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Facts
The assessee, Dharti Foundation (a resident trust), claimed TDS credit of Rs. 3,34,690/- in its return, which was reflected in Form 26AS. However, the CPC, while processing the return under section 143(1) and subsequently rectifying it under section 154, allowed only Rs. 26,697/-. The CIT(A) dismissed the assessee's appeal, citing a significant discrepancy between the income reflected in Form 26AS (Rs. 46,12,020/-) and the total income declared in the return (Rs. 3,34,690/-), indicating that the entire income from 26AS was not offered to tax.
Held
The Tribunal found that the issue of granting TDS credit necessitated proper verification and reconciliation between the receipts reflected in Form 26AS and the income offered to tax in the return. Consequently, in the interest of justice, the matter was restored to the file of the Assessing Officer for fresh examination and verification of the TDS claim as per the provisions of the Act.
Key Issues
Whether the CIT(A) erred in upholding the disallowance of TDS credit due to a mismatch between income declared in the return and receipts reflected in Form 26AS, requiring proper verification and reconciliation by the Assessing Officer.
Sections Cited
s. 154, s. 143(1), s. 199(2), s. 194A, s. 194C
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Income Tax Appellate Tribunal, “ SMC ” BENCH, AHMEDABAD
Before: MS SUCHITRA KAMBLE
आदेश/O R D E R PER SUCHITRA KAMBLE, JM:
The captioned appeal has been filed at the instance of the Assessee against the order dated 04.09.2025 passed by the Learned Commissioner of Income Tax (Appeal), Thane arising in the matter of assessment order passed under s. 154 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2022-23.
ITA No.2250/Ahd/2025 Asst. Year 2022-23
2 2. The assessee has raised the following grounds of appeal: 1. The Ld.CIT(A) erred in law and facts of the case, in sustaining the disallowance of credit of TDS of Rs.3,07,993/- while processing the return u/s.143(1) as well as while rectifying the same u/s.154 2. The appellant craves leave to add, amend, alter or delete the grounds of appeal at the time of hearing, if need arise.
The brief facts of the case are that the appellant, Dharti Founation, is a resident trust. The assessee-trust has filed return of income on 30.11.2022, declaring total income of Rs. 3,67,952/-. The assessee-trust claimed TDS of Rs. 3,34,690/- in return of income, which was duly reflected in 26AS. However, CPC processed the return of income u/s 143(1) and passed Intimation Order dated 01.05.2023, wherein TDS credit of Rs.26.697/- only is allowed against the claimed TDS credit of Rs.3,34,690/-CPC allowed only credit of TDS of Rs.26,697/-. Subsequently, the assessee filed rectification on 01.05.2023 and in response, CPC passed rectification order u/s 154 dated 11.05.2023, allowing TDS credit of Rs.26,697/-
Aggrieved by the Assessment Order passed u/s.154 of the Act, the assessee filed an appeal before the Ld. CIT(A)/NFAC, who dismissed the appeal of the assessee by observing as follows:
“…5.1.1 During the appellate proceedings, the appellant trust was requested to submit evidence in support of its claim for TDS credit. It was observed that the trust had claimed TDS credit of Rs.3,34,690/- in its return of income. However, the CPC allowed credit of only Rs.26.697/-. In support of its claim, the appellant submitted the ITR acknowledgment, ITR form, Form 26AS, the intimation order, and the rectification order. The trust contended that the TDS credit claimed in the return is duly reflected in Form 26AS. As per the provisions of Section 199(2) of the Income Tax Act, credit for TDS can be allowed only if the corresponding income has been offered to tax in the same assessment year. Form 26AS reflects amounting to Rs.46,12,020/-, whereas the total income declared in the return is only Rs.3,34,690/-. This discrepancy clearly indicates that the entire income reflected in Form 26AS was not offered to tax. AM
ITA No.2250/Ahd/2025 Asst. Year 2022-23
3 5.1.2 Upon verification of Form 26AS, it is noted that the appellant received contractual receipts amounting to Rs.44,34,670/-, on which TDS of Rs.3,16,807/- was deducted under Section 194A. A comparison with the return of income reveals that the appellant failed to disclose these receipts. Consequently, the TDS credit was restricted to the extent of income actually offered to tax. 5.1.3 Further, Form 26AS also reflects interest income of Rs.1,78,256/-, with TDS of Rs.17,883/- deducted under Section 194C. These receipts too were not disclosed in the return of income. Accordingly, the credit for TDS was limited to the income reported. 5.1.4 In view of the above findings, the disallowance of TDS credit amounting to Rs.3,07,993/- is upheld. The appeal on this ground is therefore dismissed…” 5. The Ld. Counsel for the assessee produced a detailed chart showing the particulars of tax deducted at source by various deductors during the relevant previous year. The Ld. Counsel submitted that the TDS claimed by the assessee in the return of income was duly reflected in Form No. 26AS and supported by the details furnished in the chart. The Ld. Counsel therefore prayed that the matter may be restored to the file of the Assessing Officer for proper verification and for granting appropriate credit of TDS in accordance with law.
I have heard the rival submissions and perused the material available on record. I find that the issue relating to the grant of TDS credit requires proper verification of the details furnished by the assessee, including
ITA No.2250/Ahd/2025 Asst. Year 2022-23
4 reconciliation of the receipts reflected in Form No. 26AS with the income offered to tax in the return of income. In the interest of justice, I deem it appropriate to restore this issue to the file of the Assessing Officer for fresh examination and verification of the claim of TDS credit in accordance with the provisions of the Act.
In the result, the appeal filed by the assessee is allowed for statistical purposes
Order pronounced in the Open Court on 09.03.2026 at Ahmedabad.
Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER (True Copy) अहमदाबाद/Ahmedabad, �दनांक/Dated 09.03.2026 Manish, Sr. PS
आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु� अपील / The CIT(A)-(NFAC) ( ) 5. िवभागीय �ितिनिध अिधकरण अपीलीय आयकर राजोकट/DR,ITAT, Ahmedabad, , , 6. गाड� फाईल /Guard file.
आदेशानुसार/ BY ORDER, स�यािपत �ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad