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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
ORDER PER GAGAN GOYAL, A.M: This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi [hereinafter referred to as [‘NFAC’] dated 02.11.2021 passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as [‘the Act’] for the Assessment Year (AY) 2018-19. The assessee has raised the following grounds of appeal:
“1) The Ld Assessing Officer has erred in not grating the TDS credit of Rs. 5,38,921/- on account of the reason that the said TDS credit is not appearing in the Form 26AS for the AY 2018-19. 2) The Ld. CIT (A) has erred in dismissing the appeal of the Appellant thereby denying the TDS credit of Rs 5,38,921/- in the AY 2018-19. 3) The Appellant caves leave to add/alter any other grounds of appeal before or at the time of final hearing appeal.”
2. Brief facts of the case are that the assessee-company is engaged in the business of production of Television Software, filed its return of income on 15.10.2018 declaring total income of Nil claiming refund of Rs. 10,14,720/-. The return was processed under section 143(1)(A) of the Act. Vide this processing under section 143(1)(A) of the Act, assessee’s claim of refund was reduced from Rs. 10,14,720/- to Rs. 4,75,801/-. On the ground that balance figure of Rs. 5,38,921/- is not reflecting in Form No. 26AS for the year under consideration.
3. Against this order, the assessee filed an application under section 154 of the Act before the CPC, Bangalore on 23.12.2019. Vide its order dated 06.01.2020 CPC, Bangalore rejected the application filed by assessee citing the same reasons.
4. Being aggrieved with the order of CPC, Bangalore, assessee preferred an appeal before the Ld. CIT (A). The ld. CIT (A) also dismissed the appeal of assessee on the ground that “appellant raised above mentioned grounds challenging allowability of TDS Credit amounting to Rs. 5,38, 921/- which is not reflecting in 26AS of AY 2018-19 but the same is reflecting in next assessment year i.e. in AY 2019-20. It is also contended that he had offered total income from Viacom in AY 2018-19, therefore, he is entitled to claim TDS credit of total amount of Rs. 10,14,722/-.”
The ld. CIT (A) further relied in the case of Escorts Ltd. Vs. DCIT (2007) 15 SOT 368 (Delhi ITAT) held as under: "6. The scheme for giving credit for TDS was sought to be modified through clauses 56 and 59 of the Finance Bill, 2002 and the same have also been explained in the Memorandum explaining the provisions of the Finance Bill to state that: "Under the existing provisions of section 199 of the Income-tax Act, any deduction made in accordance with the provisions of sections 192 to 194 and 194A to 196D and 'Paid to the account of Central Government is treated as a payment of tax on behalf of the person from whose income the deduction was made or the owner of the security or depositor or owner of the property or of unit-holder or of the shareholder, as the case may be and credit given to such person for the amounts so deducted on the production of a certificate furnished under section 203 in the assessment made under this Act for the assessment year for which such income is assessable. Hardship is being faced by the assessee since in many cases certificates under section 203 are not furnished to them and as a result credit is not given for the tax so deducted. With a view to mitigate this hardship, it is proposed to insert a new sub section (14) in section 155 to provide that where in the assessment for any previous year or in any intimation or deemed intimation under sub section (1) of section 143 for any previous year, credit for tax deducted in accordance with the provisions of section 199 has not been given on the ground that the certificate furnished under section 203 was not filed with the return and subsequently such certificate is produced before the Assessing Officer within two years from the end of the assessment year in which such income is assessable, credit of TDS shall be given to the assessee on production of such certificate. Nothing contained in the proposed sub-section shall apply unless the income from which tax has been deducted has been disclosed in the return of income filed by the assessee for that assessment year. The proposed amendment shall enable the Assessing Officer to rectify the order of assessment or any intimation or deemed intimation under sub-section (1) of section 143."
The Ld. CIT (A) further observed “In the present case, it is clear from the action of deductor that it had not deposited the TDS on time in AY 2018-19 and this is the reason why it is not appearing in 264S of AY 2018-19. Had it been deposited in government treasury on time in AY 2018-19 and TDS returns furnished on time, it would have been reflected in 26AS of AY 2018-19. Therefore, the conduct of deductor is defeating the intent of law and appellant has also not approached the deductor for correction in TDS statements so that correct TDS amount appears in concerned assessment year.”
We have analyzed order passed under section 154 by the CPC, Bangalore, order of Ld. CIT (A) along with case law and provisions he relied upon. We observed that assessee has disclosed the total figure of income in A.Y. 2018-19 itself but because of some problem at the end of deductor is not able to claim the full amount of TDS on income declared. Assessee claimed TDS of Rs. 10,14,722/- against income received of Rs. 1,00,47,220/-. But CPC, Bangalore allowed TDS under section 143(1)(a) and 154 of the Act to the extent of Rs. 4,75,801/- (as reflected in Form No. 26AS). In our opinion assessee was liable to declare true and fair income in the relevant A.Y. and was entitled to claim full amount of TDS deducted by the deductor i.e. 10,14,722/-.
Assessee is nowhere empowered / obliged under the Act to chase the deductor to comply with the provisions of the Act like timely payment of amount deducted and filing return in time. These authorities and duties are their own Income-tax officials. As Ld. CIT (A) himself observed that assessee declared true and fair income, TDS has been deducted thereon but because of some problem / non-compliance at the end of the deductor, claim of assessee was denied. Even if, for the time being, we assumed that the action taken by CPC, Bangalore is justified even then assessee will face trouble in next year when he will claim balance amount of TDS amounting to Rs. 5, 38, 921/- as no corresponding income will be there. We have examined all the permutation and combinations in this case but the only possible way out of this problem is to allow the assessee full amount of TDS in A.Y. 2018-19. For default at the end of deductor in the form of late payment of tax or showing the same in next Financial Year should be taken up by the Department and assessee cannot be made liable for all these things. In the light of above, we direct the CPC, Bangalore to allow the full claim of assessee i.e. full claim of TDS amounting to Rs. 10, 14, 722/- with interest (minus) amount of TDS with interest already paid. With these observations, appeal of assessee is allowed and disposed of.
In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 20th day of October, 2022.