2013 (4) TMI 419 - AT - Income Tax

Rectification of mistake u/s 154 - petition was made that the deductors wrong mention or non-mention of the PAN could not be held against the assessee - full credit claimed on the very income being the lease rent received from the tenant who were to deduct tax at source u/s.194-I - Held that - The mistake which was sought to be rectified was apparent insofar as income had been brought to tax by the AO not on the basis of TDS certificate to be subjected to the provisions of Chapter XVIIB was not probed at the time of passing of the order, the assessee being the recipient. The assessee has claimed the tax deduction which the AO refused to acknowledge by holding that the PAN given by the deductor was with respect to the Karta of the HUF and therefore, it was a wrong mentioning of the PAN by the deductor which cannot be rectified at the Assessing Officer s end. Thus AO knew that the Karta has not been given credit of the tax paid in view of the deductor not claiming deduction on account of rent paid to the Karta but to the HUF. It was a simple mistake apparent on record and in fact was rectified by the AO as per the order u/s.154 by AO for the immediately preceding AY. CIT(A) has complicated the issue of a simple rectification to be carried out when the AO had carried out the same in the immediately preceding AY by holding a view that the ball was neither in the court of the assessee nor the AO therefore becomes an issue beyond the provisions of Section 154. It was a self declaration in the form of a petition u/s.154 was complied by the assessee as pointed out by the DR otherwise. The Assessing Officer was to take cognizance of these and because he had already rectified the same in the immediately preceding Assessment Year was a mistake apparent from record was to be carried out in the impugned Assessment Year as well. AO directed to give credit as petitioned by the assessee u/s.154 - appeal of the assessee allowed.

Summary

Issues involved:
1. Rectification of mistake under section 154 - Dismissal by Assessing Officer.
2. Dispute regarding TDS credit due to mismatch of PAN in TDS certificates.
3. Interpretation of Section 199 and Rule 37BA for TDS credit allocation.
4. Whether failure to give TDS credit constitutes a mistake apparent from the record.

Issue 1: Rectification of mistake under section 154 - Dismissal by Assessing Officer:
The appeal concerns the dismissal of a rectification sought by the assessee under section 154 by the Assessing Officer. The Assessing Officer refused to rectify an error regarding the PAN mentioned in the records, which the assessee claimed was a mistake apparent from the record. The CIT(A) complicated the issue by deeming it non-rectifiable under section 154, leading to the appeal.

Issue 2: Dispute regarding TDS credit due to mismatch of PAN in TDS certificates:
The dispute revolves around the denial of TDS credit to the assessee due to a mismatch in the PAN mentioned in the TDS certificates. The Assessing Officer rejected the assessee's petition under section 154, and the CIT(A) upheld this decision. The issue raised is whether the failure to give TDS credit was a mistake apparent from the record, particularly in the context of Section 199 and Rule 37BA.

Issue 3: Interpretation of Section 199 and Rule 37BA for TDS credit allocation:
The interpretation of Section 199 and Rule 37BA is crucial in determining the allocation of TDS credit. Section 199 mandates the treatment of TDS paid as tax payment on behalf of the person from whose income TDS was made. Rule 37BA outlines the procedure for crediting TDS to the appropriate person based on information provided by the deductor. The dispute involves whether the failure to credit TDS was in line with the provisions of Rule 37BA(2)(i)(c) read with Section 199.

Issue 4: Whether failure to give TDS credit constitutes a mistake apparent from the record:
The Tribunal analyzed the facts and circumstances of the case and concluded that the failure to give TDS credit to the assessee was indeed a mistake apparent from the record. The Assessing Officer had previously rectified a similar error in the preceding assessment year, indicating that the mistake was rectifiable. The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to grant the credit petitioned by the assessee under section 154 of the Income Tax Act, 1961.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the rectifiability of the mistake in granting TDS credit and the applicability of Section 199 and Rule 37BA in determining the rightful recipient of the credit.