2025 (2) TMI 406 - AT - Income Tax

Railway guard denied TDS credit despite documentary evidence gets relief on appeal under section 192

Kushal Prashad Sahu Versus Assistant Commissioner of Income Tax, Circle-1 (1), Bilaspur

ITAT Raipur allowed appeal of railway guard employee who was denied TDS credit under section 80C. Appellant worked as goods train guard with South Eastern ... Denial of credit of TDS & deduction u/s 80C - Appellant is working as a Guard, and is staff of Indian Railways viz. South Eastern Central Railway, Bilaspur & due to his nature of employment, he is used to stay outside of his usual residence. TDS is being made by the employer & because of his unstable place of residence, his Return of Income could not be filed, notices were not received. HELD THAT:- Addition in the case of assessee was made by the Ld. AO in absence of any response by the assessee based on income of the assessee reflected in Form 26AS, but the TDS credited available in Form 26AS was not allowed to the assessee, which obviously would have reflected in Form 26AS against the entries of Salary (Amount paid / credited) and recorded as transactions u/s 192 of Act. The contention of AR that, the assessee is a Goods Train Guard, which is regularly placed on duties outside of his usual residence, and therefore, notices issued by the department could not have found his attention and he was unable to respond on time, cannot be the sole reason to allow the assessee to adopt non-responsive and evasive approach towards the tax compliances, however, as the legitimate credit of TDS was not allowed by the AO, in spite of having such facts on records, we find perversity in the order of Ld. AO, therefore, the same needs to be set aside and in the interest of substantial justice, we deem it fit to restore this matter back to the file of Ld. AO, for verification of the facts of the present case and to re-assess the income of the assessee after allowing the legitimate TDS credited and the eligible deductions available under the mandate of law. The issues presented and considered in the judgment are as follows:1. Whether the Commissioner of Income Tax (Appeals) erred in dismissing the appeal without considering the written submissions and various supporting documents filed by the assessee.2. Whether the order passed by the Assistant Commissioner of Income Tax under sections 144 and 147 was in accordance with the law.3. Whether the Commissioner of Income Tax (Appeals) erred in not allowing the credit of TDS and deduction under section 80C to the assessee.4. Whether the penalty levied under section 271(1)(c) by the Assistant Commissioner of Income Tax was justified.Detailed Analysis:Issue 1:The relevant legal framework and precedents were the Income Tax Act, 1961. The Court interpreted that the Commissioner of Income Tax (Appeals) erred in dismissing the appeal without considering the documents filed by the assessee. The key evidence was the written submissions and supporting documents. The Court found that the order of the Commissioner of Income Tax (Appeals) was unjustified and the appeal should be admitted and decided on merits.Issue 2:The legal framework was sections 144 and 147 of the Income Tax Act. The Court reasoned that the notices issued did not come to the knowledge of the assessee and there was no approval under section 151. The Court concluded that the assessment order was not according to law and prayed for annulment of the assessment order.Issue 3:The legal framework was section 80C of the Income Tax Act. The Court found that the Commissioner of Income Tax (Appeals) erred in not allowing the credit of TDS and deduction under section 80C to the assessee. The key evidence was the Form No. 16. The Court concluded that the income should be assessed with the allowed deductions and credits.Issue 4:The legal framework was section 271(1)(c) of the Income Tax Act. The Court found that the penalty levied by the Assistant Commissioner of Income Tax was not justified as the TDS was deducted by the employer and the Form 16 was submitted. The Court concluded that there was no default under section 271(1)(c) and the penalty should be cancelled.Significant Holdings:The Court held that the orders of the Commissioner of Income Tax (Appeals) and the Assistant Commissioner of Income Tax were not in accordance with the law. The core principle established was the importance of considering all relevant documents and evidence before making a decision. The final determinations were to partly allow the appeals for statistical purposes and restore the matters back to the file of the Assistant Commissioner of Income Tax for fresh adjudication.In conclusion, the judgment addressed various issues related to the assessment and appeals of the assessee under the Income Tax Act, highlighting the importance of due process and consideration of all relevant evidence in making tax-related decisions.