2025 (9) TMI 346 - AT - Income Tax

Assessee not taxable for interest wrongly reflected in Form 26AS; AO must assess only interest actually received (Section 194A)

ITAT restored the matter to the AO for factual verification and fresh decision on merits after giving the assessee opportunity to be heard. The tribunal ... Denial of interest income u/s. 57(vi) - Receipt of enhanced compensation on compulsory acquisition of land under Land Acquisition Act, 1894 - specific submissions were made before the CIT(A) in Statement of Facts that the assessee has received interest on enhanced compensation on compulsory acquisition of land, supported by documentary evidences still deduction to the extent of 50% of such interest income u/s. 57(vi) of the Act was not allowed to the assessee Counsel referring to statement received from HSIIDC IMT Manesar pointed that the name of the assessee appears at serial no. 3, wherein apart from other details PAN of the assessee, interest amount received and amount of TDS has been mentioned against the name of assessee. He pointed that in the same statement a person at serial no. 8 Kanwar Pal son of Bihari with PAN of the assessee has been mentioned. HELD THAT:- TDS deducted in respect of interest payment made to Kanwar Pal has also been reflected in Form 26AS of the assessee. This is a glaring error in the statement. Two individuals cannot have same PAN. We deem it appropriate to restore this matter back to the AO for verification of facts, and thereafter decide the issue on merits, after affording reasonable opportunity of making submissions to the assessee, in accordance with law. AO while making assessment shall consider only that amount which has actually been received by the assessee as interest. Merely, for the reason that some TDS amount has been reflected in Form 26AS it would not make assessee liable to pay tax if, that interest amount has not been actually credited to the assessee’s account or TDS has been wrongly deducted under the PAN of assessee, provided assessee has not taken credit of such wrongly deducted TDS. Appeal of the assessee is allowed for statistical purpose Assessee, an agriculturist, received enhanced compensation and interest on compulsory acquisition of land. During assessment year 2013-14 the Assessing Officer did not allow the claimed deduction of 50% of such interest under section 57(vi). Assessee did not appear before AO alleging non-receipt of notice; partial submissions were filed before CIT(A) noting documentary evidence of interest and TDS entries. The appellate tribunal found apparent errors in the HSIIDC statement and Form 26AS (duplicate PAN entries) and held that, in view of factual disputes, the matter should be remitted to the AO 'for verification of facts, and thereafter decide the issue on merits, after affording reasonable opportunity of making submissions to the assessee, in accordance with law.' The tribunal directed that the AO 'shall consider only that amount which has actually been received by the assessee as interest.' It further held that 'Merely, for the reason that some TDS amount has been reflected in Form 26AS it would not make assessee liable to pay tax' if interest was not credited or TDS wrongly deducted and not claimed as credit. Appeal allowed for statistical purposes and matter restored to AO.