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Facts
The assessee, a 'Kaccha Arhatia', is appealing against the disallowance of TDS amounting to Rs. 112921.00, and the proportionate allowance of TDS based on Form 26AS. The assessee's income consists solely of commission, and they do not hold dominion over the goods.
Held
The Tribunal held that the proportionate disallowance of TDS credit is bad in law when receipts are part of business income and reflected in Form 26AS. The matter is restored to the AO to examine Form 26AS and give credit for TDS mismatch, ensuring it's subject to Section 199 and Rule 37BA.
Key Issues
Whether proportionate disallowance of TDS credit is justified when receipts are part of business income and reflected in Form 26AS, and whether the AO should verify TDS mismatch against Form 26AS.
Sections Cited
194Q, 194H, 194A, 199, 37BA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JODHPUR BENCH (Virtual
Before: SHRI RAJPAL YADAV, HONʼBLE & DR. MITHA LAL MEENA, HONBLE
This appeals by the assessee is directed against the order of the Commissioner of Income Tax, Appeals, ADDL/JCIT(A)-4, Kolkata, (hereinafter referred to "the JCIT appeal"] dated 27/11/2024 in respect to the Assessment Year 2023-24. 2. The assessee has taken the following grounds of appeal:
That the Id. Dy. Director of Income tax (CPC) has erred in disallowing the TDS amounting to Rs. 112921. 00. That the Id. AO has further erred in allowing the TDS •in proportion to the turnover/receipts in Form 26AS in relation to TDS deducted under section 194Q,194H,194A and other sections.
Assessment Year 2023-24 That the Id. Dy. Director of Income-tax (CPC) has erred in completing the assessment at Rs. 7,47.980/- against declared income of Rs. 2,09,320/-.
The appellant has challenged sole and common issue regarding disallowance of the claim of TDS deducted on transaction of Kaccha Arahtia claimed to be allowable in the light of CBDT circular No. 452 dated 17/03/1986. 4. The Ld. Counsel Sh. P.M. Chopra for the appellant submitted at the outset, that the assessee's case is covered case by the Coordinate Bench Decision delivered recently in several cases. The appellant relies on the judgment in ITA No.488/JODH/2024 dated 23.09.2024 (Manju Mithal, M/S Bihari Lal and Sons, Jodhpur Bench) where bench has observed that proportionate disallowance of TDS credit is bad in law when the receipts are part of business income and duly reflected in Form 26AS. However, there was error in the factual finding given by the Tribunal without reference to the Form 26AS of the appellant revealing the quantification of the Proportionate Turnover and TDS claim thereof.
On similar fact, recently the Coordinate Jodhpur Bench in the case of Ratnesh Garg Vs. ITO, Srinagar in ITA No. 589/Jodh/2024 (Assessment Year 2022- 23) vide order dated 22.04.2025 has held as under:
Having heard both the sides and perusal of record, we find that AO/CPC has not allowed the full claim of the TDS due to the mismatch of total receipt in ITR and Form-26AS. In this respect, appellant in his submission before Ld. CIT(A) and before us has submitted that he is a "Kaccha Arhatia" registered with Rajasthan Krishi Upaj Mandi and works as a middleman. As per the Circular No. 452(F.No. 201/3/85-/T(A-//)], dated 17.03.1986) the aforesaid Kaccha Arhatia acts only as an agent of his constituent and never acts as a principal.
The JCIT(A) has not appreciated the facts of the case in right perspective. Considering the peculiar facts of the present cases, the matter is required to be restored to the AO for limited purpose with the direction to examine the contents of the Form 26AS at the time of giving appeal effect and give credit of TDS mismatch claimed subject to provision of section 199 of the I. T. Act and rule 37BA of the I. T. Rules. Thus, the AO has to verify the total receipts shown in 26AS and ITR and give credit of TDS to the appellant if the corresponding income has been offered either by the assessee, the Kachha Adatiya or its principle by for taxation in his income tax return in the relevant year after due verification.
Without prejudice to above, it is pertinent to mention that appellant is being a kachha arahtia involved in selling crops on behalf of farmers and therefore, only gross commission has to be considered for the purpose of computing the turnover in the light of aforementioned CBDT Circular 452 of 1986 dated 17.03.1986 while computing tax liability. It is clarified that the short credit of TDS granted in respect of TDS deducted against his own PAN is dependent upon the filing of TDS statement by the deductor as mandated u/s 199 and rule 37BA(1). If there is any mismatch in the TDS claim as per the return vis-a-vis the TDS statement filed by the deductor. The assessee has been allowed due liberty by the LD. JCIT(A) that the TDS statement can be rectified by getting appropriate corrected TDS statement issued filed by the deductor. 10 Considering the factual matrix of the case and the CBDT Circular 452 of 1986 dated 17.03.1986, we direct the AO to examine and verify the contents of the Form 26AS at the time of giving appeal effect and give credit of TDS mismatch if any, to the appellant assesses. 6 Assessment Year 2023-24 10 Following the decision of Coordinated Jodhpur Bench, Jodhpur in the case of "Ratnesh Garg Vs. ITO", (Supra) we direct the AO to examine and verify the contents of the Form 26AS at the time of giving appeal effect and give credit of TDS mismatch if any, to the appellant assesses.
In the backdrop of the aforesaid discussion, this appeal of the assesse is allowed in the manner discussed as above. Order pronounced on 27/05.../2025 in the open Court. (DR. MITHA LAL MEENA) ACCOUNTANT MEMBER Dated:2.7.145./2025 Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By Oder