2023 (1) TMI 218 - AT - Income Tax

Short grant of TDS - no documentary evidences were produced in support of claim of TDS - HELD THAT - It is the duty of AO to examine the issue on the basis of evidences filed and allow the credit to the assessee after doing necessary verification. We have also examined the TDS certificates which are placed before us and observe that the assessee is entitled to credit of Rs. 14,46,276/-. We also find support from the decision of Hon ble Delhi High Court in the case of Own Motion and Ors. Vs. CIT Ors. 2013 (3) TMI 316 - DELHI HIGH COURT We also note that CBDT has issued instruction from time to time to the AO s qua the manner of processing the return and giving TDS credit. The Hon ble Delhi High Court in its above judgment issued seven mandamuses for necessary action of Income Tax Department, one of which is regarding the issue of non-credit of TDS to the taxpayer due to TDS mismatch despite the assessee furnishing before the AO, TDS certificate issued by the deductor. CBDT in view of the order of Hon ble Delhi High Court issued instruction to the AO s to grant credit of TDS when the assessee furnished TDS certificate as evidence against any mismatch amount after verification. And if necessary AO may issue notice to the deductor to compel to file correction statement as per the procedure laid down. We are inclined to set aside the order of Ld. CIT(A) and direct the AO to give credit to the assessee of full amount as claimed by the assessee after examining the TDS certificates which may be furnished by the assessee. Needless to say once the TDS certificates are furnished by the assessee, AO is duty to give credit of TDS - Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
- Dispute over the restriction of TDS credit by the Assessing Officer.
- Failure of the appellate authority to consider documentary evidence supporting TDS claim.
- Interpretation of legal provisions regarding TDS credit and mismatch resolution.

Analysis:
1. Restriction of TDS Credit: The primary issue in this case revolves around the Assessing Officer's decision to restrict the credit of TDS to the assessee to Rs. 6,02,319 out of the total TDS gain of Rs. 14,46,276, resulting in a shortfall of Rs. 8,43,887. The assessee had consistently provided TDS certificates and supporting documents to prove the deduction and deposit of TDS by the deductors within the due time. Despite multiple attempts by the assessee to rectify the situation and provide necessary evidence, the AO maintained the restriction due to a mismatch in NSDL data. The Tribunal observed that the assessee had fulfilled all requirements to claim the TDS credit, and the AO's decision was unjustified.

2. Appellate Authority's Dismissal: The appellate authority, the Ld. CIT(A), dismissed the appeal by stating that no documentary evidence was produced in support of the claim for TDS of Rs. 14,46,276. This dismissal without considering the documentary evidence provided by the assessee was a crucial flaw in the appellate process. The Tribunal noted that the assessee had indeed submitted original TDS certificates and other relevant documents to substantiate the TDS claim, which the AO failed to adequately consider.

3. Legal Interpretation and Precedents: The Tribunal referred to a judgment of the Hon'ble Delhi High Court, emphasizing the obligation of the Assessing Officer to verify TDS details when an assessee provides requisite information and documents. The court directed that the AO must ensure that TDS credit is granted to the assessee upon verification of the payment by the deductor. Additionally, the CBDT had issued instructions to AO's regarding processing returns and granting TDS credit, especially in cases of mismatch. The Tribunal, in line with legal provisions and precedents, set aside the Ld. CIT(A)'s order and directed the AO to credit the full TDS amount of Rs. 14,46,276 to the assessee after examining the TDS certificates provided.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, highlighting the importance of due diligence by the Assessing Officer in verifying TDS claims and resolving any discrepancies in line with legal provisions and judicial directions.