Appellate tribunal reduces disallowed TDS claim from income for 2016-17, highlights incorrect assumptions.

The appellate tribunal directed the assessing officer to reduce the disallowed TDS claim of Rs.4,67,300 from the appellant's income for the assessment year 2016-17, emphasizing that assuming client payments as TDS without actual remittance to the government was incorrect. The tribunal partially allowed the appeal, instructing the computation of tax liability without including the disputed amount in the appellant's income. The order was issued on 29th August 2022.

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Issues:
Addition/disallowance of an amount in the assessment year 2016-17.

Analysis:
The appeal in this case pertains to the addition/disallowance of Rs.4,67,300 in the assessment year 2016-17. The appellant, an advocate by profession, claimed credit for TDS amounting to Rs.75,02,413 in the return of income filed. However, the assessing officer noted a discrepancy as per Form 26AS, where the actual TDS amount was less by Rs.4,63,300. The appellant explained that the difference was due to some clients making less payment than billed, leading to an assumption that these clients had deducted tax at source aggregating to Rs.4,67,300. The appellant argued that the gross professional income offered for taxation already included this amount. Despite the explanations, the assessing officer disallowed the TDS claim of Rs.4,67,300.

Upon appeal, the learned Commissioner (Appeals) upheld the decision of the assessing officer, emphasizing that the appellant failed to substantiate the TDS claim with any certificates, and the amount was not deposited to the government's account. However, the appellate tribunal, after considering the submissions and material on record, found that the appellant had indeed received short payment of Rs.4,67,300, which was assumed to be TDS. The tribunal agreed that the short payment made by the clients could not be assumed as TDS unless the clients had actually deducted and remitted the amount to the government's account.

The tribunal directed the assessing officer to reduce the amount of Rs.4,67,300 from the appellant's income and compute the tax liability accordingly. While acknowledging that the excess TDS claim based on assumed client payments may not be acceptable, the tribunal emphasized that if the disputed amounts were not actually received by the appellant but included in the income, they should be reduced. Consequently, the appeal was partly allowed, and the tribunal issued the order on 29th August 2022.

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