2022 (7) TMI 1153 - AT - Income Tax

Rectification of mistake u/s 154 - allowing less credit on account of tax deducted at source - Assessee submitted that assessee has not been granted benefit of Tax Deducted at Sources (TDS), which was deducted by the National Insurance Corporation Ltd ( NICL for short) from the commission amount paid to the assessee. HELD THAT - We note that difference in TDS appears to be on account of TDS certificate issued to assessee by National Insurance Co. Ltd. from the commission amount paid to assessee and the amount of TDS reflected in Form No.26AS. It is possible that later on, NICL might have revised its TDS returns and reduced TDS credit of assessee. We note that assessee has fully offered commission income for taxation, as received by him from NICL and he had also received valid TDS certificates from NICL against the commission income so offered by him. Thus, assessee is justified in claiming TDS credit as assessee has offered income for the same. However, at this stage we cannot ascertain the fact that why the TDS credit was not allowed to the assessee, as we have pointed out that NICL might have revised its TDS return, that is way, the exact amount of TDS is not getting reflected in Form No.26AS. However, without verifying the real facts, such disallowance of TDS credit must not be made, as income has been duly offered by the assessee, and if TDS credit is disallowed in that case the corresponding income shown by assessee also ought to have been reduced by passing rectification order u/s 154 of the Act. That is, the right income should be taxable in the hands of the assessee. Alternatively, the assessing officer should examine Form No. 26AS and TDS certificate of assessee and revised TDS return of TDS of NICL and adjudicate the issue afresh in accordance with law. In this alternative also, we make it clear that if TDS credit is disallowed in that circumstances the corresponding income offered by the assessee for taxation also ought to have been reduced by passing rectification order u/s 154 of the Act by the assessing officer. Assessee s appeal is allowed for statistical purposes.

Summary

Issues:
Appeal against order by National Faceless Appeal Centre regarding assessment year 2012-13 - TDS credit disallowance - Interest charged under sections 234A, 234B, and 234C of the IT Act.

Analysis:
The appeal filed by the assessee challenges the order passed by the National Faceless Appeal Centre (NFAC) related to the assessment year 2012-13, which stems from the assessment order by the Assessing Officer (AO) under the Income Tax Act, 1961. The grounds of appeal raised by the assessee primarily revolve around the disallowance of Tax Deducted at Source (TDS) credit, specifically concerning the commission amount paid by the National Insurance Corporation Ltd (NICL). The assessee contended that despite having a valid TDS certificate issued by NICL, the credit was not allowed by the Assessing Officer, leading to the appeal before the NFAC/Ld. CIT(A).

The counsel for the assessee argued that the TDS credit should be granted as the assessee had filed a rectification application under section 154 of the Act, requesting the CPC Bengaluru to allow the credit. On the contrary, the Senior DR for the Revenue emphasized the need for reconciliation of the TDS amount not reflected in Form No.26AS, suggesting a review of the TDS certificate and Form No.26AS by the Assessing Officer. The possibility of NICL revising its TDS return was also highlighted, indicating the need for further examination.

After hearing both parties and reviewing the evidence, it was noted that the discrepancy in TDS was likely due to changes in NICL's TDS returns. The Tribunal acknowledged the justification for the assessee's claim for TDS credit, considering the income had been duly offered for taxation, supported by valid TDS certificates. The Tribunal emphasized the importance of verifying the actual facts before disallowing the TDS credit, as the correct income should be taxable in the hands of the assessee.

The Tribunal directed the assessing officer to examine Form No.26AS, the TDS certificate, and any revised TDS return by NICL to address the issue appropriately. It was highlighted that if TDS credit was to be disallowed, the corresponding income offered for taxation should also be adjusted through a rectification order under section 154 of the Act. Ultimately, the assessee's appeal was allowed for statistical purposes, emphasizing the need for a thorough examination and verification of TDS-related discrepancies to ensure accurate taxation.