2015 (9) TMI 1421 - AT - Income Tax

Reopening of assessment - entitlement for credit of TCS/TDS in respect of income earned by the AOP - Held that - In so far as the merits of case is concerned, the issue is squarely covered by the decision of CIT Vs. Bhooratnam & Company reported at 2013 (1) TMI 478 - ANDHRA PRADESH HIGH COURT wherein held as under Where income shown in the TDS certificate was offered to tax by the assessee then TDS credit is allowable on the basis of TDS mentioned in the TDS certificates irrespective of the fact that TDS certificate was not in assessee s name. The facts and circumstances in the instant cases are exactly identical. Furthermore, the findings recorded by the ld. CIT(A) to the effect that the members of AOP has not claimed any TDS/TCS in their individual returns, therefore, the assessee-AOP is entitled for credit of TCS/TDS in respect of income earned by the AOP. The findings recorded by the ld. CIT(A) has not been controverted by the ld. D.R. by bringing any cogent material on record. Accordingly, we do not find any reason to interfere with the conclusion arrived at by the ld. CIT(A) in directing the AO to allow credit of TCS/TDS issued in the name of individual members in the hands of the assessee-AOP after due verification and satisfaction. Facts and circumstances being pari materia similar in all the cases of all the assessees, following the reasons given hereinabove, we dismiss all the appeals of the Revenue. Coming to reopening issue from the plain reading of the section 147 of the IT Act, 1961, it is clear that provisions of section 147 applicable wherein any income chargeable to tax has escaped assessment not the excess credit of tax or TCS/TDS. The assessee case was reopened for the reason that the income of the appellant to the extent of ₹ 2668331.00 on account of excess credit of TCS/TDS allowed to the assessee AOP has escaped the assessment in terms of section 147 of the IT Act, 1961, which was not come within the purview of section 147 of the IT Act, 1961, as the excess credit of TCS/TDS is not the part of income of the assessee. Hence, the essential precondition of section 147 of the IT Act, 1961 has not been fulfilled in the assessee s case. There is no variation in the income even after passing of order u/s 143/147 of the Act. Since there is no escapement of income which has been brought within the tax net after reopening, there is no justification for reopening of assessment. - Decided in favour of assessee.

Summary

Issues:
Appeals and cross appeals against CIT(A) order for A.Y. 2009-10 under sections 147/143(3) of the Income-tax Act, 1961.

Analysis:

1. Reopening of Assessment:
The appeals involved a bunch of appeals and cross appeals by the assessee and the Revenue against the CIT(A) order for the assessment year 2009-10 under sections 147/143(3) of the Income-tax Act, 1961. The assessee, a liquor contractor, had its case reopened under section 148 of the Act based on an audit objection. The assessee contested the reopening on the grounds of validity and merits of the addition/disallowance made concerning TCS/TDS. The CIT(A) upheld the reopening on the grounds that income had escaped assessment but allowed the assessee's appeal concerning TCS/TDS certificates issued in the name of individual members.

2. Treatment of TCS/TDS Certificates:
The Assessing Officer (AO) disallowed the credit of TCS certificates in the name of individual members during reassessment, stating that the credit should not be given if not reflected pertaining to the PAN of the assessee-AOP. However, the CIT(A) directed the AO to allow the credit of TCS/TDS certificates issued in the name of individual members in the hands of the AOP after due verification and satisfaction. The Revenue challenged this direction, while the assessee argued against the escapement of income, leading to the dismissal of Revenue's appeals and allowance of the assessee's appeals.

3. Legal Precedent and Conclusion:
The Tribunal referred to a decision of the Hon'ble Andhra Pradesh High Court where it was held that TDS credit is allowable based on certificates irrespective of the fact that the certificate was not in the assessee's name. The Tribunal found the facts identical in the instant cases and upheld the CIT(A)'s findings that the assessee-AOP was entitled to credit of TCS/TDS as the individual members had not claimed any in their returns. As there was no variation in income even after the reassessment, the Tribunal concluded that there was no escapement of income justifying the reopening of assessment, leading to the allowance of all appeals by the assessee and dismissal of all appeals by the Revenue.

In conclusion, the Tribunal upheld the CIT(A)'s decision to allow the credit of TCS/TDS certificates issued in the name of individual members to the assessee-AOP and dismissed the Revenue's appeals while allowing the assessee's appeals based on the absence of income escapement after reassessment.