Denial of TDS Credit Over Technical PAN Error Not Malafide, Appeals Allowed Under Tax Law

The ITAT Kolkata allowed the appeals of the assessee, holding that denial of TDS credit due to a technical error and incorrect PAN alphabet was not intentional or malafide. The tribunal emphasized that the statute's objective is not to penalize unintentional omissions. It directed the Assessing Officer to reconsider the claims afresh, restoring the appeals for further consideration in the interest of justice.

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ISSUES:

Whether the Assessing Officer (AO) was justified in restricting the claim of Tax Deducted at Source (TDS) despite the amount appearing in Form 26AS.Whether a technical error, specifically an error in writing the wrong alphabet in PAN credits, can justify remittance of the matter back to the AO for fresh consideration of TDS claims.Whether the assessee can be penalized or denied lawful TDS credits due to non-malafide, human errors in TDS credit entries.

RULINGS / HOLDINGS:

The AO's restriction of TDS claim was not upheld where the TDS amount was duly reflected in Form 26AS but omitted due to technical errors, specifically errors in PAN credit entries.The Court held that "the error in writing wrong alphabet in some of the PAN credits cannot be denied as it is a human error" and remitted the appeals back to the AO for fresh consideration.The Court emphasized that "the objective of statute and constitution is not to punish the assessee for error of omission not done with malafide and intentional motive," and thus the lawful claim of TDS should not be denied on account of such technical faults.

RATIONALE:

The Court applied the principle that TDS credit claims reflected in Form 26AS are prima facie allowable unless disproved by valid reasons, and technical or human errors in PAN entries should not defeat legitimate claims.The Court relied on the statutory framework under the Income Tax Act, particularly provisions related to rectification under section 154 and the importance of accurate TDS crediting.The decision reflects a doctrinal emphasis on substantive justice over procedural technicalities, ensuring that assessee's lawful claims are not defeated by inadvertent errors.No dissent or concurring opinion was recorded; the ruling reflects a unanimous approach to remand for fresh consideration in light of the technical errors identified.

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