Credit of TDS not claimed in return: appellate authority directs AO to examine credit and corresponding income and affirm entitlement

Credit of TDS appeared in accounts and Form 26AS but was not claimed in the income tax return nor via Form 71; the central issue is entitlement to TDS credit despite technical non-claim. The appellate authority applied the principle that procedural or technical pleas cannot defeat an assessee's lawful rights and directed the assessing officer to examine the TDS credit and verify whether the corresponding income was declared. The appellate direction required reconciliation of records and, upon such examination, affirmation of the credit reflected in records.

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Issues: Whether credit for TDS not claimed in the return but reflected in audited accounts and Form 26AS can be allowed after verification and subject to examination by the Assessing Officer.

Analysis: The issue was examined on the basis that the TDS entries appeared in the audited financial statements under balances with government authorities and in Form 26AS while the credit was inadvertently not claimed in the filed return. The appellate authority applied judicial principles that technical objections should not defeat a lawful substantive right where a meritorious claim exists. The appellate authority directed that the Assessing Officer is to verify the genuineness of the TDS claim, examine whether the corresponding income has been disclosed in the return, and give the assessee adequate opportunity of being heard, with the assessee required to cooperate in the verification process. The appellate order was affirmed on the ground that the claim warranted examination and could not be denied on purely technical grounds.

Conclusion: Credit for TDS not claimed in the return but reflected in audited accounts and Form 26AS is to be examined and allowed if verified; the Assessing Officer is directed to verify the claim and give opportunity of hearing, and the appellate order directing such verification is affirmed in favour of the assessee.

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