INDERJIT SINGH,PHAGWARA vs. INCOME TAX OFFICER WARD-1, PHAGAWARA
Facts
The assessee, an individual partner in M/s Golden Auto Industries, had contract work income declared by the partnership. The contractor (BHEL) inadvertently credited the TDS for this work to the individual's PAN instead of the partnership's. The assessee initially claimed this TDS, leading to the CPC treating the gross receipts as his individual income from other sources and raising a tax demand. The assessee later filed a revised return reducing the TDS claim.
Held
The Tribunal observed that the confusion arose from the incorrect TDS claim by the assessee, and the income was already disclosed and assessed in the partnership's hands. To prevent double taxation and ensure proper verification, the case was remanded to the Assessing Officer. The assessee is directed to provide all supporting documents, including audit reports and partnership books, to substantiate the claim that the gross contract receipts were taxed in the partnership.
Key Issues
Whether contractual receipts, for which TDS was erroneously credited to an individual partner's PAN, can be added to the individual's income when the primary income was already declared and assessed in the partnership firm.
Sections Cited
Section 250, Section 154, Section 143(1), Section 194C, Section 199
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. UDAYAN DASGUPTA & SH. BRAJESH KUMAR SINGH
Per Udayan Dasgupta, J.M.:
This appeal is preferred by the assessee against the order of the ld. CIT(A)
NFAC, Delhi, passed u/s 250 of the Income Tax Act,1961 dated 25.04.2024which has arisen from the order of the AO, CPC, Bengaluru dated 17.12.2020 passed u/s 154of the I.T. Act, 1961.
2 I.T.A. No. 369/Asr/2024 Assessment Year: 2017-18
The grounds of appeal taken by the assessee in Form No. 36 are as follows:
“1. That on facts and circumstances of the case and as per provisions of law, the worthy Commissioner of Income Tax (Appeals), NFAC has erred in confirming the addition made by the Centralized Processing Center, Bengaluru while processing the return of income under section 143(1) of the Income Tax Act, 1961
That the worthy Commissioner of Income Tax (Appeals), NFAC has erred in upholding the addition made under section 143(1) of the Income Tax Act, 1961 against the guidelines laid down by the CBDT as per instruction No. 10/2017 dated 15/11/2017.
That the worthy Commissioner of Income Tax (Appeals), NFAC failed to appreciate the fact that income reported in Form 26AS has been offered to tax in the return of income of M/s Golden Auto Industries, Phagwara in which the assessee is a partner and that the assessee had filed a rectification return to delete the inadvertent claim of TDS immediately upon receipt of intimation under section 143(1) of the Income Tax Act, 1961.
That Appellant requests to add, amend or leave any grounds of appeal before the appeal is finally heard or disposed off.”
Brief facts emerging from records are that the assesseean individual (Mr.
Inderjit Singh )is a partner of the partnership firm M/s Golden Auto Industries PAN:
[AAKFG 9983E] and during the financial year 2016-17, relevant to the year under
appeal , contract work has been executed by the partnership firm under Bharat
Heavy Electricals Ltd. amounting to Rs.9,94,655/- and the said amount has been
3 I.T.A. No. 369/Asr/2024 Assessment Year: 2017-18 duly disclosed in the return of income filed by the partnership firm ( ITR-5) on
31/10/2017, and the said amount is duly reflected in audited profit and loss account
and balance sheet of the partnership firm and audit report ( TAR ). Copy of
computation of the partnership along with the copy of return receipts has been filed
by way of a paper book before us.
On the other hand, the assessee has filed its return in Form No. ITR-2 on
21.03.2018 disclosing an income of Rs.3,37,040/-( including partners remuneration
and interest on capital and share in profits of the partnership as per
ledger).However, the contractee (Bharat Heavy Electrical Ltd ), has deducted TDS
against execution of contract work by the partnership firm, but has inadvertently
credited the PAN of the individual assessee with the said deduction ( when it should
have been credited in the partnership PAN), and the same is duly reflected in Form
No. 26AS in the Income tax portal in the name of the assessee.
The assessee has also wrongly claimed the TDS amounting to Rs.10,406/- in 5.
his return of income, when the said TDS should have been claimed by the partnership
firm because the gross contact receipt from the contractee has disclosed in the hands
of the partnership and has also assessed as such. As such, the assessee, subsequently
on realizing his mistake, has revised his individual return on 02.12.2020 disclosing
4 I.T.A. No. 369/Asr/2024 Assessment Year: 2017-18
the same income under similar heads, but reducing the claim of TDS relating to
Bharat Heavy Electrical Ltd.
However, the CPC, Bengaluru has passed a rectification order without taking
into consideration, the revised return, and has treated the gross contract receipt from
Bharat Heavy Electrical Ltd. as reflected in form 26AS, as income from other
sources and has assessed the same accordingly raising a tax demand of Rs.2,96,000/-.
The matter was carried in appeal before the ld. first appellate authority, NFAC
and ld. the CIT(A) after going through the written submission filed by the assessee
has dismissed the appeal by observing as follows:
“4. I perused the Form No.35, grounds of appeal, statement of facts, Rectification Order, Written Submissions and the material available on record carefully and my observations in respect of the grounds raised by the appellant are as follows:
It is seen that all the grounds relate to the addition made by the AO of contractual receipts of Rs.9,88,377/-, based on the Form 26AS, and since all the grounds are interrelated, the same are dealt together.
