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TMI Blog2017 (12) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... y and during the course of assessment proceedings, the Assessing Officer made the following disallowances:- i) On reconciliation of TDS as per books with Form 26AS, the Assessing Officer observed that the assessee had claimed credit of TDS amounting to Rs. 8,19,286/- which was not appearing in Form 26AS. Subsequently, the assessee produced TDS certificates of Rs. 7,19,423/- only and the Assessing Officer proceeded to disallow TDS credit of Rs. 99,683/-. ii) The Assessing Officer further observed that in certain cases of professional income, the assessee had claimed TDS credit which was equal to the professional receipts offered for taxation. The Assessing Officer applied Rule 37BA(iii) of the Income Tax Rules, 1962 and proceeded to disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The Ld. Commissioner of Income Tax (A), however, confirmed the disallowance of Rs. 25,455/- pertaining to difference in credit card expenses as per the AIR information and the books of accounts. 2.2 Now, the aggrieved department has approached the ITAT and has raised the following grounds of appeal:- "1. In the facts and circumstances of the case the Ld. CIT(A) has grossly erred in allowing TDS credit of Rs. 31,10,744/- which was withdrawn by the A.O. as per the provisions of section 199 of the I.T. Act, 1961 read with rule 37BA of the I.T. Rules, 1962. 2. In the facts and circumstances of the case the Ld. CIT(A) has grossly erred in allowing TDS credit of Rs. 31,10,744/- which was withdrawn by the A.O. not appreciating the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The Ld. Sr. DR submitted that the assessee was following the cash system of accounting and not mercantile system of accounting and, therefore, the credit of TDS can be given only in the year in which the professional income was offered for tax. It was submitted that since the assessee had shown professional income of Rs. 34,56,382/-, only 10% of the TDS was to be allowed as tax credit to the assessee. The Ld. Sr. DR also read out the provisions of section 199 of the Income Tax Act, 1961 (hereinafter called 'the Act') and Rule 37BA(3)(i) of the Income Tax Rules and submitted that the Assessing Officer had followed the provisions as provided in the Income Tax Act and the Rules and, therefore, the order of the Assessing Officer sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order of the Ld. Commissioner of Income Tax (A) be upheld. 5. We have heard the rival submissions and perused the material available on record. As far as ground nos. 1 and 2 of the department's appeal relating to TDS credit of Rs. 31,10,744/- are concerned, the Assessing Officer has observed that the TDS credit of only Rs. 3,45,638/- was allowable as the assessee had shown professional income of Rs. 34,56,382/- only. However, while doing so, the Assessing Officer has not considered the response of the assessee to his show cause notice wherein the assessee has stated that it has claimed TDS of Rs. 34,56,382/- (as has been deducted up to 31.3.2010) as the professional income and the remaining fees have been claimed without TDS in subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been made by the Assessing Officer on an estimate without pinpointing any specific vouchers for disallowance. The Ld. Commissioner of Income Tax (A) has also noted that a similar disallowance has been made in assessment year 2007-08 against which the assessee had not filed any appeal. A perusal of the assessment order shows that the Ld. Commissioner of Income Tax (A) is absolutely correct in observing that the disallowance has been made on an estimate and we are also in agreement with the adjudication of the Ld. Commissioner of Income Tax (A) that ad hoc disallowance without pointing out any specific defect or lacuna is not sustainable. Therefore, we uphold the adjudication of the Ld. Commissioner of Income Tax (A) on this issue also and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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