2023 (5) TMI 162 - AT - Income Tax

Non Granting the refund of TDS credit - TDS which was not claimed in the return of income - application u/s 119(2)(b) rejected before the ld. PCIT-for allowing the belated claim of refund of the TDS as case of the assessee was not covered under the provision of section 119(2)(b) - HELD THAT - The income of the assessee should not be over assessed even if there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income. As decided in the case of Vareli textile industry 2006 (2) TMI 102 - GUJARAT HIGH COURT . The onus is greater. One of the propositions of settled legal position is to ensure that a meritorious case is not thrown out on the ground of limitation. Therefore, it is necessary to examine, at least prima facie, whether the assessee has or has not a case on merits. Thus we note that the assessee should not be deprived of the benefit of the TDS credit which was inadvertently not claimed in the return of income. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to allow the benefit of the TDS credit as per the provisions of law. Hence the ground of appeal of the assessee is allowed.

Summary

Issues:
The only issue raised is the denial of refund of TDS credit.

Summary:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the assessment order passed under section 154 of the Income Tax Act, 1961 for the Assessment Year 2012-2013. The assessee, a Non-Banking Financial Company (NBFC), had inadvertently not claimed a tax credit of Rs. 11,89,444 in the return of income. Despite various attempts to rectify this, including applications under different sections of the Act, the refund claim was rejected by the authorities.

The Commissioner dismissed the appeal, stating that the higher authority had already rejected the claim, and therefore, the assessee was not entitled to the TDS credit. The assessee then appealed to the Appellate Tribunal, arguing that they should not be penalized for the mistake and should be allowed the benefit granted under the statute.

After considering the arguments from both sides, the Tribunal referred to relevant case law to emphasize that authorities must ensure that only legitimate taxes due are collected, even if there was a mistake on the part of the assessee. Citing previous judgments, the Tribunal held that the assessee should not be deprived of the benefit of the TDS credit simply because it was not claimed in the return of income. Consequently, the Tribunal allowed the ground of appeal and directed the Assessing Officer to grant the benefit of the TDS credit to the assessee.

In conclusion, the appeal filed by the assessee was allowed by the Appellate Tribunal in favor of the assessee.