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Facts
The assessee, a private trust, earned interest income and claimed TDS credit. However, certain TDS amounts were not reflected in Form 26AS. The AO made an addition of Rs. 5,32,083/- based on this discrepancy, which the assessee argued resulted in double addition.
Held
The Tribunal noted that the assessee had offered the gross interest income to tax and that the AO added the TDS credit claimed which was not reflected in Form 26AS. The Tribunal also considered the issue of interest u/s 244A.
Key Issues
Whether the addition made by the AO on account of TDS credit not reflected in Form 26AS is valid, and whether the assessee is entitled to interest u/s 244A till the date of actual refund.
Sections Cited
244A, 143(1), 143(3), 199, 37BA, 205
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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI GIRISH AGRAWAL
Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 29/11/2024 passed by Ld.CIT(A) Faridabad, for assessment year 2017-18 on following grounds of appeal :
“1. The Ld. CIT(A) has erred in not giving any direction with regard to the action of the Ld. AO in making addition of Rs. 5,32,083/-, On A.Y. 2017-18 P K Jain Family Holding Trust the facts, that the said amount has already offered to tax thereby resulted in double additions, and in the circumstances of the case and in law, the addition of Rs. 5,32,083/- made ought to be deleted.
The Ld. CIT(A) has erred in directing the Ld. AO to grant the TDS credit of Rs. 5,32,083/- taking into account the TDS amount as mentioned in Form 26AS. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have directed to allow the TDS credit of Rs. 5,32,083/- as per the provisions of the law and the Rules made thereunder instead of on the basis of amount reflected in Form 26AS.
The Ld. CIT(A) has erred in treating the interest under section 244A as consequential in nature swithout appreciating the fact that ground relating to interest under section 244A was independent of the other grounds. On the facts and in the circumstances of the case and in law, interest u/s 244A ought to be given till the date of actual refund as against till the date of computation of such interest.
4. The appellant craves leave to add, alter, amend and/or rescind any grounds of appeal during the course of the hearing.” Brief facts of the case are as under:
2. The assessee is a private trust and during the year under consideration assessee earned Income from Business & Profession, Capital Gain and Income from Other Sources. It filed its return of income on 05.08.2017 declaring total income of Rs. 1,21,63,297/-. 2.1 During the year under consideration, assessee earned interest income of Rs.1,05,13,029/- on which TDS of Rs. 10,16,942/- was deducted by various parties. The assessee filed statement showing party-wise details of income and TDS deducted along with ledger confirmation. The assessee claimed TDS credit of Rs. 10,16,942/- in respect of which underlying interest income was offered to tax in accordance with A.Y. 2017-18 P K Jain Family Holding Trust the provision of section 199 r.w.r. 37BA. However, in form 26AS TDS of Rs. 4,84,859/- was only reflected. The assessee submitted that, TDS of Rs. 5,32,083/- deducted by following parties were not reflected: a) Rs. 5,17,083/-deducted by Dhanji Developers b) TDS of Rs. 75,000/-deducted by Jayesh P. Mehta but in form 26AS only Rs. 60,000/-was reflected. 2.2 The assessee vide its letter dated 18.11.2019 has submitted reconciliation of interest income as per 26AS and as per books offered to tax. In the said reconciliation, the assessee gave break- up of interest income of Rs. 1,05,13,029/- credited in profit & loss account and offered to tax. The said interest income of Rs. 1,05,13,029/-includes gross interest income of Rs. 51,70,833/- received from Dhanji Developers on which TDS of Rs. 5,17,083/- deducted and not reflected in form 26AS (inadvertently shown as reflected in form 26AS in the said reconciliation statement). Similarly, said interest income of Rs. 1,05,13,029/- includes gross interest income of Rs. 1,50,000/-received from Jayesh P Mehta on which TDS of Rs. 15,000/- deducted and not reflected in form 26AS.
2.3 The Ld.AO issued show cause notice dated 29.11.2019 as to why the variation between TDS claimed in return and Form 26AS should not be added back to the total income.
