TDS credit cannot be denied solely for portal mismatch when Form 16A and bank certificates support deduction and deposit.
Tax deducted at source is treated as payment on behalf of the deductee when supported by statutory certificates and deposited to the Central Government under the Income-tax Act and Rule 37BA. Form 16A and bank certificates containing the requisite deduction and deposit particulars can support TDS credit even if the amount is not reflected on Form 26AS or the portal, unless the Department dislodges their genuineness with verified material. The authorities must verify the certificates within a reasonable time; if no discrepancy is found, credit should be granted and consequential refund issued after adjustment of any existing demand, with statutory interest from the date it became due.
Issues: (i) whether the deductee was entitled to credit of tax deducted at source on the basis of Form 16A and the bank certificates despite non-reflection on the portal, and (ii) whether the Department could withhold credit and consequential refund without verifying the genuineness of the certificates and TDS particulars.
Issue (i): Whether the deductee was entitled to credit of tax deducted at source on the basis of Form 16A and the bank certificates despite non-reflection on the portal.
Analysis: The statutory scheme under Sections 198, 199, 200, 200A, 201, 203, 203A, 205 and 206 of the Income-tax Act, 1961, together with Rule 37BA of the Income-tax Rules, 1962, treats tax deducted and paid to the Central Government as payment on behalf of the deductee. The certificates issued by the deductor-bank contained the relevant particulars of deduction and deposit, and the Department did not dislodge their correctness by any affidavit or verified material. In these circumstances, mere non-display in Form 26AS or on the portal could not defeat the statutory right to credit.
Conclusion: The deductee was entitled to credit of TDS on the basis of the certificates and Form 16A, subject to verification of genuineness.
Issue (ii): Whether the Department could withhold credit and consequential refund without verifying the genuineness of the certificates and TDS particulars.
Analysis: The Department was required to verify the particulars furnished in the certificates and Form 16A within a reasonable time. Once the deductor's certificates were not shown to be false and no adverse material was placed on record, the Department could not keep the matter pending indefinitely or deny credit. If verification revealed no infirmity, full credit had to be given and refund issued after adjustment of any existing demand, with statutory interest from the date the refund became due.
Conclusion: The Department was directed to verify the TDS particulars and, if no adverse discrepancy was found, grant full credit and consequential refund with statutory interest.
Final Conclusion: The batch of writ applications succeeded, and the income tax authorities were obliged to verify the TDS certificates and, upon finding them genuine, extend credit and refund relief to the petitioners.
Ratio Decidendi: Where deduction and deposit of TDS are supported by statutory certificates containing requisite particulars and the Department does not establish any falsity, credit cannot be denied merely because the amount is not reflected on the portal; the authorities must verify and, if the particulars are found genuine, grant credit and consequential refund.
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