2023 (3) TMI 84 - AT - Income Tax

Tribunal grants TDS credit, prevents double taxation, emphasizes taxpayer protection & compliance

The Tribunal allowed the appeal, directing the Assessing Officer to grant the TDS credit claimed by the appellant, emphasizing that denial of TDS credit ... Credit of TDS deducted in the name of deceased mother of the assessee - As contended that where the income of the deceased mother is offered for taxation, then the appellant is entitlement of credit of such TDS - claim of TDS under Rule 34BA of Income Tax Rules - HELD THAT:- It is admitted facts on record that the appellant’s deceased mother’s income on which TDS was deducted had been offered for tax in its return of income and assessed u/s 143(1) and thus, the credit of TDS cannot be denied merely because it appears in the name of deceased mother. As per law and in principle the tax on particular income can be charged once only. In the instant case, the tax has already been deducted by way of TDS by the revenue and thus, the confirmation of the order of the lower authorities would be denial of TDS claim to the appellant would result into double taxation of the same income. In our view, a particular income cannot be taxed twice under the law and therefore, as in the present case, the appellant is entitlement for the credit of TDS deducted on the disputed income. Assessee shall be eligible to seek permissible from the CCIT to file belated return in the name of disease person (Appellants mother) for the claim of TDS under Rule 34BA of Income Tax Rules and thereby withdrawing the diseased mother income shown in its return. In the case of Smt. Vijay Luxmi Gupta (Through legal heir Shri Mukesh Gupta) Vs. Income Tax Officer, Ward- 1(4), [2021 (3) TMI 1105 - ITAT ALLAHABAD] it was held that credit of TDS cannot be denied merely because the TDS amount was wrongly deposited by the deductor in PAN of the deceased husband and in refusing to follow Rule 37 BA of Income Tax Rules. We accept the grievance of the assesse as genuine. As such, we conclude that the assessee would not be made to suffer because of delay on the part of the deductor in updating PAN of the legal heir. Accordingly, the AO is directed to allow credit of the TDS claimed by the appellant on verification of form 26-AS issued for the relevant quarters of the financial year in the name of diseased person as per Rule 37 BA of Income Tax Rules. Appeal filed by the assessee is allowed. Issues:- Denial of TDS credit and confirmation of demand under section 143(1) of the Income Tax Act, 1961.- Non-allowance of TDS credit for income belonging to the deceased mother.- Refusal to follow precedents and rules regarding TDS credit denial.- Communication issues regarding updating PAN details with the deductor.- Double taxation concern due to denial of TDS credit.Analysis:1. The appellant challenged the order of the Ld. CIT(A) regarding the denial of TDS credit and confirmation of the demand under section 143(1) of the Income Tax Act, 1961. The appellant argued that the income on which TDS was deducted had already been offered for tax in the return of income filed, making them entitled to the credit of such TDS. The appellant emphasized that the denial of TDS credit would result in double taxation of the same income, which is against the principles of taxation.2. The Ld. Commissioner confirmed the finding of the Assessing Officer regarding the non-allowance of TDS credit for income belonging to the deceased mother of the assessee. However, it was acknowledged that the deceased mother's income, on which TDS was deducted, had been included in the appellant's return of income and assessed under section 143(1) of the Income Tax Act, 1961. The Tribunal agreed that the credit of TDS cannot be denied based solely on the name of the deceased mother, as the tax on a particular income should only be charged once.3. The Tribunal referred to a previous case where it was held that TDS credit cannot be denied due to errors in depositing the TDS amount under the wrong PAN. The Tribunal also highlighted the importance of following Rule 37 BA of the Income Tax Rules in such cases. Considering these precedents and rules, the Tribunal accepted the appellant's grievance as genuine and directed the Assessing Officer to allow the credit of the TDS claimed by the appellant after verifying the relevant Form 26 issued in the name of the deceased person.4. The communication issue regarding the updating of PAN details with the deductor was addressed by the appellant, stating that the delay in updating PAN details should not penalize the taxpayer. The Tribunal agreed that the appellant should not suffer due to procedural errors on the part of the deductor and emphasized the importance of ensuring that TDS credit is available to the rightful claimant.5. In conclusion, the Tribunal allowed the appeal filed by the assessee, directing the Assessing Officer to grant the TDS credit claimed by the appellant after verifying the necessary documentation. This decision aimed to prevent double taxation and ensure that the appellant was not penalized for the deductor's delay in updating PAN details.