2015 (10) TMI 2439 - AT - Income Tax

Mistake by mentioning wrong section in TDS challan - Held that - In its grounds of appeal, department submitted that the assessee should have filed a correction statement to rectify the wrong section which has been quoted in the challan and in absence of that the credit has not been given to the assessee. It seems to us that once the challan is deposited with the bank, it would not be possible for assessee to retrieve the same and make any correction. However, as far as the TDS return is concerned, if there is any mistake, same can be rectified by filing the correction statement. It is not under dispute that assessee has deposited the TDS of ₹ 5,02,000/- under its own TAN. In the light of above discussion, we hereby direct the Revenue to allow the due credit of such TDS for ₹ 5,02,000/- to the assessee after verification of original challan.- Decided in favour of assessee.

Issues:
- Appeal against order of ld. CIT (A) for A.Y. 2008-09 regarding TDS defaults and wrong section in challan.
- Assessment of tax demand and interest u/s 201(1) and 201(1A) of the IT Act.
- Correction statement filing by assessee to rectify errors in TDS challans.
- Credit of tax deposited by deductor and re-computation of demand.
- Adjudication on TDS challans deposited in wrong TAN and under wrong section.

Analysis:

1. The appeal was filed by the Revenue against the order of ld. CIT (A) for A.Y. 2008-09 concerning TDS defaults and incorrect section mentioned in challans. The AO observed non-payment of TDS amount and wrong section in the challan by the assessee, leading to a tax demand of Rs. 28,08,180/- u/s 201(1) and interest of Rs. 13,85,930/- u/s 201(1A) of the IT Act. The assessee filed correction statements to rectify errors, reducing the demand to Rs. 20,06,550/-, which was deposited accordingly.

2. The first appeal before ld. CIT (A) resulted in partial relief for the assessee. The AO was directed to allow necessary relief after verifying the correction statements and original challans provided by the assessee. The correction statement filing by the assessee aimed to rectify mistakes in TDS challans, ensuring proper credit for tax deposited. The ld. CIT (A) ordered the AO to rectify errors in the challans deposited in wrong TAN and under wrong section, re-computing the demand and interest accordingly.

3. The Tribunal noted that the department did not contest the TDS of Rs. 4,24,700/- deposited under the wrong TAN. However, for the TDS of Rs. 5,02,000/- deposited under the correct TAN but with a wrong section, the department raised concerns about crediting the amount to the assessee. The Tribunal deliberated on whether the responsibility for rectifying the section in the challan lay with the assessee or the department. It was concluded that the assessee cannot amend a deposited challan but can rectify errors in the TDS return through a correction statement. Given that the TDS was correctly deposited by the assessee, the Tribunal directed the Revenue to credit the amount of Rs. 5,02,000/- to the assessee after verifying the original challan.

4. Consequently, the Revenue's appeal was dismissed, affirming the direction to credit the TDS amount to the assessee. The judgment emphasized the distinction between correcting errors in TDS returns and amending deposited challans, highlighting the importance of proper credit allocation based on the correct TAN and section. The decision aimed to ensure fairness in tax assessments and rectification processes, ultimately upholding the principles of tax compliance and procedural correctness.

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