It is seen from the Form 26AS of the assessee that the assessee is in receipt of contractual receipts from BHEL and a TDS of Rs. 9,947/- was deducted u/s.194C of the Act.
Admittedly, the assessee had claimed the TDS thereon u/s. 194C of the Act, of Rs.9,9471- in his hands in the ITR filed by him and this fact has not been denied by the assessee.
5 I.T.A. No. 369/Asr/2024 Assessment Year: 2017-18 The assessee claims that the said contractual receipts appearing in Form 26AS were pertaining to M/s. Golden Auto Industries and inadvertently the same have been reflected in the 26AS of the assessee. If that were so, it is seen that the said 26AS was never corrected and no efforts were taken by the assessee to correct the same and on the contrary the assessee has chosen to claim the TDS thereon in his hands in the ITR filed by him.
The assessee has also not filed any revised ITR withdrawing the claim of the said TDS on account of the said contractual receipts.
The assessee’s claim that the addition should have been restricted to 8% of such contractual receipts is also not valid since no expenses against such contractual receipts have been claimed by the assessee. Since, the assesseehas failed to claim any expenses w.r.t.the said contractual receipts no such leeway is admissible.
In view of the above discussion, the adjustment made by the CPC, Bengaluru in terms of 143(1) (a) (vi) is upheld and the grounds of appeal are dismissed.”
Now, the assessee is in appeal before the Tribunal on the grounds contained in
the memorandum of appeal.
In course of hearing, the ld. AR of the assessee reiterated the same submissions
that the original return was wrongly filed claiming the benefit of TDS which resulted
in CPC, Bengaluru, considering the gross contract receipt corresponding to the said
TDS amount, as individual receipt under the head income from other sources, which
in fact has enhanced the total income.
He further submitted that the assessee has corrected his error by filing a
revised return, reducing the claim of TDS, and as such the income which has been
6 I.T.A. No. 369/Asr/2024 Assessment Year: 2017-18 considered under the head other sources should be deleted because the said contract
receipt relates to the partnership ( PFAS ) where it is already considered and assessed
and re-assessing the said amount in the hands of the assessee, will result in double
taxation. As such, he prayed that the addition made by the AO and sustained by the
ld. CIT(A) amounting to Rs.Rs.9,94,655/-, may please be deleted.
The ld. DR relied on the order of the ld. CIT(A) and submitted that it is
entirely the default of the assessee and should not have claimed the TDS issued by
the contractor because the said claim of TDS can only be made against the PAN of
the partnership where the gross contract has been considered, as submitted by the
assessee. However, considering the factual aspect of the matter, the Ld. DR did not
raise any objection if the matter is remanded back to the file of the Assessing Officer
for verification of all documents and fresh adjudication.
We have heard the rival submissions and considered the materials on record
and we find that the entire confusion has arisen because of the incorrect claim of
TDS amount made by the assessee, in his individual return, when for all practical
purpose the said claim of TDS belongs to the PFAS, where the gross is considered as
per provisions of section 199 of the Act 61.
7 I.T.A. No. 369/Asr/2024 Assessment Year: 2017-18 13. From the factual aspect of the matter, it is seen that the gross contract receipts
from Bharat Heavy Electrical Ltd. amounting to Rs.9,44,655/- has already been
disclosed by the partnership firm Golden Auto Industries under PAN:[AAKFG
9983E]. On the other hand, the assessee, has already rectified his return by filing a
revised return where the claim for TDS pertaining of the above contract receipts has
been reduced.
As such, we are of the opinion that in the interest of justice, the matter should
be remanded back to the jurisdictional Assessing Officer , for proper verification of
the matter and the assessee is also directed to produce the necessary, audit reports
including books of accounts and balance sheet of the partnership , and all other
supporting documents , to substantiate the case relating to the gross contract receipt
under dispute , which as per claim is already considered for taxation in the hands of
the partnership firm. It is further observed by us that the assessee has already
disclosed the partnership remuneration amounting to Rs.1,35,000/- and partner’s
interest from partnership firm amounting to Rs.2,38,132/- along with the share of
taxable profit of Rs.15,156/-, from the partnership firm M/s Golden Auto Industries
which proves that he is a partner of the said firm and both the partnership and
individual being separate taxing entity, the gross contract receipt should be
8 I.T.A. No. 369/Asr/2024 Assessment Year: 2017-18 considered and assessed in right hands and on factual findings the assessee will not
be entitled to the credit of TDS ( as reflected in 26AS).
The Assessee will be allowed reasonable opportunity of being heard and the
assessee is also directed to file all documentary evidences in support of his claim and
to fully cooperate in fresh assessment proceedings.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate
Tribunal) Rules, 1963 as on 07.07.2025
Sd/- Sd/- (Brajesh Kumar Singh) (Udayan Dasgupta) Accountant Member Judicial Member *GP/Sr.PS* Copy of the order forwarded to: (1)The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T True Copy By Order
