2022 (12) TMI 531 - AT - Income Tax

Credit of TDS - unclaimed TDS brought forward from earlier years and claimed in the year on the basis of mercantile system of accounting - CIT(A) submitted that as per the amended Form ITR-5, it is for the assessee to carry forward unclaimed TDS to subsequent financial years and in case the assessee does not carry forward TDS, then the CPC will allow credit for TDS as per Form 26AS - HELD THAT - We find that the assessee has claimed credit for TDS pertains to earlier financial years, because income relating to said TDS has been offered to tax for the impugned assessment years on the basis of mercantile system of accounting. The assessee had also furnished necessary details of TDS brought forward from earlier financial years in Form ITR-5 filed for impugned assessment years. As per the provisions of section 199 200 of the Act, credit for TDS should be allowed when the assessee has offered income relating to said TDS. The assessee claims that income relating to said TDS has been offered to tax for the impugned assessment years. If, the claim of the assessee is correct then the credit for TDS should be allowed on the basis of claim of the assessee including TDS brought forward from earlier financial years. The fact needs to be verified. Therefore, we set aside the issue to the file of the AO and direct the AO to verify the claim of the assessee and in case the AO finds that income relating to said TDS has been offered to tax for the impugned assessment years, then the credit for TDS also needs to be allowed as claimed by the assessee.

Issues Involved:
Appeals against orders of Commissioner of Income Tax (Appeals) for assessment years 2018-19 & 2019-20 - Delay in filing appeals - Condonation of delay - Credit for TDS - Mercantile system of accounting - Verification of TDS credit - Statutory provisions - Assessment procedures - Natural justice principles.

Detailed Analysis:

1. Delay in Filing Appeals:
The appeals were filed with a delay of 89 days due to unforeseen circumstances involving a key individual's health issues. The petitioner explained the reasons for the delay, attributing it to post-Covid complications and subsequent severe eye infection of the individual handling tax matters. The Tribunal, after hearing both parties, found the reasons provided by the petitioner to be reasonable and beyond their control. Consequently, the delay was condoned, and the appeals were admitted for adjudication.

2. Credit for TDS - Mercantile System of Accounting:
The appellant, a consulting and auditing firm, claimed credit for TDS for the assessment years 2018-19 and 2019-20 based on the mercantile system of accounting. The appellant contended that TDS credit should be allowed when income related to TDS has been offered for tax, as per statutory provisions. The appellant had filed relevant details of unclaimed TDS from previous years and asserted that the income related to TDS had been offered for tax in the respective assessment years. The Tribunal noted that the appellant had furnished necessary details in Form ITR-5. The Tribunal directed the Assessing Officer to verify the claim and allow TDS credit if the income related to TDS had indeed been offered for tax in the relevant assessment years.

3. Statutory Provisions and Assessment Procedures:
The Tribunal emphasized the importance of adhering to statutory provisions regarding the allowance of TDS credit when income pertaining to TDS has been offered for tax. The Tribunal highlighted the need for verification by the Assessing Officer to ensure compliance with the law and proper assessment procedures. The decision to set aside the issue to the AO for verification underscores the significance of following statutory requirements in determining TDS credit eligibility.

4. Natural Justice Principles:
Throughout the proceedings, the Tribunal ensured that principles of natural justice were upheld. Both parties were given an opportunity to present their arguments, and the Tribunal considered all relevant facts and submissions before reaching a decision. By allowing the appeals for statistical purposes, the Tribunal demonstrated a commitment to fair and just proceedings in line with natural justice principles.

In conclusion, the Tribunal's judgment addressed the issues of delay in filing appeals, credit for TDS based on the mercantile system of accounting, adherence to statutory provisions, assessment procedures, and principles of natural justice. The decision to direct the Assessing Officer to verify the TDS credit claim reflects a meticulous approach to ensuring compliance with the law and fair treatment of the appellant.

← Previous Next →