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Facts
The assessee, a qualified professional, filed his return of income for AY 2016-17, declaring income and claiming TDS credit based on Form 16. Subsequently, the employer revised Form 16, reducing the salary and TDS. The assessee filed rectification applications and appeals to correct the TDS credit in his return, which were rejected by the CPC and CIT(A).
Held
The Tribunal observed that the assessee's claims for change of income and TDS credit were made through rectification applications, which are not permissible for changes not apparent from the record. The Tribunal found that the grounds related to the rejection of the rectification application were dismissed, but the ground regarding TDS credit required further verification.
Key Issues
Whether the rejection of the rectification application for change in salary and TDS credit was justified, and whether the assessee is entitled to TDS credit as per the revised Form 16.
Sections Cited
154, 139(5)
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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SMT BEENA PILLAI & SHRI PRABASH SHANKAR
O R D E R Per Beena Pillai, JM: Present penalty appeal is filed by the assessee against order dated 30/07/2024 passed by Ld.CIT(A) for Assessment Year 2016- 17 on following grounds of appeal:
Monish Bipin Shah; A. Y.2016-17 1) “ On the facts and in the circumstances of the case and in law, the Id. C.I.T. (Appeals) NFAC, [C.IL.T.(A)] erred in upholding the Order Dt. 18-06-2018 passed u/s 154 by Dy. Com. of Income Tax, CPC rejecting Application U/s 154 Dt. 04- 04-2018 for the reasons cited therein. 2) On the facts and circumstances of the case and in law, the Id C.L.T.(A) erred in upholding rejection of Application for Rectification U/s 154 insofar as Computation of Tax liability. 3) On the facts and circumstances of the case and in law, the Ld. C.I.T.(A) erred in upholding rejection of Application for Rectification U/s 154 insofar as treating the application as Fresh Claim for TDS as not being a mistake apparent from record. 4) On the facts and circumstances of the case and in law, the Ld. C.I.T.(A) erred in uploading rejection of Application for Rectification U/s 154 insofar as interpreting that the claim for TDS can be made only under the provisions of sec. 139(5), of the income tax. 5) "Without prejudice" to the foregoing grounds, the learned Ld. C.I.T.(A) erred in upholding rejection of Application for Rectification U/s 154 insofar as including the income at higher amount as per Original Form 16 and at the same time granting credit for TDS as per Revised Form 16 at lower tax credit. 6) The Appellant craves leave to add, to amend, to alter and/or to delete all or any of the above grounds of appeal.”
Brief facts of the case are as under: 2. The assessee is a qualified professional deriving his income from salaries. During the previous year, the assessee was employed with KPMG Advisory Services Pvt. Ltd. (hereinafter referred to as "KPMG") for part of the year and earned his income under the head ‘Salary’. The assessee filed his return of income and sought for Form 16 from KPMG. The assessee received the relevant document through mail dated 30/08/2016. 2.1. The assessee filed his return as per Form 16 and also stated therein that, there is mismatch of TDS. It was submitted that, Monish Bipin Shah; A. Y.2016-17 KPMG filed its returns in Form 24-Q and issued Certificate in Form 16 on 25-05-2016, reflecting the taxable salary of assessee at Rs.76,01,315/- on which tax of Rs. 24,62,386/- was deducted. The said TDS was reflected in Form 26-AS on 02-06-2016 that was downloaded from TRACES. 2.2. The assessee accordingly filed his Return of Income on 22-02- 2017 declaring total income of Rs. 1,47,76,346/- including salary of Rs. 76,01,315/- earned from KPMG and claimed credit for TDS of Rs. 24,62,386/- as stated in Form 16. Subsequently, KPMG filed correction statement (Revised Return) according to which the figure of gross salary was maintained at Rs. 76,01,315/- but the amount of TDS was reduced to Rs. 16,04,348/- as against original TDS of Rs. 24,62,386/-. Form 26AS of the assessee on 20/02/2017 stated salary of Rs.76,01,315/-, however the amount of TDS was Rs. 16,04,348/-. 2.3. The return of assessee was processed by CPC vide Intimation u/s 143(1) Dt. 25-08-2017 accepting the income of Rs. 1,44,32,360/- as returned, including Salary Income of Rs. 76,01,315/- from KPMG. However, in the above Intimation, credit for TDS was considered for reduced sum considering TDS from KPMG at Rs. 16,04,348/- only as against Rs. 24,62,360/- as deducted claimed by the assessee resulting in a demand of Rs. 10,98,390/-.
