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Facts
The assessee filed their income tax return, claiming TDS credit. The CPC restricted this claim by invoking Rule 37BA. The CIT(A) dismissed the assessee's appeal ex-parte due to non-response. The assessee has appealed this order to the Tribunal.
Held
The Tribunal found that the issue was primarily about the restriction of TDS credit. To ensure justice and proper consideration, the matter was remitted back to the AO for fresh consideration, directing the AO to allow TDS credit as per law and grant the assessee a reasonable opportunity of being heard.
Key Issues
Whether the TDS credit claim was correctly restricted by the CPC invoking Rule 37BA, and whether the CIT(A)'s ex-parte order was justified.
Sections Cited
250, 37BA, 143(1), 244A
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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 02/09/2024 in respect of the A.Y. 2023-24 on the following grounds of appeal:
1. General ground: 1.1. The learned Commissioner of Income-tax (Appeals) (hereinafter referred to as CIT (A) for short) has erred in passing the order under section 250 in the manner passed by him. The order so passed is bad in law and liable to be quashed.
2. Ground relating to restricting claim of TDS under Rule 37BA:
2.1. The CPC has erred in restricting the claim of TDS to Rs. 11,65,60,761 as against the TDS claim as per return of income amounting to Rs. 12,32,80,655 by incorrectly invoking rule 37BA of the Income tax Rules. The CPC has erred in denying TDS credit of Rs. 67,19,894. 2.2. The CPC has erred in not appreciating that the total receipts offered to tax under various heads of income cannot be compared to the total receipts as per Form 26AS on gross basis but must be compared for each nature of income/ receipt separately. 2.3. The CPC has erred in assuming the total receipts offered to tax under various heads as Rs. 45,25,19,39,847 without providing the source / working of the same. 2.4. The CPC has failed to appreciate that the total receipts on which tax has been deducted as per Form 26AS includes gross revenue from sale of goods whereas the amount of revenue from operations indicated as per the financial statements / profit and loss account is net of returns and discounts. 2.5. The CPC has erred in not appreciating that the gross receipts offered to tax, before adjusting for returns and discounts are higher than the gross receipts as per Form 26AS. 2.6. The CPC has erred in not appreciating that the gross receipts as per Form 26AS of Rs. 48,98,10,89,842 includes an amount of Rs. 2,88,00,000 is unearned revenue and has been offered to tax in the subsequent year and credit of TDS on this is also not claimed in the return of income in schedule TDS 1 of the return income. 2.7. The CPC has erred in applying the formula under Rule 37BA in the manner applied it, without appreciating that the Appellant has claimed a TDS credit only of Rs. 12,32,80,655 in the return of income, which is lower than the credit of Rs. 12,61,66,384 available as per Form 26AS. 2.8. The learned CPC has erred in not appreciating the fact that TDS credit cannot be denied for the reason that the deductor has not deposited TDS with the government. 2.9. The CPC has erred in not appreciating the fact that TDS cannot be collected from the appellant when the deductor has not deposit the same to the credit of the government.
2.10. Based on the facts of the case, the restricting of TDS credit to Rs. 11,65,60,761 is incorrect and the TDS credit must be restored back to amount claimed as per the return of Rs. 12,32,80,655.
Ground relating to interest under section 244A 3.1. The appellant prays that when the above grounds are allowed, the refund be granted along with interest under section 244A.
4. Prayer: 4.1. Based on the above grounds and other grounds to be adduced at the time of hearing, the appellant prays that the order passed under section 250 be quashed or in alternative the above grounds and relief prayed thereof be allowed. The appellant prays accordingly.”
The brief facts of the case are that the assessee had filed their return of income on 31/10/2023. The CPC had processed the return and sent an intimation u/s. 143(1) of the Act in which the TDS claim was restricted by invoking Rule 37BA of the Act. As against the said intimation, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) issued notices on 5 occasions for which the assessee had not responded and therefore the Ld.CIT(A) had decided the appeal ex-parte and dismissed the same. As against the said order, the assessee is in appeal before this Tribunal.
3. At the time of hearing, the Ld.AR submitted various grounds on merits and requested to grant one more opportunity to put forth their case before the Ld.CIT(A). The Ld.AR further submitted that since the intimation was sent without hearing the assessee, he prayed that one more opportunity may be granted to appear before the AO and satisfy him that the assessment made is wrong.
The Ld.DR relied on the order of the lower authorities and further submitted that both the authorities below had given various opportunities to the assessee for representing its case. But the assessee disregarded the notices issued by authorities. Therefore, for want of proper representation, the authorities were bound to pass the ex-parte order and objected for granting another chance to the assessee.
We have heard the arguments of both sides and perused the materials available on record.
We have perused the various grounds raised by the assessee against the restriction of TDS credit is concerned. The assessee filed return of income and claimed TDS. The CPC did not grant full credit of TDS as claimed by the assessee and intimation was generated. Against the intimation passed u/s. 143(1)(a), the assessee filed appeal before the Ld.CIT(A) and various notices were sent but there was no response from the assessee side. Therefore the Ld.CIT(A) passed order without going into the merits of the case. Since in this case, the dispute is only for not allowing the full TDS credit, as per our considered opinion and in the interest of justice, we are remitting this issue to the file of AO for fresh consideration after allowing TDS credit as per law and the AO is directed to grant reasonable opportunity of being heard to the assessee and the assessee is also directed to cooperate with the department for completing the assessment at the earliest without taking unnecessary adjournments.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 20th January, 2025.