2022 (10) TMI 848 - AT - Income Tax

Short deduction of taxes - credit to the assessee for TDS deducted denied - HELD THAT - As it seems that the assessee has in fact deposited TDS and there is no short deduction of TDS (as evident from the Justification Report submitted by the Revenue). Accordingly, the matter is being restored to the file of the concerned Assessing Officer, who is directed to grant necessary credit to the assessee for TDS deducted and delete demand on account of short deduction of TDS and consequential interest. In our view, in the instant case, the assessee has deducted and deposited TDS within time, but due to a technical error in CPC site, the assessee has not been granted credit of TDS, for no default on behalf of the assessee. It is a fit case where the assessee should be granted necessary credit of TDS paid by AO and he may accordingly internally coordinate with CPC so that the assessee does not have to undergo any further difficulty / inconvenience for no default on his part.

Summary

Issues:
1. Short payment of taxes and interest imposition by the Department without justification.
2. Dismissal of the appeal by the CIT(A) confirming the additions.
3. Assessee's appeal before the ITAT challenging the additions.

Detailed Analysis:
Issue 1: The assessee's appeal was based on the Department's alleged error in holding short payment of taxes amounting to Rs. 51,677 and imposition of interest of Rs. 3,898 without justification. The CIT(A) dismissed the appeal, citing short deduction of tax and interest as per the ACIT's order. The CIT(A) rejected the appellant's reliance on a Supreme Court decision and a circular, stating the appellant failed to provide evidence that the payee declared the income received and paid due tax. Consequently, the CIT(A) confirmed the additions.

Issue 2: The assessee appealed before the ITAT against the CIT(A)'s decision. The ITAT reviewed the submissions and documents provided by both parties. The Revenue submitted a "Justification Report" indicating a technical issue in crediting the taxes deposited by the assessee. The ITAT observed that the assessee had indeed deposited the TDS, and there was no short deduction as per the report. Therefore, the ITAT directed the Assessing Officer to grant necessary credit for the TDS deducted, delete the demand for short deduction of TDS, and consequential interest.

Issue 3: The ITAT found that the assessee had fulfilled the TDS obligations within the stipulated time, but due to a technical error on the CPC site, the credit was not granted. The ITAT concluded that the assessee should be given the credit for the TDS paid without any fault on their part. Consequently, the ITAT allowed the appeal of the assessee and directed the Assessing Officer to coordinate internally with the CPC for necessary actions to avoid further inconvenience to the assessee.

In conclusion, the ITAT allowed the assessee's appeal, restoring the file to the Assessing Officer with directions to grant credit for TDS deducted, delete the demand for short deduction, and coordinate with the CPC to rectify the technical error.