Tribunal Overturns Tax Demand, Rules AO Exceeded Jurisdiction by Withdrawing TDS Credit Without Proper Verification.

The Tribunal allowed the appeal of the assessee, quashing the demand amount of Rs. 4,68,850/-. It held that the AO exceeded jurisdiction under section 154 of the Income Tax Act 1961 by withdrawing TDS credit without proper verification and consideration of evidence. The Tribunal emphasized that section 154 is limited to rectification related to the processing of returns and intimation, and thus, the AO's action was not justified. The decision overturned the previous upholding of the demand by CIT(A).

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Issues:
The judgment involves the rejection of TDS credit by the Assessing Officer (AO) under section 154 of the Income Tax Act 1961 for the Assessment Year (A.Y.) 2017-18 based on the withdrawal of tax credit by the deductor.

Summary:

Issue 1: Rejection of TDS Credit by AO under Section 154
The assessee filed the return for A.Y. 2017-18, declaring total income and was allowed a refund. Subsequently, the AO proposed to withdraw tax credit amount on account of the deductor withdrawing the credit. The AO withdrew the credit and raised a demand, which was upheld by the CIT(A). The appellant contended that the withdrawal of TDS was arbitrary and submitted evidence to support the claim. The Tribunal observed that the AO's decision was based on the deductor not providing the tax credit to the assessee. However, the Tribunal held that the AO exceeded jurisdiction by withdrawing the credit under section 154, which is limited to rectification related to the processing of returns and intimation. The Tribunal emphasized the need for verification and consideration of evidence before withdrawing TDS credits. Therefore, the Tribunal set aside the appeal order and quashed the demand amount.

Decision:
The appeal of the assessee was allowed, and the demand amount of Rs. 4,68,850/- was quashed.

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