Monish Bipin Shah; A. Y.2016-17 2.4. It is submitted that the assessee filed application u/s. 154 on 12- 09-2017. The Application for Rectification u/s 154 filed on 12- 09-2017 was processed by CPC vide Intimation dtd. 27-10-2017, wherein, a status quo was maintained in respect of income assessed as well as credit for TDS from KPMG at Rs. 16,04,348/-. 2.5. Aggrieved by the downward revision of TDS from Rs.24,62,386 to Rs. 16,04,348 by assessee filed Grievance application Dt. 30-11- 2017 before Ld. CIT- TDS Chandigarh having Jurisdiction of KPMG with a request to direct KPMG to correct the TDS entry in Form 26AS. It is submitted that the Ld.CIT-TDS vide his letter dtd.12-12- 2017 issued directions to KPMG through jurisdictional DCIT-TDS, Chandigarh to correct entry in Form 26-AS as per Form 16 issued originally. 2.6. The assessee vide his email Dt. 09-01-2018 also forwarded a copy of the said directions to DCIT-TDS, Gurgaon with a request to look into the matter and do the needful as to correct Form 26AS as to TDS amount. Pursuant to notice issued by CIT-TDS, KPMG issued Revised Form 16 Dt. 20-02-2018 according to which the amount of Salary was revised downward to Rs. 51,01,350/- and corresponding TDS thereon was reckoned at a reduced amount of Rs. 16,04,348/- as reflected by Form 26-AS. 2.7. The assessee then filed another application for Rectification U/s 154 on 04-04-2018 with CPC revising therein Income from Salaries at Rs. 51,01,350/- as per Revised Form 16 issued by Monish Bipin Shah; A. Y.2016-17 KPMG and claimed TDS thereon at Rs. 16,04,348/- as reflected by Revised Form 16 as also Revised Form 26-AS. It is submitted that the second Application for Rectification u/s 154 Dt. 27-10-2017 uploaded by the assessee was rejected by the CPC stating that "fresh claim for change of income is not allowable u/s 154 as the same is not a mistake apparent from record and that any such change can be made only under the provisions of Section 139(5) of the Income-tax Act vide intimation dated 18/06/2018. The rectification rights were then transferred by CPC to the Jurisdictional AO (viz. DCIT 27(2), Mumbai. The Jurisdictional AO directed the assessee to submit application to Ld. Principal CIT 27 with request u/s 139(5) as stated in the order of AO CPC. Since the time limit for filing Revised Return u/s 139(5) as suggested by AO (CPC) already lapsed, the assessee also filed application Dtd. 10- 07-2018 before the Ld. Principal C.I.T. 27 for condonation of delay u/s 139 (5). Be that as it way the assessee, also, filed appeal before the Ld. CIT(A) against the rejection order dated 18/06/2018.
