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Facts
The assessee claimed TDS credit of Rs. 2,68,18,119/- in its return of income. However, the CPC restricted the claim to Rs. 2,52,37,076/-, resulting in a short credit of Rs. 15,81,043/-. The assessee argued that the TDS credit related to income spread across multiple assessment years, and that Rs. 6,80,180/- was voluntarily forgone, restricting the claim to Rs. 9,00,863/-.
Held
The Tribunal held that the issue primarily involves verification of facts by the Assessing Officer. Rejection of the assessee's claim without proper verification leads to unnecessary multiplicity of proceedings. Therefore, the order of the CIT(A) was set aside and the matter was restored to the Assessing Officer for proper verification.
Key Issues
Whether the assessee is entitled to the full TDS credit claimed, considering that the income and TDS relate to multiple assessment years and require verification by the Assessing Officer.
Sections Cited
143(1), 154, 199, 37BA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “H (SMC
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
This appeal has been preferred by the assessee against order dated 17.01.2025 passed by the Ld. Additional Commissioner of Income-tax (Appeals) – 2, Guwahati [ in short the ld ‘CIT(A)’]for assessment year 2017-18, raising following grounds:
On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals), ADDL/JCIT (A)-2 Guwahati {hereinafter referred to as CIT(A)};
Erred in upholding the action of the CPC, Bangalore thereby 1. Erred in upholding the action of the CPC, Bangalore thereby 1. Erred in upholding the action of the CPC, Bangalore thereby not granting credit of tax deduc not granting credit of tax deducted at source to the extent of ted at source to the extent of Rs. 11,10,863. Rs. 11,10,863.
Failed to appreciate that the said TDS credit is either 2. Failed to appreciate that the said TDS credit is either 2. Failed to appreciate that the said TDS credit is either reflecting in Form 26AS of AY 2016 reflecting in Form 26AS of AY 2016-17 or AY 2018-19, details 19, details of which were submitted before the CIT(A) and income of which were submitted before the CIT(A) and income of which were submitted before the CIT(A) and income was offered to tax. 2. Briefly stated, facts of the case are that while processing the , facts of the case are that while processing the , facts of the case are that while processing the return of income u/s 143(1) of the Income return of income u/s 143(1) of the Income-tax Act, 1961 (in short tax Act, 1961 (in short ‘the Act’) the Central Processing Centre (CPC) restricted the claim of ‘the Act’) the Central Processing Centre (CPC) restricted the claim of ‘the Act’) the Central Processing Centre (CPC) restricted the claim of TDS credit of assessee of assessee to Rs.2,52,37,076/- as against claim as against claim of Rs.2,68,18,119/- made made in the return of income. Thus in the return of income. Thus, in the intimation order passed u/s 143(1) of the Act the TDS credit intimation order passed u/s 143(1) of the Act the TDS credit intimation order passed u/s 143(1) of the Act the TDS credit allowed was short by a sum allowed was short by a sum of Rs.15,81,043/-. The Ld. CIT(A) has . The Ld. CIT(A) has reproduced the ‘TDS ‘TDS mismatch report’ generated by the CPC generated by the CPC, which was sent to the assessee for giving its comments was sent to the assessee for giving its comments before passing of before passing of order u/s 143(1) of the Act. order u/s 143(1) of the Act. The CPC also provided detailed reasons The CPC also provided detailed reasons and possible resolution for the mismatch. The relevant part of the and possible resolution for the mismatch. The relevant part of the and possible resolution for the mismatch. The relevant part of the said mismatch report said mismatch report ( Table –C)is reproduced as under: s under:
“
SL Particulars Resolution No. 1. 1a) Invalid TAN entered in the return: In case Valid TAN Flag is mentioned as 'N' in the column No.7 of Table-B "Details of Flag is mentioned as 'N' in the column No.7 of Table Unmatched TDS and TCS Claimed in the Return, it implies that Unmatched TDS and TCS Claimed in the Return, it implies that invalid TAN is quoted by you and in such cases the credit will invalid TAN is quoted by you and in such cases the credit will not be matched with the claims. You are requested to file an not be matched with the claims. You are reques application for rectification online under section 154 by quoting application for rectification online under section 154 by quoting the correct TAN under 3c(i) category mentioned below. the correct TAN under 3c(i) category mentioned below. (1b) SAT/AT details are entered wrongly: 1b) SAT/AT