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2017 (2) TMI 910 - AT - Income TaxValidity of reopening of assessment - claim of tax deduction at source credits by the assessee on the basis of certificate which do not relate to income of the present assessment year - Held that - As regards the decision of the Tribunal in earlier year wherein it was held that income represented by the deduction at source certificates relating to other years cannot be added as income of the year in which the same was claimed, the same is also related to facts of the case of the particular year and cannot be said to be laying down any blanket ratio. As regards the issue of dropping of rectification proceedings we find that the matter of reconciliation of TDS certificates is a matter which requires analysis and examination of the facts and cannot be said to be subject matter of rectification of apparent mistake. Hence the assessing officer has rightly dropped the rectification proceeding and has initiated reopening of the case. Further more the plea that since addition have been deleted, direction to withdraw T.D.S credit does not survive is also not cogent, as the addition and T.D.S credits are intertwined matter. In the background of aforesaid discussion and precedent we are of the considered opinion that the reopening in this case was valid. Accordingly, we uphold the order of Ld. CIT (A)on the issue of validity of reopening proceedings. As regards the merits of the issue we find that Ld. CIT (A) has drawn adverse inference by observing that assessing officer has made the addition without proper verification and correlation of the tax deduction at source certificates with the income offered by the assessee in assessment year 2005 -06. We find that it is settled law that the powers of the Ld. CIT(A) are coterminous with that of the assessing officer. When the Ld. CIT (A) has found an error in the proceedings of the authorities below. It was his duty as well as jurisdiction to correct the error. This proposition is supported by the case law from honourable Supreme Court in the case of Kapoorchand shrimal 1981 (8) TMI 2 - SUPREME Court . Hence we are of the considered opinion that the Ld. CIT(A) was not correct in directing the deletion of the addition without verification and correlation of the tax deduction at source certificates with the income of the assessee which was offered for assessment year 2005 -06. In this regard we also find that there is justification in the pleading of the Ld. Counsel of the assessee that the credit should be granted for the tax deduction at source for the years in which the actually relate. But this requires follow up of proper procedure to claim tax refund. The plea of Ld. Counsel goes on to prove that assessee has claimed credit of T.D.S certificate in the current year without offering concerned income to tax in the current year. Hence the offer of income as well claim of T.D.S is not at all in accordance with law. Accordingly, in the interest of justice we remit the issue raised the file of the assessing officer. The assessing officer is directed to examine the TDS certificates with the income offered by the assessee and compute income accordingly. The assessing officer is also directed to grant credit to the assessee for the tax deduction at source for the years for which they actually relate if the same is claimed as per law. As regards the issue of charging of interest is concerned learned counsel of the assessee has submitted that the same was not adjudicated by the Ld. CIT (A) though the issue has been raised before him. Since we have already remitted the main issue to the file of the assessing officer, this issue should also be considered by him afresh.- Decided partly in favour of assessee for statistical purposes.
Issues Involved:
1. Validity of proceedings under Section 148 of the IT Act. 2. Deletion of the addition made by the Assessing Officer amounting to ?54,15,809/-. 3. Direction to allow credit for TDS withdrawn from the current year in the years to which it relates. 4. Cancellation of interest charged under Section 234B of the IT Act. 5. Increase in interest under Section 234D pursuant to order under Section 147 of the IT Act. Issue-wise Detailed Analysis: 1. Validity of Proceedings under Section 148 of the IT Act: The assessee argued that the proceedings under Section 148 were invalid as there was no fresh material to justify the reopening of the assessment. The assessee contended that the reopening was based on an audit objection and not on new information. The Tribunal upheld the validity of the reopening, stating that the core issue was the claim of TDS credits based on certificates not relating to the income of the present assessment year. It was noted that reopening on the basis of an audit objection, which is a matter of fact, does not vitiate the reopening process. The Tribunal concluded that the reopening was valid and upheld the order of the CIT(A) on this issue. 2. Deletion of the Addition Made by the Assessing Officer Amounting to ?54,15,809/-: The CIT(A) had deleted the addition made by the Assessing Officer, stating that the latter had wrongly worked out the income based on TDS certificates without proper verification and correlation with the income offered by the assessee. The Tribunal found that the CIT(A) had the power to correct errors in the proceedings of the authorities below. It was held that the CIT(A) should have verified and correlated the TDS certificates with the income of the assessee for the assessment year 2005-06. The Tribunal remitted the issue back to the Assessing Officer for proper examination and computation of income, directing the officer to grant credit for TDS for the years to which they actually relate, following the proper procedure for claiming tax refund. 3. Direction to Allow Credit for TDS Withdrawn from the Current Year in the Years to Which It Relates: The Tribunal acknowledged the plea of the assessee that credit should be granted for TDS for the years in which they actually relate. However, it emphasized that this requires following the proper procedure to claim tax refunds. The issue was remitted to the Assessing Officer for examination and appropriate action, ensuring that the credit for TDS is granted as per the law. 4. Cancellation of Interest Charged under Section 234B of the IT Act: The assessee contended that no interest under Section 234B was chargeable. The Tribunal noted that this issue was raised before the CIT(A) but was not adjudicated. Since the main issue was remitted to the Assessing Officer, the Tribunal directed the officer to consider the issue of charging interest afresh. 5. Increase in Interest under Section 234D Pursuant to Order under Section 147 of the IT Act: The assessee argued that interest under Section 234D could not be increased pursuant to the order under Section 147. The Tribunal did not provide a separate analysis for this issue but implied that it should be considered by the Assessing Officer during the reassessment proceedings. Conclusion: The appeal was partly allowed for statistical purposes. The Tribunal upheld the validity of the reopening proceedings and remitted the main issue of addition and TDS credit back to the Assessing Officer for proper examination and computation. The issue of charging interest under Section 234B was also directed to be reconsidered by the Assessing Officer. The order was pronounced in the open court on 15/02/2017.
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