2.4 In response to the same, the assessee filed its reply vide letter dated 02.12.2019 on e-filling portal giving reasons as to why the proposed additions should not be made. Copy of the submission along with the Acknowledgment letter is attached at Page no 8-15, of the Paper Book. However, the Ld.AO without Aggrieved by the order of the Ld.AO, assessee preferred appeal before the Ld. CIT(A).
3. The Ld. CIT(A) after considering the submissions of the assessee observed and held as under: “5.1.2 The appellant has claimed that credit TDS by Dhanji Developers amounting to Rs. 5,17,083 and TDS by Sh. Jayesh P. Mehta amounting to Rs. 15,000 has not been allowed by the AO. In this regard it is opined that since almost four years have lapsed since the inception of the appeal, and it may be possibility that the aforementioned TDS entries may now be updated in the Form 26 AS; the AO may give credit as per law, taking into account the TDS amount as mentioned in Form 26.” 3.1 Before the Ld. CIT(A)the assessee also raised claimed of interest u/s. 244A up to the date of actual receipt of the refund. 3.2 The Ld. CIT(A) dismissed this ground by observing it to be consequential in nature with the direction to verify computation of interest u/s. 244A as per law. Aggrieved by the order of the Ld.AO assessee is in appeal before this Tribunal.
Ld.AR submitted that Ld.AO added Rs. 5,32,083/- to the total income of the assessee only on the ground that the TDS credit claimed by the assessee in respect of the above named two parties is not reflected in form 26AS. Ld.AR drew our attention to the party wise summary of interest submitted vide letter dated 02/12/2019 before the Ld. AO. The Ld.AR submitted that the assessee already offered gross interest income (inclusive of TDS of Rs. 5,32,083/- credit of which is not reflected in form 26AS) in the return of income.
A.Y. 2017-18 P K Jain Family Holding Trust 4.1 Accordingly, Ld.AR prayed for deduction of addition of Rs. 5,32,083/- made by the Ld. AO all it amounts to double addition. In support we place reliance on the decision of Hon’ble Bombay High Court in case of Yashpal Sahni vs. ACIT reported in (2007) 165 taxmann.com 154 where in the Hon’ble Court observed and held as under :
“As stated earlier, in the present case the petitioner-assessee has established that from his salary income, tax has been deducted at source by the employer-respondent No. 6 and, therefore, the revenue has to recover the said TDS amount with interest and penalty from the respondent No. 6 alone and the revenue cannot seek to recover the said amount from the petitioner-assessee in view of the specific bar contained under section 205 of the Act. The fact that the petitioner is not entitled to the credit of the tax deducted at source for the non-issuance of the TDS certificate by the respondent No. 6, cannot be a ground to recover the amount of tax deducted at source from the petitioner. In other words, even if the credit of the TDS amount is not available to the petitioner-assessee for want of TDS certificate, the fact that the tax has been deducted at source from salary income of the petitioner would be sufficient to hold that as per section 205 of the Act, the revenue cannot recover the TDS amount with interest from the petitioner once again. again”
4.2 Reliance was also placed on the decision of Hon’ble Coordinate Bench of the Tribunal in case of LSG Sky Chef India Pvt. Ltd. vs. DCIT reported in (2014) 45 taxmann.com 256 where in this Tribunal observed and held as under:
“3 The issue or the imbroglio, however, has to be resolved. We have given our careful and anxious consideration to the matter. In our view, though Form 264S (r/w r.314B and sx. 203AA and 206C(5)) represents a part of a wholesome procedure designed by the Revenue for accounting of TDS (and TCS), the burden of proving as to why the said Form (Statement) does not reflect the details of the entire tax deducted at source for and on behalf of a deductee cannot be placed on an assessee-deductee. The assessee, by furnishing the TDS certificate/s A.Y. 2017-18 P K Jain Family Holding Trust bearing the full details of the tax deducted at source, credit for which is being claimed, has in our view discharged the primary onus on it toward claiming credit in its respect. He, accordingly, cannot be burdened any further in the matter. The Revenue is fully entitled to conduct proper verification in the matter and satisfy itself with regard to the veracity of the assessee's claim/s, but cannot deny the assessee credit in respect of TDS without specifying any infirmity in its claim/s. Form 26AS is a statement generated at the end of the Revenue, and the assessee cannot be in any manner held responsible for any discrepancy therein or for the non-matching of TDS reflected therein with the assessee's claim/s. Where so, no doubt a matter of concern, is one which is to be investigated and pursued by the Revenue, which is suitably armed by law therefor. The plea that the deductor may have specified a wrong TAN, so that the TDS may stand reflected in the account of another deductee, is no reason or ground for not allowing credit for the TDS in the hands of the proper deductee. The orus for the purpose lies squarely at the door of the Revenue.” On the contrary the Ld.DR relied on orders passed by the authorities below. We have perused the submissions advanced by both sides in the light of records placed before us.