details are entered wrongly: Please check the details entered in respect of Self Assessment Tax/Advance Tax details entered in respect of Self Assessment Tax/Advance Ta payment is exactly the same as appearing in Form 26AS. payment is exactly the same as appearing in Form 26AS. Credit available in Form Credit available in Form 26AS but not given in the 26AS but not given in the Please ensure the amount claimed in the return is exactly Please ensure the amount claimed in the return is exactly intimation order matched to the amount in the payment challan. Do not round off matched to the amount in the payment challan. Do not round off the amounts. Please ensure the date is entered in DD/MM/YYYY format. Please ensure the date is entered in DD/MM/YYYY format. You are requested to file an application for rectification online equested to file an application for rectification online under section 154 by quoting the correct CIN details (BSR code/ under section 154 by quoting the correct CIN details (BSR code/ Date of deposit/ Challan Sequence number) and amount under Date of deposit/ Challan Sequence number) and amount under 4c(i) category mentioned below. Ensure that all the above 4c(i) category mentioned below. Ensure that all the above details are exactly same as mentioned in Form 26AS. y same as mentioned in Form 26AS. (1c) "No data error in TAN/SAT/AT details: 1c) "No data error in TAN/SAT/AT details: In case, there is no data entry error (as mentioned in 1a and 1b above) and the no data entry error (as mentioned in 1a and 1b above) and the same matches with 26AS, you are requires to file a rectification same matches with 26AS, you are requires to file a rectification under 154 online under 4c(ii) category given below. under 154 online under 4c(ii) category given below. (1d) "No data error in particulars entered in TDS/TCS 1d) "No data error in particulars entered in TDS/TCS schedule": Please ensure that claim for the TDS/TCS are Please ensure that claim for the TDS/TCS are consistent with the claim made in schedule Part B-TTI and the consistent with the claim made in schedule Part B same matches with 26 AS. In case, you are required to make same matches with 26 AS. In case, you are required to make correction in schedule Part B-TTI of the Return, file online TTI of the Return, file online rectification under section154 under 4c(ii) category mentioned section154 under 4c(ii) category mentioned below. 2. (2a) Mismatch of TDS/TCS amounts claimed compared to (2a) Mismatch of TDS/TCS amounts claimed compared to Form 25AS: As the credit not appearing in 26AS, you should As the credit not appearing in 26AS, you should take up the matter of mismatch in the TDS/TCS, with your take up the matter of mismatch in the TDS/TCS, with your Deductor / Collector so that corrective action can be taken by Deductor / Collector so that corrective action can be taken by the Deductor / Collector. After the correction is done and the the Deductor / Collector. After the correction is done and the corrected statement filed by your deductor the credit will appear d by your deductor the credit will appear in 26AS. You can apply for online rectification under section 154 in 26AS. You can apply for online rectification under section 154 to get the benefit of unmatched credits under 4c(iii) category to get the benefit of unmatched credits under 4c(iii) category given below. (2b) Mismatch of SAT/AT: In case of mismatch of SAT/AT, (2b) Mismatch of SAT/AT: In case of mismatch of SAT/AT, please follow up with the back where payment was made or the with the back where payment was made or the Credit Not available in Credit Not available in Jurisdictional Assessing Officer. After the correction is done and Jurisdictional Assessing Officer. After the correction is done and Form 26AS the corrected statement filed by your Bank / Jurisdictional the corrected statement filed by your Bank / Jurisdictional Assessing Officer, the credit will appear in 26AS. You can apply Assessing Officer, the credit will appear in 26AS. You can apply for online rectification under section 154 to get the benefit of ation under section 154 to get the benefit of unmatched credits under 4c(ii) category given below. Ensure unmatched credits under 4c(ii) category given below. Ensure that all the above details are exactly same as mentioned in that all the above details are exactly same as mentioned in Form 26AS. For further information/guidance on Challan correction - please For further information/guidance on Challan correction logon to www.incometaxindia.gov.in - Select Challan Correction Mechanism. ”
Before the Learned CIT(A), the assessee contended that the 3. Before the Learned CIT(A), the assessee contended that the Before the Learned CIT(A), the assessee contended that the primary reason for the mismatch in TDS credit was the non-claim primary reason for the mismatch in TDS credit was the non primary reason for the mismatch in TDS credit was the non of certain TDS amounts in earlier years, which were brought of certain TDS amounts in earlier years, which were brought of certain TDS amounts in earlier years, which were brought forward and claimed in the assessment year under consideration, forward and claimed in the assessment year under consideration, forward and claimed in the assessment year under consideration, since the corresponding income had not been offered to tax in the corresponding income had not been offered to tax in the corresponding income had not been offered to tax in the earlier years but was offered in the relevant assessment year. By earlier years but was offered in the relevant assessment year. By earlier years but was offered in the relevant assessment year. By way of illustration, the assessee highlighted that an amount of Rs. way of illustration, the assessee highlighted that an amount of Rs. way of illustration, the assessee highlighted that an amount of Rs. 62,975/–, which had been shown as TDS brought forward from the , which had been shown as TDS brought forward from the , which had been shown as TDS brought forward from the earlier year in the return of income, nevertheless appeared as a rlier year in the return of income, nevertheless appeared as a rlier year in the return of income, nevertheless appeared as a mismatch in the impugned intimation. It was further submitted mismatch in the impugned intimation. It was further submitted mismatch in the impugned intimation. It was further submitted that, pursuant to a reconciliation of the updated Form 26AS with that, pursuant to a reconciliation of the updated Form 26AS with that, pursuant to a reconciliation of the updated Form 26AS with the corresponding party accounts the corresponding party accounts — owing to either the realization owing to either the realization of TDS or the write of TDS or the write-off of balances — the assessee voluntarily the assessee voluntarily forgone TDS credit of Rs. 6,80,180/ forgone TDS credit of Rs. 6,80,180/– out of the total short credit of out of the total short credit of Rs. 15,81,043/– as reflected in the impugned intimation. as reflected in the impugned intimation. as reflected in the impugned intimation. Accordingly, the assessee restricted its claim and sought credit for Accordingly, the assessee restricted its claim and sought credit Accordingly, the assessee restricted its claim and sought credit the balance amount of Rs. 9,00,863/ the balance amount of Rs. 9,00,863/–.
3.1 The Learned CIT(A), however, dismissed the assessee’s appeal The Learned CIT(A), however, dismissed the assessee’s appeal The Learned CIT(A), however, dismissed the assessee’s appeal primarily on the ground that the assessee had not reconciled each primarily on the ground that the assessee had not reconciled each primarily on the ground that the assessee had not reconciled each instance of mismatch between the income offered and the instance of mismatch between the income offered and the instance of mismatch between the income offered and the corresponding TDS claim, as corresponding TDS claim, as mandated under the provisions of mandated under the provisions of section 199 read with rule 37BA of the Income section 199 read with rule 37BA of the Income-tax Rules, 1962. tax Rules, 1962.
We have heard the rival submissions and perused the material We have heard the rival submissions and perused the material We have heard the rival submissions and perused the material available on record. The Centralized Processing Centre (CPC) in its The Centralized Processing Centre (CPC) in its intimation under section 14 intimation under section 143(1) granted short credit of Rs. 3(1) granted short credit of Rs. 15,81,043/- in respect of tax deducted at source (TDS). Before the in respect of tax deducted at source (TDS). Before the in respect of tax deducted at source (TDS). Before the Learned CIT(A), the assessee restricted its claim to Rs. 9,00,863/-, Learned CIT(A), the assessee restricted its claim to Rs. 9,00,863/ Learned CIT(A), the assessee restricted its claim to Rs. 9,00,863/ submitting that the balance amount had either been realized or submitting that the balance amount had either been realized or submitting that the balance amount had either been realized or written off and, hence, written off and, hence, was not being pursued. However, in the was not being pursued. However, in the grounds raised before us, the assessee has now sought TDS credit grounds raised before us, the assessee has now sought TDS credit grounds raised before us, the assessee has now sought TDS credit of Rs. 11,10,863/-.
