KANTA RANI,CHANDIGARH vs. ITO, WARD 2(1), CHANDIGARH

The only issue raised in the grounds of appeal is against the order of CIT(A), NFAC, Delhi upholding the order of the Assessing Officer in deferring / not allowing the credit of TDS amounting to Rs. 38,500/-.

The facts in brief are that the Assessee has let out his property to Mr. Rajan Batra O/o G.K. Towers, Opposite HMV College, Jalandhar. During the year, the tenant has paid the rent to the Assessee after deduction of TDS of Rs. 38,500/-. However, the said TDS deducted at source was not deposited by the deductor / tenant in the Government treasury resulting into non-reflection of TDS in Form 26AS. It is pertinent to state that order u/s 201(1) / 201(1A) of the Income Tax Act, 1961 (in short 'the Act’) waspassed in the case of the deductor by the ITO (TDS), Jalandhar dated 30.3.2021 raising a demand therein of Rs. 75,460/- which is inclusive of interest u/s 201(1A) of the Act. Thereafter, ITO Ward-2(1), Chandigarh passed a rectification order u/s 154 of the Act stating therein that a demand has been raised by the ITO (TDS) against deductor and that as and when the impugned demand would be recovered from the deductor and reflected in Form 26AS against the PAN of the Assessee, necessary rectification would be made allowing the credit of TDS to the assessee.

Aggrieved by the order passed by the ITO, Ward 2(1), the Assessee preferred an appeal before the ld. CIT(A), who also dismissed the appeal by observing that the TDS deducted by the 48-Chd-2024 – Kanta Rani, Chandigarh 3 deductor has not been deposited and therefore, the ITOWard 2(1), Chandigarh was right in withdrawing the TDS claim of Rs. 38,500/-.

After hearing the rival contentions and perusing the material available on record, it is noted that the Assessee has given on rent premises to Mr. Rajan Batra who has deducted the TDS at source from the said rental amounting to Rs. 38,500/-, however, he failed to remit the same in the government treasury resulting into the non- reflection of such TDS deducted from the Assessee in Form 26AS. The Assessing Officer Ward-2(1) rejected the claim of the Assessee on the ground of non-deposit of TDS by the deductor, which can only be allowed when the same is deposited by the deductor, and reflected against the PAN of the Assessee. In my considered opinion, the order of the CIT(A) upholding the order passed by the Assessing Officer under section 154 of the Act is in clear violation of the provisions of the Act and also the various decisions of the Judicial Forums on this issue. The failure of the deductor to deposit the TDS at source into the government treasury cannot be attributed to the Assessee. Moreover, the demand in the case of deductor has already been raised and this fact is acknowledged by the Department that there is a default on the part of the deductor to deposit TDS to the government treasury. In my considered view, the order passed by 48-Chd-2024 – Kanta Rani, Chandigarh 4 the ld. CIT(A) is not sustainable in the eyes of law and is accordingly set aside and the A.O.is directed to allow the credit of TDS of Rs. 38,500/- to the Assessee.

In the result, the appeal of the Assessee is allowed.