It is noted that, the parties deducted TDS that was not deposited into the government account during the year under consideration due to which, the same was not reflected in form 26AS. It is also noted that, assessee offered gross income to taxed for the year under consideration. In the interest of justice we remit the issues back to the Ld.AO to carry out necessary verification having regard to the evidences filed by the assessee in accordance with law. 5.1 The Ld. AO is directed to verify the evidences filed by the assessee in the light of the ratios in decisions refered to herein above and to delete the addition made if the submissions of the assessee is found to be correct.
A.Y. 2017-18 P K Jain Family Holding Trust Accordingly, Ground no. 1 and 2 raised by the assessee stands allowed for statistical purposes.
Ground No. 3 raised by the assessee is in respect of interest to be computed u/s. 244A of the Act till the date of actual issuance of the refund determine actual issuance of the refund determine after giving effect to the orders of this Tribunal. 6.1 The Ld.AR submitted that, assessee claimed refund of Rs.1,08,74,200/- comprising of excess advance tax and self assessment tax placed. It is submitted that the return was processed u/s. 143(1) and the refund of Rs. 1,15,59,422/- was determined including interest of Rs. 12,06,584/- u/s. 244A of the Act. The Ld. AR submitted that, no refund was granted to the assessee along with the intimation passed. 6.2 It was submitted that, subsequently, the assessment was completed u/s. 143(3) of the Act, wherein refund was computed on 1,01,45,072/- including interest of Rs. 12,06,584/- It is submitted that, until passing of assessment order assessee was not issued any refund, and that it was on 11/01/2021 that the refund was issued to the assessee. 6.3 It is the submission of the Ld.AR that, the assessee should be granted interest u/s. 244A till the date of actual issuance of refund that is 11/01/2021. In support he placed reliance on the decision of coordinate bench of the Tribunal in case of Tata Sons Pvt. Ltd. vs. DCIT in for assessment year 1993-94 vide order dated 6/12/2023. The Ld.AR submitted that the this coordinate bench of this Tribunal relied on the decision of Hon’ble Bombay High Court in case of CIT vs. Pfizer Ltd. reported in (1991) 191 ITR 626.
A.Y. 2017-18 P K Jain Family Holding Trust 6.4 On the contrary the Ld.DR placed reliance on the orders passed by the below. We have perused the submissions by both sides in the light of record placed before us.
It is noted that the issue is covered by the decision of Hon’ble Bombay High Court in case of Pfizer Ltd. (supra) that is followed by the coordinate bench of the Tribunal in case of Tata Sons Pvt. Ltd. (Supra) this Tribunal by observing as under: “9. On the issue of grant of refund till the date of issue of refund, the Id AR submitted that the issue is squarely covered in favour of the assessee vide the decisions of Hon'ble Bombay High Court in case of CIT vs. Pfizer Limited [1991] 191 ITR 626 (Bom) and also of City bank NA Mumbai Vs. CIT in of 2001 as well as the decision of CIT vs. K.E.C International in of 2000. Respectfully following the aforesaid precedents, in our considered view, the assessee is justified in seeking interest u/s 244A of the Act upto the date of receipt of the refund order, i.e. 18.08.2022. Accordingly the AO is directed to re- calculate the interest up to the date of actual receipt of refund by the assessee. It is ordered accordingly.” 7.1 Respectfully following the above the AO is directed to calculate the interest upto the date of the issuance receipt of the assessee. In the result the appeal filed by the assessee stands allowed as indicated here in above. Order pronounced in the open court on 27/03/2025