Tribunal orders reassessment of TDS credit, considering COVID-19 impact

The Tribunal directed the assessing officer to re-examine the disallowance of TDS credit despite being reflected in form no 26AS, emphasizing the need for the assessee to submit an application under section 199 with the necessary declaration. The delay in filing the appeal before the Tribunal was condoned due to the Covid-19 pandemic. The Tribunal instructed the assessing officer to reevaluate the claim of TDS credit in the case of a partnership firm and directed the restoration of the rectification application for fresh adjudication. The dismissal of the appeal was set aside for reexamination by the assessing officer, allowing the grounds of appeal raised by the assessee for statistical purposes.

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Issues:
1. Disallowance of TDS credit in the assessment year 2018-19.
2. Delay in filing the appeal before the Tribunal.
3. Claim of credit of TDS in the case of partnership firm.
4. Rejection of rectification application under section 154.
5. Dismissal of the appeal by NFAC/Ld. CIT(A).

Issue 1: Disallowance of TDS credit in the assessment year 2018-19:
The appeal by the assessee was against the order of NFAC/Ld. CIT(A) for not allowing TDS credit of Rs.2,21,000 despite being reflected in form no 26AS. The assessee argued that the capital gain on the sale of property was offered for taxation in the hands of the partnership firm, and no revenue loss was incurred. The NFAC/Ld. CIT(A) held that the credit can only be claimed in the year when the income is assessable in the hands of the person other than the deductee. The assessee executed the sale deed on behalf of the firm in a representative capacity as a partner, and no declaration was filed for transferring the credit to the partnership firm. The Tribunal directed the assessing officer to re-examine the issue, with the assessee required to submit an application under section 199 with the necessary declaration.

Issue 2: Delay in filing the appeal before the Tribunal:
There was a delay of fifty-two days in filing the appeal before the Tribunal. The assessee cited an order by the Hon'ble Apex Court extending the time period for filing appeals due to the Covid-19 pandemic. The Tribunal condoned the delay, considering the grace period allowed by the Apex Court, and proceeded to review the case.

Issue 3: Claim of credit of TDS in the case of partnership firm:
The assessee, a partner in a partnership firm, claimed credit of TDS on the sale of property by the firm, even though the income was assessable in the hands of the partnership firm. The NFAC/Ld. CIT(A) emphasized that the credit should be claimed in the year in which the income is assessable in the hands of the firm. The Tribunal directed the assessing officer to reevaluate the issue and instructed the assessee to file the necessary application for claiming the credit of TDS.

Issue 4: Rejection of rectification application under section 154:
The assessee's application for rectification under section 154 was rejected by the CPC, leading to the appeal before the NFAC/Ld. CIT(A). The rejection was based on the provisions of section 199 and Rule 37BA, stating that the credit can only be considered in the hands of the firm since the income was assessable in the partnership firm's hands. The Tribunal decided to restore the case to the assessing officer for fresh adjudication, with directions for the assessee to submit the required application for claiming the TDS credit.

Issue 5: Dismissal of the appeal by NFAC/Ld. CIT(A):
The NFAC/Ld. CIT(A) dismissed the appeal, highlighting that the TDS credit can only be claimed in the year when the income is assessable in the hands of the person other than the deductee. The Tribunal, after considering the submissions and records, directed the assessing officer to reexamine the issue and allowed the grounds of appeal raised by the assessee for statistical purposes.

This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive overview of the arguments, decisions, and directions given by the authorities involved in the case.

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