Amit Ashok Chandwani Vs DCIT (ITAT Pune)
TCS Credit Cannot Be Denied for Default of Collector — Section 205 Bar Applies
The Pune Bench of the ITAT held that credit of Tax Collected at Source (TCS) cannot be denied to the assessee merely because the collector failed to deposit the same into the Government treasury. The Tribunal recorded a categorical finding that the TCS amount was actually collected from the assessee and separately charged in the sale bills, and the assessee had substantiated the payment through bank statements and documentary evidence. Relying on Section 205 of the Income-tax Act, along with CBDT Instruction dated 01.06.2015 and Office Memorandum dated 11.03.2016, the ITAT observed that the statute puts a complete bar on recovery of tax from the assessee once tax has been deducted or collected at source. The default of the deductor/collector cannot be shifted onto the assessee. Following the coordinate bench decision in Walvekar Sons, the Tribunal directed the Assessing Officer to grant adjustment of the TCS against the assessee’s tax liability, while clarifying that no refund shall be issued since the TCS was not deposited by the collector. However, the ad hoc disallowance of sales promotion expenses was confirmed. Accordingly, the appeal was partly allowed.
