Tribunal grants Chartered Accountants' appeal on TDS credit denial for A.Y. 2014-15

The Tribunal allowed the appeal of the assessee, a firm of Chartered Accountants, concerning the denial of credit of tax deducted at source amounting to Rs. 1,23,596 for A.Y 2014-15. The delay in filing the appeal was condoned as the discrepancy in TDS credit was realized only upon receiving the income tax refund cheque. The Tribunal directed the AO to grant the TDS credit to the assessee, recognizing their entitlement based on the income offered for taxation. The appeal was allowed on 29/11/2019.

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Issues:
Appeal against denial of credit of tax deducted at source.

Analysis:
The appeal was filed by the assessee against the order of the ld. CIT(A)-3, Jaipur for A.Y 2014-15 concerning the denial of credit of tax deducted at source amounting to Rs. 1,23,596. The assessee, a firm of Chartered Accountants, follows the cash basis of accounting. An amount of Rs. 11 lakhs received from M/s K.C. India Ltd was booked under professional fees and offered to tax, but the corresponding TDS credit of Rs. 1,23,596 was inadvertently carried forward to the subsequent year. The assessee filed an application for rectification of mistake u/s 154, and the AO passed an order granting the TDS credit. However, upon receiving the income tax refund cheque, the assessee noticed that the TDS credit was still not given. The ld. CIT(A) dismissed the appeal stating a delay in filing it post the order u/s 154. The assessee contended that the delay was due to the realization of the TDS credit discrepancy only upon receiving the refund cheque.

The Tribunal noted that the AO had directed to grant TDS credit in the rectification order u/s 154. The discrepancy arose when the TDS credit was not reflected in the processing of the income tax refund. The Tribunal observed that the Department should have rectified this inconsistency suo-moto, as the claim had been accepted. The delay in filing the appeal before the ld CIT(A) was due to the assessee's belief that the claim had been accepted based on the order u/s 154. The appeal was filed promptly upon realizing the discrepancy upon receiving the refund cheque. The Tribunal, therefore, condoned the delay in filing the appeal, finding a reasonable cause beyond the assessee's control.

On the merits, it was established that the assessee had offered the income received from M/s K.C. India Ltd for taxation. Consequently, the assessee was entitled to claim the corresponding TDS credit of Rs. 1,23,596 as per Form No. 26AS. The AO was directed to grant the TDS credit to the assessee. As a result, the appeal of the assessee was allowed, and the order was pronounced on 29/11/2019.

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