 7,48,288 Total TDS 18,40,288 5.1 It is noted that, the TDS Rs. 3,70,000/- deducted by ABG Shipyard and the assessee was only paid net amount into the bank account for the relevant period. Subsequently, the assessee preferred application under 154 and CPC while passing order under 154 granted TDS credit of only upto Rs.2,90,000/-. The A.Y. 2016-17 to 2018-19 Firuzeh Soli Engineer, Legal Heir of Late Soli Engineer balance 80,000/- was not granted as ABG Shipyard did not deposit the said amount to the government treasury. 5.2 Similarly, for the other remaining assessment years under consideration, identical mismatch occurred and the assessee was not granted TDS credit. These are verifiable from the Bank statement and the invoices raised by the assessee. 5.3 Similar in the situation in case of payments received from Varun Shipyard. In this view of the factual position section 205 preclude the revenue from raising a demand on the assessee to pay. The revenue under no circumstances could make assessee liable to make payment of any tax to the extent the same was deducted at source by the deductor. Further instruction issued by the CBDT based instruction no. 5/2013 and 01/06/2015 categorically restricted the authorities from raising any demand on the deductee and /or enforce the assessee to make good the payment of the TDS that already was deducted by the deductor.
We therefore direct to the Ld.AO to grant necessary credit to the assessee. The assessee is directed to furnish all relevant documents in support of its claim. 6. Accordingly the grounds raised by the assessee for the A.Y. 2016-17 stands allowed.
7. Identical directions are issued in respect of the assessment year 2017-18 and 2018-19 mutatis mutandis.
8. Accordingly the grounds raised by the assessee for the A.Y. 2017-18, 2018-19 stands allowed. In the result the appeals filed by the assessee for all the assessment 3 years stands allowed.