2023 (9) TMI 1156 - AT - Income Tax

ITAT Jabalpur directs AO to credit TDS against tax liability, deems denial of credit as injustice.

Ramesh Prasad Yadav Versus CPC, Bangalore ITO, Bina.

Ramesh Prasad Yadav Versus CPC, Bangalore ITO, Bina. - TMI Issues involved:The issues involved in the judgment are the rejection of the appeal by the Ld. Commissioner of Income Tax(Appeals) regarding the credit of TDS, the arbitrary interest charged for non-payment of tax, and the rectification request filed by the assessee under section 154 of the Income Tax Act.Regarding the rejection of the appeal for credit of TDS:The assessee, a retired employee, mistakenly reported TDS as advance tax in the return of income. The Assessing Officer raised a demand without giving credit for the TDS already appearing in form no. 26AS. The Tribunal found this to be an abuse of authority and negligence of duty. The AO rejected the rectification application of the assessee, citing it as time-barred, without providing a copy of the order passed under section 143(1) to the assessee. The Tribunal referred to a decision by the Hon'ble Bombay High Court, stating that the limitation period for rectification should be reckoned from the date the order came to the knowledge of the assessee. As there was no evidence that intimation under section 143(1) was sent to the assessee, the AO was not justified in rejecting the rectification application. Denying credit of TDS to the assessee, whose tax had already been deducted by the employer, was deemed gross injustice. The Tribunal set aside the order of Ld.CIT(A) and directed the AO to rectify the order and credit the TDS against the tax liability of the assessee.Regarding the arbitrary interest charged for non-payment of tax:The interest charged for non-payment of tax without considering the TDS amount was deemed arbitrary and bad in law by the assessee. The Tribunal, in its analysis, found that denying credit for the TDS, which had already been deducted by the employer and remitted to the government, was unjust. Therefore, the Tribunal allowed the appeal filed by the assessee.Conclusion:In conclusion, the Appellate Tribunal ITAT Jabalpur allowed the appeal filed by the assessee, directing the Assessing Officer to rectify the order and credit the TDS against the tax liability. The Tribunal found the rejection of the rectification application by the AO as unjustified, considering the limitation period for rectification and the absence of evidence of intimation under section 143(1) being sent to the assessee.