High Court orders grant of TDS credit after quashing tax commissioner's refusal

The High Court quashed the impugned order by the Commissioner of Income Tax, directing the department to grant credit for the TDS that was not initially claimed but later rectified through a revised return filed within the statutory period. The Court held that the refusal to grant credit for the TDS was unjustified and technical, emphasizing the validity of the revised return under Section 139(5) of the Income Tax Act. The petitioner's challenge through a Special Civil Application was successful, with the Court ordering the department to provide the credit/refund for the TDS as per the details in Form No.26(AS) submitted.

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Issues:
1. Quashing of impugned order dated 14.2.2013 by the Commissioner of Income Tax, III, Ahmedabad.
2. Granting credit for TDS on verification of Form No.26(AS).

Analysis:

Issue 1: Quashing of Impugned Order
The petitioner, an assessee, filed a return of income for the assessment year 2010-11 but failed to claim TDS of Rs. 29,326 in the original return. Upon receiving an intimation under Section 143(1) of the Income Tax Act, it was discovered that no credit for TDS was granted. Consequently, a revised return was submitted, along with an application under Section 264 of the Act for a refund due to a bona fide error. However, the Commissioner dismissed the revision under Section 264 mainly due to the original return being belated and the revised return being considered nonest. The petitioner challenged this decision through a Special Civil Application.

Issue 2: Granting Credit for TDS
The petitioner argued that the impugned order was erroneous as credit for TDS and the subsequent refund were not granted, despite the TDS details being available with the revenue authorities. It was contended that the revised return was submitted within the prescribed period of limitation, and therefore, the authority should have accepted it and granted the credit/refund. The department did not dispute the TDS deduction but claimed that both the original and revised returns were beyond the prescribed time limits, hence not valid.

The High Court noted that the petitioner had indeed deducted TDS but failed to claim credit for it initially. Upon realizing the oversight, the petitioner promptly submitted a revised return within the statutory period. The Court held that the revised return was valid under Section 139(5) of the Act, allowing for corrections within the specified time frame. It was emphasized that the department's refusal to grant credit for the TDS already deposited was unjustified and too technical. Therefore, the Court directed the concerned respondent to provide the credit/refund for the TDS as per the details in Form No.26(AS) submitted with the petition.

In conclusion, the High Court allowed the petition, quashed the impugned order, and directed the department to grant credit for the TDS already deposited. No costs were awarded in the case.

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