2021 (12) TMI 593 - AT - Income Tax

Disallowance of credit for TDS - addition confirmed by CIT while processing the return of income by CPC under section 143(1) of the Act and thereafter passing the order under section 154 - HELD THAT - While passing the order under section 154 of the Act, the CPC has denied the TDS credit for an amount of ₹ 1,54,213/- but no reason is assigned for non granting the credit of the said amount. CIT(A) though accepted this fact that the CPC has not given any reason for not allowing the credit of the said amount and accordingly directed the CPC to allow the total TDS credit ₹ 11,06,643/- instead of ₹ 9,52,430/- allowed in the rectification order passed under section 154 CIT(A) has directed the assessee to provide the information for the purpose of implementing the directions issued to the CPC. Thus, it is manifest from the impugned order that the CIT(A), instead of getting relevant details and facts verified by calling a remand report from the Assessing Officer, has directed the CPC to consider the issue and allow the claim. Since the assessee has claimed that the relevant details were filed in the proceedings under section 154 of the Act as well as before the CIT(A) therefore, in the interest of justice, we set aside this issue to the record of the Assessing Officer to verify the relevant details and correctness of the claim of the assessee regarding the TDS credit. The Assessing Officer has to properly verify the details of TDS as reflected in Form 26AS and then allow the TDS credit to the assessee after giving an opportunity of hearing to the assessee - Appeal is allowed for statistical purposes.

Summary

Issues:
1. Disallowance of credit for TDS of ?80,951 confirmed by CIT(A) out of ?1,71,360 while processing the return of income.

Analysis:

The appeal revolves around the disallowance of credit for TDS of ?80,951 out of ?1,71,360 confirmed by the CIT(A) during the assessment year 2017-18. The assessee, a partnership firm of Chartered Accountants, filed its return of income, which was processed by CPC under section 143(1). The CPC accepted the declared income but made an adjustment for tax payable by the assessee, resulting in a shortfall credit for TDS and an adjustment of ?4,88,679. The assessee filed a rectification application under section 154, which was disposed of by the CPC. Subsequently, the assessee appealed to the CIT(A) challenging the adjustment and contending that the TDS credit was not granted accurately, leading to a demand of ?1,71,360.

The learned AR of the assessee argued before the Tribunal that all details of gross receipts and TDS deducted were provided, as reflected in Form 26AS. He highlighted previous years where similar issues were decided in favor of the assessee by the CIT(A). The AR urged the Assessing Officer to verify the correctness of the TDS deducted from the receipts and reflected in Form 26AS to allow the tax credit. On the contrary, the learned DR contended that the TDS claim did not match the department's data system, and credit was granted only for the amount available in the system. The DR relied on the CIT(A)'s orders to support this stance.

Upon considering the submissions and evidence, the Tribunal observed discrepancies in the TDS credit granted by the CPC without providing a reason for denial of a specific amount. The CIT(A) acknowledged this lapse and directed the CPC to allow the total TDS credit of ?11,06,643 instead of the initial ?9,52,430. However, the CIT(A) did not call for a remand report from the Assessing Officer to verify the facts but instructed the CPC to consider and allow the claim. In the interest of justice, the Tribunal remanded the issue to the Assessing Officer to verify the correctness of TDS details reflected in Form 26AS and grant the credit after a proper verification process and hearing to the assessee.

In conclusion, the appeal was allowed for statistical purposes, emphasizing the need for accurate verification and granting of TDS credit in accordance with the provided details and records.