2023 (2) TMI 1398 - AT - Income Tax

Allowability of TDS in form 26AS reflected in the revised form - claim not made in the original return of income or during the assessment proceedings - CIT(A) directed the AO to allow credit of TDS if corresponding income was also shown in the ITR - HED THAT - It is an admitted fact that for taxation purpose the learned Assessing Officer considered the income relevant for the TDS reflected in form 26AS as revised. When the AO considered the corresponding income and has before him all the relevant facts in the shape of form 26AS as on the date of assessment he is duty bound to assist the assessee if the assessee is not aware of the discrepancy in respect of the income as per books and as per form 26AS. When form 26AS along with the reconciliation of income as per books and form 26AS was produced before him learned Assessing Officer cannot accept the income for tax purpose and refuse to allow credit of corresponding TDS. Both must go hand in hand. Appeal of the Revenue is dismissed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment is whether the Tax Deducted at Source (TDS) as reflected in the revised Form 26AS is allowable to the assessee, despite not being claimed in the original return of income or during the assessment proceedings. The issue involves assessing whether the Assessing Officer's decision to restrict the TDS credit to the amount claimed in the original return was appropriate, and whether the direction by the CIT(A) to allow the TDS credit, if the corresponding income was shown in the Income Tax Return (ITR), was justified.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

The legal framework involves the provisions under the Income Tax Act regarding the allowance of TDS credit. The case references the decision of the Hon'ble Apex Court in M/s. Goetze (India) Ltd. Vs. CIT, which restricts the Assessing Officer from considering claims not made in the original or revised return of income. Additionally, Circular No. 14(XL-35) dated 11/04/1955 from the Board of Revenue under the Income Tax Act, 1922, is relevant, emphasizing the duty of tax officers to assist taxpayers in claiming due reliefs.

Court's interpretation and reasoning:

The Tribunal interpreted that the Assessing Officer, upon considering the corresponding income for taxation, is obliged to also consider the corresponding TDS credit. The Tribunal emphasized the principle that both the income and the TDS credit should be reconciled and treated consistently. The Tribunal found that the CIT(A) correctly directed the Assessing Officer to allow the TDS credit if the corresponding income was reported in the ITR.

Key evidence and findings:

The key evidence includes the revised Form 26AS, which indicated a higher TDS amount than initially claimed in the return, and the reconciliation of income as per the books and Form 26AS submitted by the assessee during the assessment proceedings. The Tribunal noted that the Assessing Officer had all relevant facts, including the revised Form 26AS, at the time of assessment.

Application of law to facts:

The Tribunal applied the law by considering the duty of the Assessing Officer to assist the taxpayer in securing reliefs, as outlined in the CBDT Circular. The Tribunal found that the Assessing Officer should not take advantage of the taxpayer's ignorance and should have allowed the TDS credit when the corresponding income was taxed. The Tribunal upheld the CIT(A)'s directive to allow the TDS credit if the income was reported in the ITR.

Treatment of competing arguments:

The Revenue argued that the excess TDS claim was not made in the original return or during the assessment proceedings, and thus, the Assessing Officer was justified in restricting the TDS credit. The Tribunal countered this by highlighting the principle that the Assessing Officer should not refuse the TDS credit when taxing the corresponding income. The Tribunal found the CIT(A)'s reliance on the CBDT Circular appropriate and dismissed the Revenue's appeal.

Conclusions:

The Tribunal concluded that the Assessing Officer should have allowed the TDS credit when taxing the corresponding income, as per the revised Form 26AS. The Tribunal found no illegality or irregularity in the CIT(A)'s findings and dismissed the Revenue's appeal.

SIGNIFICANT HOLDINGS

The Tribunal held that the Assessing Officer is duty-bound to assist the taxpayer in claiming due reliefs, including TDS credits, when the corresponding income is taxed. A significant principle established is that the income and TDS credit must be reconciled and treated consistently. The Tribunal upheld the CIT(A)'s directive to allow the TDS credit if the corresponding income was reported in the ITR, emphasizing the duty of tax officers to assist taxpayers as per the CBDT Circular.

The final determination was that the appeal by the Revenue was devoid of merits and was consequently dismissed.