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2021 (10) TMI 1016 - AT - Income TaxRectification of mistake u/s 154 - restriction of the TDS credit - CIT(A) restored the issue to the A.O. for examination and grant of correct TDS credit - HELD THAT - A.O. while giving effect to the CIT(A) s order dated 05.12.2018 granted the TDS credit as originally claimed in the return of income. Therefore, the present proceedings, which arise out of 154 proceedings of the A.O. dated 28.03.2014 has been subsumed by the later proceedings of the CIT(A) dated 05.12.2018 and the order giving effect to the CIT(A) by the A.O. dated 25.10.2019. Therefore, this appeal of the Revenue in essence is rendered infructuous and the same is dismissed as such.
Issues:
1. Rectification of TDS credit by Assessing Officer under section 154 of the Income Tax Act. 2. Validity of rectification of TDS credit by Assessing Officer. 3. Appeal against the order of CIT(A) allowing the assessee's appeal. Detailed Analysis: Issue 1: Rectification of TDS credit by Assessing Officer under section 154 of the Income Tax Act. The case involved an appeal by the Revenue against the CIT(A)'s order arising from the Assessing Officer's (A.O.) order dated 28.03.2014 under section 154 of the Income Tax Act. The dispute centered around the TDS credit claimed by the assessee for the assessment year 2006-2007. The A.O. had initially restricted the TDS credit to a certain amount, and later issued a notice to further reduce the credit. The assessee objected, arguing that the rectification notice indicated a change of opinion by the A.O. The A.O. proceeded to pass an order under section 154, reducing the TDS credit. The CIT(A) allowed the assessee's appeal, holding that the rectification was not a mistake apparent from the records, as it represented a change of opinion by the A.O. Issue 2: Validity of rectification of TDS credit by Assessing Officer. The Revenue contended that the A.O. rightly reduced the TDS credit in the proceedings under section 154, as the assessee had not disclosed a significant amount of income for the relevant assessment year. The Revenue relied on a judgment of the Calcutta High Court to support its argument. On the other hand, the assessee argued that subsequent orders by the CIT(A) and the A.O. had already determined the correct TDS credit, making the Revenue's appeal redundant. The CIT(A) had directed the A.O. to grant the TDS credit after due verification, and the A.O. had subsequently granted the credit as originally claimed by the assessee. Issue 3: Appeal against the order of CIT(A) allowing the assessee's appeal. The ITAT heard the rival submissions and reviewed the case history. It noted that the A.O. had eventually granted the TDS credit as per the original claim made by the assessee, following the CIT(A)'s direction. As a result, the ITAT found the Revenue's appeal to be rendered infructuous due to the subsequent orders by the CIT(A) and the A.O. The ITAT dismissed the Revenue's appeal, confirming the decision of the CIT(A) to allow the assessee's appeal. In conclusion, the ITAT upheld the CIT(A)'s decision, emphasizing the importance of due process in rectification proceedings under section 154 of the Income Tax Act. The case highlighted the significance of proper verification and consideration of all relevant facts before making changes to TDS credits, ensuring fairness and adherence to legal principles.
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