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Facts
The assessee claimed TDS credit of Rs. 79,72,554/- based on Form 26AS, which was not fully reflected in the return of income due to technical glitches. The Assessing Officer rejected the rectification application and a subsequent petition under Section 119(2)(b). The CIT(A) allowed the appeal, directing the AO to grant credit for prepaid taxes.
Held
The Tribunal held that the CIT(A) was justified in directing the AO to allow credit for TDS as per Form 26AS, as the omission was due to technical glitches and not the assessee's fault. The Revenue's appeal was dismissed. The assessee's cross-objection regarding interest on refund was rejected due to lack of evidence of informing the AO about technical glitches.
Key Issues
Whether the assessee is entitled to TDS credit based on Form 26AS despite not claiming it in the return due to technical glitches, and whether interest on refund is payable when technical glitches prevented timely credit.
Sections Cited
154, 119(2)(b), 26AS, 199, 244
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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA
PER KUL BHARAT, VICE PRESIDENT.:
These appeal and cross objection by the Revenue and Assessee are directed against the order of the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) dated 05.03.2024, pertaining to the assessment year 2020-21.
CO. No.23/LKW/2024 Page 2 of 6 For the sake of convenience, these were heard together and are being disposed off by this common order. The Revenue has raised the following grounds of appeal: - “(i) Law and on facts of the case by deciding the case in favour of the assessee relying on the premise that matter before him for adjudication is pertaining to not giving the TDS credit of Rs.79,72,554/as per 26AS statement and ignoring the very fact of the matter that the assessee did not even claim such TDS to the tune of Rs.79,72,554/in its ITR. (ii) Law and on facts of the case by giving relief of Rs.79,72,554/holding that on the basis of Form 26AS statement, the TDS, which was not claimed in the : Return of Income may also be allowed to the assessee. iii) Law and on facts of the case by allowing the appeal of the assessee and ignoring the fact that application for condonation of delay u/s 119(2)(b) of the Act for claiming unclaimed TDS was filed by the assessee on the basis of hardship but the same was rejected by Ld. CCIT, Allahabad (copy of order is attached).”
2. The assessee has raised following grounds in cross objection: -
1. Because the CIT(A)/NFAC has erred on facts and in law in not directing for payment of interest on refund amount of Rs.79,72,554/while directing to issue the refund, the CIT(A)/NFAC, should ought to have directed for issue for refund with interest u/s.244 as may be due thereon.
2. Because the refund of Rs.79,72,554/due to the assessee being refundable should ought to have been refunded alongwith interest due thereon u/s.244, the AO be directed to calculate the interest on the refund amount and issue the payment advise for be same to the assessee.”
The facts, briefly, are that the assessee aggrieved by the action of the assessing authority for not giving credit to the entire amount deducted and reflected in Form 26AS filed an application before AO for rectification of mistake u/s 154 of Income Tax Act, 1961 (hereinafter referred to As “the Act”). This application was rejected. It is pertinent to note that the assessee had also filed a petition u/s 119(2)(b) of the Act. This petition was rejected by the Competent Authority. Aggrieved against rejection of application u/s 154 of the Act, the assessee preferred an appeal before the CO. No.23/LKW/2024 Page 3 of 6 Ld. CIT(A) who allowed the appeal of the assessee for statistical purposes. Thereby he directed the Assessing Officer to give credit for the prepaid taxes. Aggrieved against this, both the Revenue and the Assessee have filed appeal and cross-objection respectively.
Apropos to the grounds of appeal, the Ld. DR supported the action of the Assessing Authority and also pointed out that the assessee had also approached to the Chief Commissioner of Income Tax, Allahabad, by way of an application u/s 119(2)(b) of Income Tax Act, 1961 (hereinafter referred as to “Act”) and the same application was rejected. The Ld. CIT(A) ought not to have entertained the appeal of the assessee.
5. On the other hand, the Ld. Counsel for the Assessee reiterated the submissions as made in the written submissions and submitted that the present appeal relates to the proceedings u/s 154 of the Act, therefore, the Ld. CIT(A) was justified and entertaining the appeal and passing the impugned order.
We have heard the rival submissions and perused the materials available on record. The Ld. CIT(A) vide impugned order has decided the issue by observing as under: -
“6. These grounds of appeal are in relation to the appellant’s contention that the CPC has not allowed TDS credit completely while processing the ITR. As both the grounds are in identical in nature, therefore both are adjudicated together. The submission of the appellant, the grounds of appeal and the statement of facts and also the order of the assessing officer, it is noted that the claim of appellant towards TDS could be verified from the Form 26AS. As the CIT (AU) does not have access to the appellant’s 26AS form, whereas AO has access to verify from Form 26AS. Moreover, this is a matter of prima facie mistake according to the facts of the case furnished by the appellant as the issue involved is relating to not giving credit as per Form 26AS. Hence, the AO is directed to allow the credit of the prepaid taxes after due verification of the Form 26AS as per the provisions section 199 of the income Tax Act, 1961.
CO. No.23/LKW/2024 Page 4 of 6 7. In view of the above, the appeal of the appellant is allowed for statistical purpose.” 7. We do not see any infirmity in the impugned order. The tax-payer should not be subjected to harassment merely on the basis of some mistake occurred due to technical glitch of software.
The Hon'ble Supreme Court in the case of Aluminium Corporation of India Ltd vs Union of India & Ors (1975) 2 SCC 472 has observed as under:
If we may anticipate our ultimate conclusion even at the opening stage, this appeal deserves to be allowed as a matter of law but what is more significant for society are three unhappy features which, we feel confident, the State will seriously consider. They are: (a) that good government involves not only diligent collection of taxes, but also ready refunds of excess levies, (b) that simplicity or easy comprehensibility in drafting legislation, including rules and notifications affecting the laity, is an art found absent, although not difficult to accomplish, given a fresh approach to use of statutory language; and (c) that a fair construction not always one adverse to the assessee is permissible and proper on the part of government and the taxing officers when enforcing fiscal legislation.
Undisputedly, in this case, the assessee had not claimed credit of tax in its Income Tax Return. As per the assessee, the assessee had deducted tax during the year amounting to Rs.1,32,68,202/- but due to technical glitches TDS deducted to the tune of Rs.52,95,646/- was only updated by the software in the return of income. Therefore, the assessee had made an application for seeking rectification of mistake. Undisputedly, it is not the case of the revenue that the tax deducted as per Form No. 26AS was only Rs.52,95,646/- as uploaded by the assessee. Moreover, it is incumbent upon the assessing authority to ensure that the credit of tax deducted at source has been given as per Form No. 26AS. The Assessing Officer has not brought any materials to rebut this fact. Even otherwise also, it is not the case of AO that tax so deducted was not deposited in government CO. No.23/LKW/2024 Page 5 of 6 account. It is apparently a mistake that could not have been the basis of denial of credit of tax under the facts and circumstances of the present case. Thus, looking to the material placed before us and the finding of the Ld. CIT(A), we are of the view that the Ld. CIT(A) was justified in directing the Assessing Officer to give credit to the tax deducted at source. Therefore, we do not see any reason to interfere in the finding of the Ld. CIT(A). The grounds of appeal of the Revenue are hereby dismissed.
In the result, the appeal of the Revenue stands dismissed.
Now, coming to cross objection filed by the assessee. The only grievance is against the non-payment of interest on the refund due. Ld. Counsel contended that the case of the assessee is that the AO did not give credit of taxes deducted. Had the credit been given there would have been refund due and assessee would be entitled for interest on the amount of refund due. On the other hand, the Ld. DR opposed the submissions. He submitted that it was negligence of assessee itself. Hence, the cross objection is not tenable under law.
We have heard the rival contentions and perused the materials available on record. Undisputedly, the assessee himself had not claimed credit of taxes in the return of income. The case of the assessee is that due to the technical glitches entire claim could not be uploaded in the return of income. Under these facts, we do not see any fault on the part of the assessing authority for not granting refund along with interest thereon. Moreover, no material has been placed before us that any effort was made by the assessee for bringing to the notice of the assessing authority
In the result, the appeal of the revenue is dismissed and cross objection of the assessee is dismissed.
Order pronounced in the open Court on 20/02/2025.