4.1 The primary reason for the mismatch, as explained by the The primary reason for the mismatch, as explained by the The primary reason for the mismatch, as explained by the assessee, is that the TDS credit claimed relates to income spread assessee, is that the TDS credit claimed relates to income spread assessee, is that the TDS credit claimed relates to income spread across multiple assessment years. Rule 37BA of the Income s multiple assessment years. Rule 37BA of the Income s multiple assessment years. Rule 37BA of the Income-tax Rules, 1962 provides for such a situation. It stipulates that where Rules, 1962 provides for such a situation. It stipulates that where Rules, 1962 provides for such a situation. It stipulates that where tax has been deducted at source and paid to the Central tax has been deducted at source and paid to the Central tax has been deducted at source and paid to the Central Government, and the income is assessable over more than one year, Government, and the income is assessable over more than one year, Government, and the income is assessable over more than one year, credit for such tax shall be allowed across the years in the same r such tax shall be allowed across the years in the same r such tax shall be allowed across the years in the same proportion in which the income is assessable. proportion in which the income is assessable.
4.2 In such a case, the assessee is required to furnish details of In such a case, the assessee is required to furnish details of In such a case, the assessee is required to furnish details of the income offered to tax in the assessment year under the income offered to tax in the assessment year under the income offered to tax in the assessment year under consideration, along with the c consideration, along with the corresponding TDS reflected in Form orresponding TDS reflected in Form 26AS of earlier years, credit for which was not claimed in those 26AS of earlier years, credit for which was not claimed in those 26AS of earlier years, credit for which was not claimed in those earlier years. It is also incumbent upon the Assessing Officer to earlier years. It is also incumbent upon the Assessing Officer to earlier years. It is also incumbent upon the Assessing Officer to verify such details and examine each instance of mismatch, verify such details and examine each instance of mismatch, verify such details and examine each instance of mismatch, including the TDS already claim including the TDS already claimed and the portion carried forward ed and the portion carried forward to the current assessment year. to the current assessment year. Thus, the dispute essentially Thus, the dispute essentially involves verification of facts by the Assessing Officer. Rejection of involves verification of facts by the Assessing Officer. Rejection of involves verification of facts by the Assessing Officer. Rejection of the the the assessee’s assessee’s assessee’s claim claim claim without without without proper proper proper verification verification verification leads leads leads to to to unnecessary unnecessary multiplicity multiplicity of of proceedings. pro ceedings. In In the the facts facts and and circumstances of the case, we deem it appropriate to set aside the circumstances of the case, we deem it appropriate to set aside the circumstances of the case, we deem it appropriate to set aside the order of the Learned CIT(A) and restore the matter to the file of the order of the Learned CIT(A) and restore the matter to the file of the order of the Learned CIT(A) and restore the matter to the file of the Assessing Officer for proper verification of the assessee’s claim. The Assessing Officer for proper verification of the assessee’s claim. The Assessing Officer for proper verification of the assessee’s claim. The Assessing Officer sha Assessing Officer shall verify the details in light of the provisions of ll verify the details in light of the provisions of section 199 read with Rule 37BA of the Rules and allow credit of section 199 read with Rule 37BA of the Rules and allow credit of section 199 read with Rule 37BA of the Rules and allow credit of TDS, if found eligible, in accordance with law. TDS, if found eligible, in accordance with law. The assessee shall be The assessee shall be afforded a reasonable opportunity of being heard, including through afforded a reasonable opportunity of being heard, including through afforded a reasonable opportunity of being heard, including through physical mode of hearing, if permissible under the applicable hysical mode of hearing, if permissible under the applicable hysical mode of hearing, if permissible under the applicable procedures. We order accordingly. We order accordingly. The grounds of the appeal are The grounds of the appeal are allowed for statistical purposes. for statistical purposes.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.