2018 (7) TMI 1081 - AT - Income Tax

Tribunal directs AO to verify TDS certs before granting credit

The Tribunal allowed the appeal of the assessee, directing the AO to verify the TDS certificates and the corresponding income offered for taxation before ... Credit of TDS - assessee has raised this claim in the proceedings which were conducted by the AO u/s 154 otherwise than by filing revised return of income u/s 139(5) - Held that:- If the AO could not have taken cognisance of the fresh claim filed by the assessee which was not filed by filing revised return of income u/s 139(5) , the learned CIT(A) being appellate authority could have always admitted the said fresh claim and thereafter adjudicated the same on merits. Hon’ble Bombay High Court decision in the case of CIT v. Pruthvi Brokers & Shareholders reported in (2012 (7) TMI 158 - BOMBAY HIGH COURT) is relevant and binding being jurisdictional High Court. Thus, the assessee could not be denied the said claim of credit of TDS to the tune of ₹ 9,93,555/- but however for limited purposes for verification of contentions raised by the assessee, we are restoring this issue of grant of credit for prepaid taxes to the tune of ₹ 9,93,555/- being TDS back to the file of the AO for necessary verification of the TDS certificates filed by the assessee purported to be received from Elecon Engineering Co. P. Ltd. and Prayas Engineering Ltd. as to the credit of taxes to Central Government and also for verification of offering of the corresponding income by the assessee to taxation in the return of income filed u/s 139(1) on 20-09-2008, before allowing credit for said TDS Issues Involved:1. Unjust and unfair disallowance of the claim of TDS of Rs. 9,93,555/-2. Applicability of Section 155(14) of the Income-tax Act, 1961Detailed Analysis:1. Unjust and unfair disallowance of the claim of TDS of Rs. 9,93,555/-The appellant, a company engaged in the business of clearing and forwarding agent, filed its return of income for AY 2008-09 on 20-09-2008, declaring a total income of Rs. 4,57,01,174/- and claiming TDS credit of Rs. 89,44,765/-. The AO, however, allowed TDS credit of Rs. 79,05,771/- in the intimation under section 143(1). Aggrieved by this shortfall, the assessee filed a rectification application under section 154, requesting correction of the short credit of TDS. During these proceedings, the assessee also claimed an additional TDS credit of Rs. 9,93,555/- for the first time, stating that the corresponding income was already included in the return, but the TDS certificates were received late due to the late deposit of TDS by the deductors.The AO, in the order dated 01.05.2015 under section 154, did not grant the additional TDS credit of Rs. 9,93,555/-, leading the assessee to appeal to the CIT(A). The CIT(A) dismissed the appeal, stating that the claim was made after four years from the end of the assessment year and did not comply with Section 155(14) of the Act. The CIT(A) held that the appellant's claim was not acceptable, as it was made beyond the permissible period.2. Applicability of Section 155(14) of the Income-tax Act, 1961The CIT(A) relied on Section 155(14), which allows for the rectification of an assessment order to grant credit for TDS if the TDS certificate is produced within two years from the end of the assessment year in which the income is assessable. The CIT(A) concluded that since the appellant's claim was made after four years, it did not fall under this provision.Tribunal's Decision:The Tribunal considered the rival contentions and material on record, including the case laws cited by both parties. It observed that the assessee had offered the corresponding income for taxation and the delay in claiming TDS credit was due to the late issuance of TDS certificates by the deductors, which was beyond the assessee's control.The Tribunal held that taxes can only be levied and collected under the authority of law as per Article 265 of the Constitution of India. It noted that the assessee had made the claim for TDS credit during the ongoing proceedings under section 154 and was not at fault for the delay in receiving the TDS certificates. The Tribunal referenced similar cases decided by ITAT Rajkot and ITAT Ahmedabad, which allowed the TDS credit in similar circumstances.The Tribunal concluded that the assessee could not be denied the TDS credit of Rs. 9,93,555/- and restored the issue to the AO for verification of the TDS certificates and the corresponding income offered for taxation. The appeal was allowed subject to these verifications.Conclusion:The Tribunal allowed the appeal of the assessee, directing the AO to verify the TDS certificates and the corresponding income offered for taxation before granting the TDS credit of Rs. 9,93,555/-. The Tribunal emphasized that the assessee should not be penalized for the delay caused by the deductors in depositing the TDS and issuing the certificates.