SH. RAKESH KUMAR SINGLA,LUDHIANA vs. ITO, WARD-6(1), LUDHIANA

आदेश/ORDER

This is assessee's appeal for assessment year 2020-21

against the order dated 16.12.2022 passed by the ld. CIT(A)

NFAC, Delhi.

appeal :

“1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Assessing Officer in not allowing the credit for TDS amounting to Rs. 3,39,080/- to the appellant.

ITA 46/CHD/2023 A.Y.2020-21 Page 2 of 12 2. That the Learned CIT(A) gravely erred in upholding the action of the Learned Assessing Officer in rejecting the claim of the appellant that the mistake was outside the purview of a mistake apparent from record. 3. That the Learned CIT(A) gravely erred in not appreciating that by not giving the credit for TDS, the appellant has not been denied the right to claim of TDS against income which has already been taxed in the earlier years.”

of civil construction work like roads and related works. He

filed return of income for assessment year 2020-21 under e-

filing on 29.12.2020, declaring a total income of

Rs.33,68,860/-. He paid a total tax of Rs.12,86,462/- and

claimed a refund of Rs.4,30,380/-. While processing the

return u/s 143(1) of the Income Tax Act, the AO CPC,

Bangalore gave the credit of prepaid tax of Rs.9,49,371/-,

instead of taxes paid of Rs.12,86,462/-, thereby disallowing

the credit of Rs.3,37,091/- and allowing, instead, refund of

only Rs.1,03,070/-, including interest. In response to the

intimation issued u/s 143(1), the assessee filed a

rectification application on 04.04.2022. This was accepted

by the AO and the assessee was issued additional refund of

Rs.3,42,150/-, including interest, vide order dated

06.06.2022. Thereafter, the AO, CPC reversed the

rectification order dated 06.06.2022 and raised the demand

ITA 46/CHD/2023 A.Y.2020-21 Page 3 of 12 of Rs.3,39,080/- (Rs.1,03,070/- and Rs.2,36,010/-) vide

Demand Notice dated 20.10.2022. The assessee filed appeal

against the said order. By virtue of the impugned order, the

ld. CIT(A) dismissed the assessee's appeal, confirming the

demand of Rs.3,39,080/-. Aggrieved, the assessee is in

further appeal.

CIT(A) has erred in upholding the AO’s action of not allowing

the credit for TDS amounting to Rs.3,39,080/- to the

assessee; that the ld. CIT(A) erred in upholding the AO’s

action of rejecting the claim of the assessee that the mistake

was outside the purview of a mistake apparent from record

within the meaning of Section 154 of the Income Tax Act;

and that the ld. CIT(A) erred in failing to appreciate that

while not giving the credit for TDS, the assessee has been

denied the right to his claim of TDS against income which

has already been brought to tax in the earlier years.

order, the ld. DR has contended that as rightly observed by

the ld. CIT(A), the issue of credit for TDS and taxing the

corresponding income is governed by the provisions of

Section 199 of the Income Tax Act and Rule 37BA of the

ITA 46/CHD/2023 A.Y.2020-21 Page 4 of 12 Income Tax Rules; that as per these provisions, credit for

TDS deducted can be considered in the hands of the

assessee only on the basis of details as furnished by the

deductor, as mandated under these provisions and if there is

any mis-match in the TDS claim as per the return filed vis-à-

vis the TDS statement filed by the deductor, the same can be

rectified by getting appropriate correction statement filed by

the deductor; that the TDS credit available to the assessee

gets modified as and when a correction statement is filed by

the deductor; that in the present case, the assessee claims

that the income relatable to the TDS has already been

offered to tax in the earlier year, on accrual basis and the

deductor has reported TDS on payment basis in subsequent

years, resulting in a mis-match; that credit for TDS can be

claimed only in the year in which the related income is

offered to tax; that in case any credit in TDS of earlier years

is claimed in this year, or part of TDS credit of current year

is not claimed and is sought to be carried forward to the

next year, etc., the appropriate details are required to be

entered in the Income Tax Return, in Schedule-TDS, so that

while processing the returns, the extent of TDS credit

allowable during the year can be properly mapped by the

CPC; that as evident from the return of income filed in the

ITA 46/CHD/2023 A.Y.2020-21 Page 5 of 12 assessee's case, no such details were entered in the

Schedule-TDS regarding credit for TDS of earlier years; that

as such, credit for TDS was rightly granted by the CPC as

per the details furnished by the assessee in the return of

income and as matched by the credit available as per the

records, which is in accordance with the provisions of

Section 199 of the Act and Rule 37BA of the Rules; that

therefore, the ld. CIT(A) found the intimation issued by the

CPC u/s 154 read with Section 143(1) of the Act, correcting

the claim of TDS in accordance with the notice on record, to

be tenable on facts and in law; that as also further correctly

held by the ld. CIT(A), the explanations offered by the

assessee and the additional documents that sought to rely

on involve detailed investigation of new facts and evidences

outside the record of the AO and such investigation was

clearly outside the scope of the provisions of Section 143(1)

of the Act; that therefore, the intimation issued by the CPC

was correctly upheld by the ld. CIT(A); and that therefore,

the order passed by the ld. CIT(A) is well versed and it is

entitled to be confirmed on dismissing the appeal filed by the

assessee.

