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2024 (7) TMI 1128 - AT - Income TaxNon grant of credit of TDS for want of Form 16A - tax was not deposited by the deductor to the account of the Central Government - HELD THAT - No discrepancy or anomaly has been pointed out in the documents and submission placed on record by the assessee. No independent verification or inquiry has been made from the deductor with respect to the tax deducted at source of the assessee despite the fact that assessee had furnished the complete details Name, TAN etc. to the AO as well as CIT(A). It is also not the case of the AO or CIT(A) that the corresponding income has not been declared by the assessee. Now only because the tax was not deposited by the deductor to the account of the Central Government, the assessee has been denied the credit of tax deducted and a corresponding demand has been raised. Denial of such benefit of credit is complete contravention to provisions of Section 205 of the Act. It is clear from the provisions of Section 205 of the Act that in cases where tax has been deducted from the income of the assessee, no further tax shall be called upon from the assessee. The natural corollary to same being that assessee has a right to get the credit of that TDS amount qua the demand against him. Reliance is placed on the following judicial pronouncements wherein it has been held that once tax has been deducted, it s the responsibility of the deductor to deposit the same with the government, deductee cannot be penalized and demand can not be raised on short fall of TDS on deductee. See SANJAY SUDAN 2023 (2) TMI 1079 - DELHI HIGH COURT INCREDIBLE UNIQUE BUILDCON PRIVATE LIMITED 2023 (10) TMI 625 - DELHI HIGH COURT INCREDIBLE UNIQUE BUILDCON PRIVATE LIMITED 2023 (6) TMI 1135 - DELHI HIGH COURT , JASJIT SINGH 2023 (12) TMI 34 - DELHI HIGH COURT . Thus we are of considered view that CIT(A) has fallen in error to misinterpret the judgement relied upon by the assessee by holding that there is merely bar on recovery of demand but does not lay down law for giving credit of TDS in respect of the amount which is not reflected in the 26AS form. The bar on recovery of such disputed TDS is specific and the credit of same to be given to assessee is natural consequence. Further, we are of firm view that inability of an assessee to procure form 16A, due to intentional mischief of the deductor cannot be basis to refuse grant of credit of TDS or the refund arising consequent to giving credit, if assessee is otherwise eligible for same. This issue in all the appeals is decided in favour of assessee. Error in in computing the demand - As we find that issue requires examination of certain facts and consequential effects, which are of arithmetical nature. Accordingly, the second issue of AY 2017-18 is allowed for statistical purposes. The AO shall make necessary verification and pass an order accordingly.
Issues Involved:
1. Non-grant of credit of TDS for want of Form 16A. 2. Alleged error in computing the demand in the computation sheet for AY 2017-18. Issue 1: Non-Grant of Credit of TDS for Want of Form 16A The assessee challenged the action of the CIT(A) in confirming the non-grant of credit of TDS due to the absence of Form 16A. The assessee had declared the corresponding income on which TDS was deducted and provided complete details of the tax deducted by the deductors, which were part of the ITR Form 6. The deductors belonged to the "AMRAPALI" Group, which had financial irregularities, and their bank accounts were attached by the Supreme Court. The CIT(A) denied the credit of TDS, citing the absence of proper documentation and the non-deposition of TDS by the deductors. The tribunal relied on the decision of ITAT Mumbai in Bhupendra C. Dalal vs. ACIT, which held that an appeal is maintainable if the assessee is aggrieved by part of the assessment order under Section 246A. The tribunal found that the assessee had furnished complete party-wise details of the tax deducted at source, and no discrepancy or anomaly was pointed out. The tribunal emphasized that the denial of credit of TDS due to non-deposition by the deductor is against Section 205 of the Act, which bars direct demand on the assessee for the tax deducted at source. The tribunal cited several judicial pronouncements, including: - Sanjay Sudan vs. ACIT & Anr.: Held that the assessee cannot be penalized for the deductor's failure to deposit the deducted tax. - Incredible Unique Buildcon Pvt. Ltd. vs. ITO: Established that the assessee cannot be denied the benefit of Section 205 even if Form 16A is not available, provided reliable material is shown. - Shri Chintan Bindra vs. DCIT & Ors.: Reiterated that recovery cannot be made from the assessee if the employer did not deposit the deducted tax. - Pushkar Prabhat Chandra Jain vs. Union of India and Anr.: Confirmed that the assessee cannot be asked to pay the tax again if it was deducted but not deposited by the payer. The tribunal concluded that the CIT(A) erred in denying the credit of TDS and that the assessee should not suffer due to the deductor's failure to deposit the tax. The issue was decided in favor of the assessee. Issue 2: Alleged Error in Computing the Demand in AY 2017-18 The second issue involved an alleged error in computing the demand in the computation sheet for AY 2017-18, where the assessed income was Rs. 3,61,38,607/- instead of Rs. 3,58,17,440/-. The tribunal found that this issue required examination of certain facts and consequential effects, which are of an arithmetical nature. Therefore, the issue was allowed for statistical purposes, and the AO was directed to make necessary verification and pass an order accordingly. Conclusion: The appeals were allowed with the following directions: 1. Credit of TDS should be granted to the assessee, and any corresponding demand should be adjusted accordingly. 2. The issue of the alleged error in computing the demand for AY 2017-18 was remanded to the AO for verification and necessary correction. Order Pronounced: The order was pronounced in the open court on 05.07.2024.
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