CPC's Unilateral TDS Credit Reduction Overturned by ITAT: Prior Notice Required U/s 154 for Credit Modifications

ITAT determined CPC's unilateral reduction of TDS credit was improper after previously granting full credit in three separate rectification orders. The subsequent reduction, executed without prior notice to assessee, violated Section 154 procedural requirements and principles of natural justice. CPC's action of diminishing TDS credit and raising demand without show cause notice was deemed unjustified. ITAT set aside CIT(A)'s order, directing AO/CPC to restore complete TDS credit and nullify corresponding demand. The assessee's appeal succeeded, establishing that administrative modifications to tax credits require proper notice and opportunity for response, upholding procedural fairness in tax proceedings. .....

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