ITA 46/CHD/2023 A.Y.2020-21 Page 6 of 12 6. We have heard the parties and have perused the

material on record. It is undisputed that the assessee paid

total tax of Rs.12,86,462/-, which included TDS amounting

to Rs.12,74,553/-, at a declared total income of

Rs.33,68,860/-, claiming a refund of Rs.4,30,380/-. The

mis-match in question occurred due to the fact that the

assessee follows the accrual method of accounting, whereas

the Government Departments follow the CASS system of

accounting. Due to this difference, there was a difference in

the receipts/contract amount as per Form 26AS and as per

the Profit & Loss Account maintained by the assessee.

Following the accrual system of accounting, the assessee

had shown receipts in his books of account in the earlier

assessment year and had declared the same in the GST

Returns. On the other hand, the Municipal Corporation

showed it in the year in which it made the payment to the

assessee. TDS had been deducted on gross payments, i.e.,

including GST, whereas in the books of the assessee, it was

shown excluding the GST. The GST was claimed as input

tax credit and was shown as an asset on the asset side of

the assessee's audited balance sheet. Resultantly, there was

a difference of Rs.1,65,38,416/- in the income declared in

the Profit & Loss Account and in comparison to the income

ITA 46/CHD/2023 A.Y.2020-21 Page 7 of 12 as per Form 26AS, i.e.,, as per the books of account, the

income was of Rs.3,60,52,983/- and as per the 26AS

statement, the income was of Rs.5,25,91,399/-, comprising

of income of Rs.4,82,93,575/- from the Dy. Controller

(Finance & Accounts), Municipal Corporation, Ludhiana and

of Rs.42,97,824/- from the Improvement Trust, on which,

TDS was deducted and claimed. The assessee submitted

before the ld. CIT(A) vide written submissions, which has

been reproduced in para 3.2 of the impugned order. In order

to reconcile the said difference, before the ld. CIT(A), the

assessee filed the following ;

ITA 46/CHD/2023 A.Y.2020-21 Page 8 of 12 bills/payments in FY 2019-20 in the year of payment and deducted TPS accordingly.

ITA 46/CHD/2023 A.Y.2020-21 Page 9 of 12 Municipal Corporation, Ludhiana has not deducted TDS on it and not shown in 26AS statement of FY 2017-18.

7.1 The assessee stated that out of the work done

(uncertified) of Rs.1,02,89,239/-, payment of certain bills

was received in Financial Year 2019-20 and it was reflected

in the 26AS statement for Financial Year 2019-20, as the

other party had made payment in this year and had also

deducted TDS. The assessee furnished before the ld. CIT(A),

the bills/invoices. The assessee also filed a copy of the

ledger account of Financial Year 2018-29, of work done of

Rs.1,54,43,635/-, net of GST, such copy was filed as

Annexure-10. Further, the assessee filed as Annexure-11, a

copy of ledger account of Rs.91,40,233/- of Financial Year

2018-19 work done (uncertified) which was shown in the

Profit & Loss Account for Financial Year 2018-19 and was

subjected to tax, though the Municipal Corporation,

Ludhiana had not deducted TDS on it and had not shown it

in the 26AS Statement of Financial Year 2018-19. The

assessee produced the bills/invoices, the payment of which,

out of the said work done (uncertified) of Rs.91,40,233/- was

received in Financial Year 2019-20 and stood reflected in the

26AS Statement of Financial Year 2019-20.

ITA 46/CHD/2023 A.Y.2020-21 Page 10 of 12 7.2 The assessee, thus, contended that it was clear that

the difference was mainly due to offering of income on

accrual basis by the assessee, whereas the other

party/customer was following the CASS system of

accounting. The assessee submitted that since he had paid

due tax on income in earlier Financial Year, in which,

respective income has been declared and the TDS has been

deducted by the customer in the next Financial Year, the

assessee claimed the same TDS in the year of deduction, as

the corresponding income had already been declared and the

assessee was fully entitled to claim the same in the year in

which the TDS was deducted.

8.1 The ld. CIT(A), it is seen, has nowhere controverted

the above submissions made by the assessee before them,

and he has just brushed aside the explanation offered by

the assessee alongwith the documents filed, by observing

that going into the same would amount to a detailed

investigation of new facts and circumstances outside the

records of the AO and also purview of the provisions of

Section 143(1) of the Act.

8.2 While doing so, the ld. CIT(A) has failed to appreciate

that it remains undisputed that the assessee cannot and

ITA 46/CHD/2023 A.Y.2020-21 Page 11 of 12 ought not to be denied the benefit of TDS which has been

claimed earlier, only because the payments were shown in

the next year by the customer and the TDS was also

deducted in that year against the income already shown by

the assessee. It was, undisputedly, duly appearing in Form

26AS, wherein it was claimed by the assessee. It is trite

that the income, against which the TDS is being claimed,

having been taxed in the earlier years, the right to claim

such TDS cannot be refused.

sought to be raised by the assessee, the same is hereby

accepted. The order under appeal is, accordingly, reversed

and the order dated 06.06.2022 issued by the CPC, granting

additional refund of Rs.3,42,150/- to the assessee.

Order pronounced on 05.02.2024.

Sd/- (A.D.JAIN ) VICE PRESIDENT “Poonam”

आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent

ITA 46/CHD/2023 A.Y.2020-21 Page 12 of 12