ITAT emphasizes TDS credit importance, directs set-off verification for accurate tax assessment

The ITAT Surat allowed the appeal, directing the Assessing Officer to verify and grant a set-off for tax shown in Form 26AS and tax deducted but not deposited by the employer. Emphasizing the importance of granting TDS credit regardless of its reflection in Form 26AS, the ITAT restored the matter for proper assessment in line with the High Court decisions and statutory provisions, highlighting the significance of accurate verification of TDS deductions and appropriate set-offs for taxpayers.

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Issues:
Appeal against CIT(A)/NFAC order for AY 2016-17 - Credit for TDS not deposited by employer - Interpretation of Section 205 - Jurisdictional High Court decision applicability - Restoration of matter to AO for verification and granting set off.

Analysis:
The appeal before the ITAT Surat involved the issue of denial of credit for TDS deducted by the employer but not deposited to the Government account, amounting to Rs. 2,12,304. The assessee contended that as per Section 205 of the Income Tax Act, where TDS has been made by the employer, the assessee is not liable to pay the tax again. The assessee relied on the decision of the Hon'ble Jurisdictional High Court in a similar case. The AR highlighted that the demand was created by CPC, Bangalore, and the assessee's tax was deducted by the employer, thus the assessee should not be asked to pay the tax again.

The Revenue, represented by the Senior Departmental Representative, supported the CIT(A)'s order. The Revenue argued that since no tax was deposited as claimed by the assessee, no credit should be allowed. In an alternative submission, the Revenue stated that even if the matter required reconsideration as per the High Court decision, the assessee should not be allowed to claim a refund of the alleged tax deducted but not deposited.

After considering the submissions of both parties and reviewing the orders of the lower authorities, the ITAT Surat found that the demand was created due to TDS not deposited by the employer. The NFAC had dismissed the appeal based on the amount in Form 26AS. However, considering the decisions of the Tribunal and the High Court precedent, the ITAT Surat restored the matter back to the Assessing Officer. The ITAT directed the AO to verify and grant a set-off for tax shown in Form 26AS and tax deducted but reflected in the salary slip of the assessee. The ITAT emphasized that the TDS credit should be granted irrespective of whether it is reflected in Form 26AS. The appeal was allowed for statistical purposes.

In conclusion, the ITAT Surat's judgment focused on the interpretation of Section 205 regarding the credit for TDS not deposited by the employer. The decision highlighted the importance of verifying TDS deductions made by the employer and granting appropriate set-offs to the assessee. The judgment underscored the significance of following High Court decisions and restoring matters for proper assessment in accordance with the law.

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