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2024 (10) TMI 525 - AT - Income TaxRectification u/s 154 - Disallowance of TDS credit - Maintainability of appeal before ITAT - CIT(A) for dismissing the appeal that the assessee can file appeal against the order u/s 143(1) - HELD THAT - The assessee claimed to have TDS in Income Tax Return as reflected inform No.26AS of the assessee. The CPC, Bengaluru while processing the return u/s 143(1) granted credit only by applying provisions of Rule 37AB of Income Tax Rules as against the claim of the assessee. The only reason assigned by the Ld. CIT(A) for dismissing the appeal that the assessee can file appeal against the order u/s 143(1) of the Act, but not against the order passed u/s 154 - On the other hand, the Ld. CIT(A) has not gone into the merit of the case of the assessee. It is well settled law that as per section 143(1) CPC has no power to reduce the claim of TDS under the provisions of section 143(1) of the Act. On the contrary, it is the duty of the CPC to give due credit of TDS reflected in Form No.26AS of the assessee. Thus, in our considered opinion, the CPC as well as the Ld. CIT(A) have committed error in not allowing the TDS Credit to the assessee. We direct the CPC to give due credit of TDS as reflected in Form No.26AS of the assessee. Appeal of the assessee is partly allowed for statistical purposes.
Issues:
Appeal against order u/s 154 of the Income Tax Act - Disallowance of TDS credit - Interpretation of Rule 37BA of Income Tax Rules - Jurisdiction of CPC - Maintainability of appeal before ITAT. Detailed Analysis: The appeal was filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals) dated 08/02/2024 for Assessment Year 2022-24. The Assessee had raised various grounds of appeal challenging the dismissal of the appeal by the Ld. CIT(A). The main issue revolved around the disallowance of Tax Deducted at Source (TDS) credit claimed by the Assessee in the return of income. The CPC processed the return under section 143(1) of the Income Tax Act and allowed TDS credit of Rs. 40,602 instead of Rs. 86,005 as claimed by the Assessee, citing Rule 37BA of Income Tax Rules. Subsequently, the Assessee filed a rectification application under section 154, which was rejected, leading to the appeal before the Ld. CIT(A) challenging the order under section 154. The Ld. CIT(A) dismissed the appeal on the grounds that the original cause of action arose under section 143(1) and not under section 154, making the appeal under section 154 not maintainable. The Assessee contended that the CPC should have allowed the TDS credit of Rs. 86,005 as reflected in Form No. 26AS, emphasizing that the CPC, while processing the return under section 143(1), cannot disallow TDS credit based on Rule 37BA of Income Tax Rules. The Assessee argued that the CPC must give due credit of TDS as per Form No. 26AS. On the other hand, the Department, represented by the Ld. DR, supported the lower authorities' decisions and sought dismissal of the appeal. Upon considering the submissions and reviewing the facts, the ITAT observed that the CPC and the Ld. CIT(A) erred in not allowing the TDS credit claimed by the Assessee. The ITAT highlighted that under section 143(1) of the Act, the CPC is obligated to provide credit for TDS as per Form No. 26AS, and cannot reduce the claimed amount. Therefore, the ITAT directed the CPC to grant due credit of TDS as reflected in Form No. 26AS of the Assessee. Consequently, the appeal of the Assessee was partly allowed for statistical purposes. In conclusion, the judgment addressed the issues of TDS credit disallowance, interpretation of Rule 37BA of Income Tax Rules, jurisdiction of the CPC, and the maintainability of the appeal before the ITAT. The decision emphasized the CPC's duty to grant TDS credit in accordance with Form No. 26AS and rectified the error in disallowing the claimed TDS credit.
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