Assessee was issued notices by the Ld. CIT(A) on various instances in response to which submissions were furnished though not considered, the Ld. CIT(A) thereafter observed and held as under:-
Monish Bipin Shah; A. Y.2016-17 “4. Decision The appellant has raised 3 grounds of appeal
. The ground 3 is general in nature and no specific adjudication is called for and hence dismissed. In ground no. 1 appellant has raised the issue that DCIT, CPC has erred in rejecting application for Rectification u/s 154 of the Income Tax Act, 1961. In ground no. 2 appellant has raised the issue that AO has erred in not granting credit for TDS as claimed in the original return of income. 4.1. I have gone through the facts of the case and have the following observations: The appellant e-filed his return of income for A.Y. 2016-17 on 22.02.2017 declaring total income at Rs. 1,47,76,346/- including Salary of Rs. 76,01,3015/- earned from KPMG Advisory Services Pvt Ltd and also claimed TDS of Rs. 24,62,386/- as per information received from his employer i.e. KPMG. The return of income was processed by the CPC u/s 143(1) of the Act on 25.08.2017 accepting income as returned by the appellant at Rs. 1,44,32,360/- however claim of TDS was restricted to Rs. 16,04,348/- in place of Rs. 24,62,386/-. The appellant filed rectification application to rectify the mistake and the same was processed on 27.10.2017 by passing order u/s 154 of the Act wherein status quo was maintained in respect of income assessed as well as credit for TDS. On getting revised Form No.16 from the employer wherein Salary was reduced to Rs. 51,01,350/-, the appellant moved another rectification application dated 27.10.2017 and the same was rejected by the AO CPC vide order dated 18.06.2018 mentioning that "Tax has been computed correctly on the income returned by the assessee. Fresh claim for change of income is not allowable u/s 154 as the same is not a mistake apparent from record. Any such change can be made only under the provisions of section 139(5) of the Income Tax Act, hence rectification request cannot be considered at CPC". The appellant has filed this appeal against the order passed u/s 154 of the Act 18.06.2018. 4.2. I have carefully considered the material brought on record and rival submission of the appellant. In the present case, it is noticed that return of income was filed by assessee at Rs. 1,47,76,346/- and the same was processed under Section 143(1) of the Act. The employer of the appellant had made some changes in salary income of the appellant and revised his salary certificate for the amount of salary and TDS also for assessment year 2016-
17. On the basis of changes made by the employer, appellant made a claim by filing an Monish Bipin Shah; A. Y.2016-17 application under the provisions of Section 154 of the Income-tax Act, 1961 that income should be recalculated and reduced for the year under consideration in accordance with changes made in Form No.16 by the employer. However, the claim of appellant made in rectification application has been rejected by the CPC for the reasons that "Tax has been computed correctly on the income returned by the assessee. Fresh claim for change of income is not allowable u/s 154 as the same is not a mistake apparent from record. Any such change can be made only under the provisions of section 139(5) of the Income Tax Act, hence rectification request cannot be considered at CPC". Having taken a note of all, I find that AO CPC has duly considered the contention of the appellant and has rightly rejected the rectification application filed u/s 154 of the Act. I find the action of CPC is correct in accordance with the provisions of the Income Tax Act, 1961. Since the changes/claims made by the appellant in rectification application are not permissible as per section 154 of the Act. Therefore, I find no infirmity in order passed by the CPC u/s 154 of the Act. Hence, ground of appeal is dismissed. The ground no. 2 of appeal is dismissed. 4.3 In ground no. 2 appellant has raised the issue that AO has erred in not granting credit for TDS as claimed in the original return of income. Perusal of record, it is noticed that appellant has not furnished copy of Form No. 26AS for the year under consideration and also other relevant document to establish his claim of TDS credit. As such, the availability of TDS credit for the year under cannot be verified and ascertained for want of documentary evidences. Hence I am inclined to uphold the action of AO. However, for the sake of natural justice, AO is directed to verify the availability of TDS for the year and allow the same if found correct. The ground of appeal is dismissed.”
Aggrieved by the order of the Ld. CIT(A), assessee is in appeal before this Tribunal.
We have perused the submissions advanced by both sides based on records placed before us. 4.1. In our opinion this issue needs proper verification and reconciliation in regards to the salary received by the assessee from Monish Bipin Shah; A. Y.2016-17 KPMG as well as TDS deducted. The Ld.AO is directed to verify the details and consider the claim in accordance with law. We, therefore, remand this issue to the Ld.AO. Needless to say that proper opportunity of law must be granted to the assessee. Accordingly the grounds raised by the assessee stands partly allowed statistical purpose. In the result the appeal filed by the assessee stands partly allowed for statistical purpose. Order pronounced in the open court on 29.11.2024. Sd/- Sd/- PRABASH SHANKAR BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 29.11.2024. Snehal C. Ayare, Stenographer/ Dragon Copy of the Order forwarded to :