2023 (7) TMI 13 - AT - Income Tax

Tribunal emphasizes fact verification before adding TDS credit to income

Chittaranjan Housing Company Pvt. Ltd. Versus DCIT, Circle-1 (1), Kolkata

The Tribunal allowed the appeal, emphasizing the importance of verifying facts before adding TDS credit to the assessee's income solely based on entries. ... Unaccounted/concealed income - reflection of credit of TDS in Form 26AS in assessee’s account deducted by one M/s Loop Mobile (India) Ltd. - assessee could not prove or confirm from the said deductor that the assessee has not received any sum from the said company - HELD THAT:- Since the assessee has alleged that it did not have any business link with M/s Loop Mobile (India) Ltd. and that it has not received any sum/income from the said company and that the TDS credit was wrongly made by the said company in favour of the assessee and that the assessee had made efforts to contact the said company and get the entry reversed, however, since the said company was not traceable and that the said credit of TDS by the said company was under some error or mistake, hence, the impugned additions without verification of proper facts by the Assessing Officer were not justified. Merely because the TDS has been shown to have deducted and deposited in assessee’s account that itself is not the absolute proof of assessee having received any sum/income from the said deductor especially when the assessee has specifically denied any transaction with the said deductor. The same can be a result of any mistake or error also. The impugned additions made by the lower authorities are set aside and the matter is restored to the file of the AO to make appropriate enquiries in this respect from the deductor /from the ITR/assessment records, if any, of the deductor and verify the contention of the assessee. Appeal of the assessee is treated as allowed for statistical purposes. Issues involved:The appeal against the order of the National Faceless Appeal Centre under the Income Tax Act regarding the addition of TDS credit in the assessee's income without corresponding income shown by the assessee.Issue 1: Addition of TDS credit in the assessee's income- The Assessing Officer added Rs. 4,99,999/- into the income of the assessee due to the reflection of credit of TDS in Form 26AS without any corresponding income shown by the assessee.- The ld. CIT(A) confirmed the addition, stating that the assessee failed to prove that no sum was received from the deductor, M/s Loop Mobile (India) Ltd.- The assessee contended that in previous years, the TDS entries by M/s Loop Mobile (India) Ltd. were reversed, but in the current year, despite objections, the reversal did not occur. The assessee claimed no business link with the company and objected to the burden of proof placed on them.- The Tribunal found that the assessee denied any business link with M/s Loop Mobile (India) Ltd., made efforts to contact the company for reversal of the entry, and the TDS credit was made in error. The Tribunal set aside the additions, directing the Assessing Officer to verify the facts and give the assessee an opportunity to present its case.In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of proper verification of facts before making additions to the assessee's income based solely on TDS entries. The case was restored to the Assessing Officer for further investigation and consideration of the assessee's contentions regarding the TDS credit.