2023 (9) TMI 1156 - AT - Income Tax

Rectification application us 154 - Credit of TDS denied as barred by limitation - AO raised a demand in intimation u/s 143(1) of the Act without giving credit of the amount of the TDS - HELD THAT - As assessee in the return of income mistakenly reported the amount of TDS as advance tax. But in the total, no excess claim of the tax has been made by the assessee. We do not understand why the AO raised a demand in intimation u/s 143(1) of the Act without giving credit of the amount of the TDS which was already appearing in form no. 26AS. A copy of said form has been filed by the assessee before the AO alongwith rectification application. Ignoring the TDS credit available to the assessee, and then raise the demand is abuse of the authority. The order of the AO passed u/s 143(1) of the Act is in gross negligence of his duty. In the case, neither in the order of the AO nor in the order of ld CIT(A) date of passing order u/s 143(1) has been provided nor such order has been placed on record by the Revenue. It was the onus of the AO to provide at least a copy of the order passed u/s 143(1) to the assessee before rejecting his application u/s 154 of the Act. The assessee has stated that said order was not received by him, therefore, it was not possible for him to file rectification within the stipulated period. Secondly, we note that as per section 254 ( 2) of the Act, an assessee or revenue can make an application for rectification before the Tribunal at any time within six months from the end of the month in which the order was passed . As respectfully, following the decision of Daryapur Shetkari Sahakari Ginning and Pressing Factory 2020 (12) TMI 84 - BOMBAY HIGH COURT the period of four years for rectification of the order as stipulated in section 154(7) of the Act should be reckoned from the date from which the said order came to the knowledge of the assessee. In that case the application of the assessee would be within the limitation period. Further, in Liberty Pesticides Fertilizer Ltd 2014 (1) TMI 248 - ITAT AHMEDABAD held that the Revenue cannot reject the rectification application on the ground that it was time barred, as A.O. failed to send intimation to the assessee specifying the sum so payable which was not the fault of assessee, hence application entertained . In the instant case also, As here is no evidence on record that intimation u/s 143(1) was sent to the assessee, therefore, Assessing officer is not justified in rejecting the rectification application of the assessee invoking section 154(7) of the Act. It is not in dispute that tax deducted by the employer on the pension of the assessee has already gone to the exchequer of the Government of India and now denying the credit of the same to the assessee is gross injustice to the assessee. we set aside the order of Ld.CIT(A) on the issue in dispute and direct the AO to carry out necessary rectification order and give credit of the TDS against the tax liability of assessee. The Grounds raised by the assessee are accordingly, allowed.

Summary

Issues involved:
The issues involved in the judgment are the rejection of the appeal by the Ld. Commissioner of Income Tax(Appeals) regarding the credit of TDS, the arbitrary interest charged for non-payment of tax, and the rectification request filed by the assessee under section 154 of the Income Tax Act.

Regarding the rejection of the appeal for credit of TDS:
The assessee, a retired employee, mistakenly reported TDS as advance tax in the return of income. The Assessing Officer raised a demand without giving credit for the TDS already appearing in form no. 26AS. The Tribunal found this to be an abuse of authority and negligence of duty. The AO rejected the rectification application of the assessee, citing it as time-barred, without providing a copy of the order passed under section 143(1) to the assessee. The Tribunal referred to a decision by the Hon'ble Bombay High Court, stating that the limitation period for rectification should be reckoned from the date the order came to the knowledge of the assessee. As there was no evidence that intimation under section 143(1) was sent to the assessee, the AO was not justified in rejecting the rectification application. Denying credit of TDS to the assessee, whose tax had already been deducted by the employer, was deemed gross injustice. The Tribunal set aside the order of Ld.CIT(A) and directed the AO to rectify the order and credit the TDS against the tax liability of the assessee.

Regarding the arbitrary interest charged for non-payment of tax:
The interest charged for non-payment of tax without considering the TDS amount was deemed arbitrary and bad in law by the assessee. The Tribunal, in its analysis, found that denying credit for the TDS, which had already been deducted by the employer and remitted to the government, was unjust. Therefore, the Tribunal allowed the appeal filed by the assessee.

Conclusion:
In conclusion, the Appellate Tribunal ITAT Jabalpur allowed the appeal filed by the assessee, directing the Assessing Officer to rectify the order and credit the TDS against the tax liability. The Tribunal found the rejection of the rectification application by the AO as unjustified, considering the limitation period for rectification and the absence of evidence of intimation under section 143(1) being sent to the assessee.