2017 (3) TMI 1894 - AT - Income Tax

Revision u/s 263 - Credit for tax deducted at source for the purposes of section 199 - Revenue has primarily relied on the findings of the Commissioner of Income Tax and stated that ld CIT has rightly exercised the jurisdiction u/s 263 and also submitted that as per section 199 read with Rule 37BA (3)(i), the TDS claimed by the assessee should not be allowed, that is, only those TDS should be allowed which pertain to the income declared by the assessee for the assessment year under consideration - HELD THAT - We are of the view that there is merit in the submissions of ld DR for the Revenue, as his propositions are supported by the provisions of section 199 of the I.T. Act, read with Rule 37BA (3) of the Income Tax Rules,1962 - as per Rule 37BA(3) (i) the Credit for tax deducted at source(TDS) and paid to the Central Government, shall be given for the assessment year for which such income is assessable. The TDS pertains to advances should not be claimed by the assessee or may be claimed by the assessee in the assessment year in which said advances get converted into income. Considering the factual position explained above, we are of the view that order passed by the ld CIT U/s 263 does not contain any infirmity and accordingly, we confirm the order passed by the ld CIT u/s 263 of the Act - Decided against assessee.

Summary

Issues:
1. Jurisdiction under Section 263 of the Income Tax Act, 1961.
2. Discrepancies in income reported by the assessee and income accrued as per TDS certificates.
3. Correctness of assessment order passed by the Assessing Officer.
4. Allowance of TDS claimed by the assessee.
5. Application of Rule 37BA(3)(i) regarding TDS on advances.

Analysis:

1. Jurisdiction under Section 263:
The appeal pertains to Assessment Year 2009-10 and challenges the order passed by the Commissioner of Income Tax, Kolkata under Section 263 of the Income Tax Act, 1961. The Commissioner exercised jurisdiction under this section due to observed discrepancies in the income reported by the assessee and the income accrued as per TDS certificates.

2. Discrepancies in Reported Income:
The Commissioner noted differences in the income reported by the assessee and the income accrued as per TDS certificates. The issue arose from the treatment of TDS on accrued income from sales during the year, leading to underassessment of income. The Assessing Officer did not properly examine these discrepancies, prompting the Commissioner's intervention under Section 263.

3. Correctness of Assessment Order:
The Commissioner found the assessment order passed by the Assessing Officer to be erroneous and prejudicial to the interests of revenue. As a result, the order was set aside to be framed de-novo, emphasizing the need for a thorough examination of the books of accounts and supporting evidence to ensure accuracy in financial transactions and TDS reconciliation.

4. Allowance of TDS Claimed:
The assessee contested the Commissioner's decision, arguing that the TDS claimed included amounts from advances, leading to a mismatch with the income declared. However, the Revenue supported the Commissioner's findings, citing provisions of section 199 of the Income Tax Act and Rule 37BA(3)(i) regarding the allowance of TDS only for income declared in the relevant assessment year.

5. Application of Rule 37BA(3)(i):
Rule 37BA(3)(i) stipulates that credit for TDS should be given for the assessment year in which the income is assessable. The Tribunal upheld the Commissioner's decision, emphasizing the correct application of this rule in determining the allowance of TDS, particularly in cases involving advances and interest income.

In conclusion, the Tribunal dismissed the appeal, affirming the Commissioner's order under Section 263 and highlighting the importance of adhering to statutory provisions and accurate assessment practices in income tax matters.