Case Law Details
Manoj Kumar Soman Vs Circle (ITAT Mumbai)
No ITR Filed, Yet ITAT Holds TDS Credit Cannot Be Denied Once 26AS Receipts Are Taxed
The appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai, was filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi dated 19/12/2025 for Assessment Year 2011-12.
The assessee had not filed a regular return of income for the relevant assessment year. The case was later reopened under Section 147 of the Income Tax Act based on information received through AIR/Form 26AS reflecting certain receipts in the assessee’s name.
In response to the notice issued under Section 148, the assessee again failed to file any return of income or furnish the required details before the Assessing Officer (AO). Consequently, the AO completed the assessment ex parte and treated the entire receipts reflected in Form 26AS as taxable income of the assessee. However, while computing the tax liability, the AO did not grant credit for tax deducted at source (TDS) appearing in Form 26AS.
The assessee challenged the assessment order before the Commissioner of Income Tax (Appeals) [CIT(A)]. Various notices were issued by the CIT(A), but no compliance was made by the assessee. Accordingly, the CIT(A) confirmed the action of the AO.
Before the Tribunal, the authorised representative for the assessee argued that the AO erred in not granting TDS credit despite treating the corresponding receipts reflected in Form 26AS as taxable income. It was submitted that once the receipts had been brought to tax, denial of credit for taxes already deducted from those receipts would result in unjust enrichment of the Revenue and double taxation to that extent. The assessee therefore requested directions for grant of due TDS credit after verification from departmental records.
The Departmental Representative supported the orders of the lower authorities. It was argued that the assessee had neither filed the original return of income nor complied with the notice issued under Section 148. According to the Revenue, in the absence of any return of income, no valid claim for TDS credit had been made before the AO and therefore there was no infirmity in the orders passed by the authorities below.
After considering the submissions and examining the records, the Tribunal observed that the assessment had been reopened on the basis of AIR information and that the assessee failed to file any return despite issuance of notice under Section 148. The AO therefore proceeded to complete the assessment ex parte by treating the receipts reflected in Form 26AS as income of the assessee. The Tribunal also noted that tax had admittedly been deducted at source on those receipts, but corresponding TDS credit was not granted while computing the demand.
The Tribunal acknowledged the Department’s contention that no formal claim for TDS credit had been made due to non-filing of return of income. However, it held that once the income corresponding to the receipts reflected in Form 26AS had been brought to tax, the taxes already deducted and deposited to the credit of the Central Government on such income could not be denied merely on technical grounds. The Tribunal further observed that grant of TDS credit is consequential and co-terminus with the assessment of the corresponding income, subject to verification of the relevant TDS entries and their correlation.
Accordingly, the Tribunal set aside the limited issue to the file of the AO with directions to verify the TDS claim from Form 26AS and departmental records and grant due credit in accordance with law after providing reasonable opportunity of hearing to the assessee. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Present appeal is filed by the assessee against the order passed by NFAC, Delhi [hereinafter to as the “Ld.CIT(A)”] dated 19/12/2025, for A.Y. 2011-12.
2. Brief Facts of the case are as under:
The assessee did not file the regular return of income for the year under consideration. Subsequently, the case was reopened under section 147 of the Act on the basis of information received through AIR/Form 26AS reflecting certain receipts in the name of the assessee.
2.1. In response to notice issued under section 148 of the Act, the assessee again failed to file any return of income or furnish requisite details before the Ld.AO. Consequently, the Ld.AO completed the assessment ex parte and treated the entire receipts reflected in Form 26AS as taxable income of the assessee. However, while computing the tax liability, credit for tax deducted at source appearing in Form 26AS was not granted.
Aggrieved, by the assessment order, the assessee preferred appeal before the Ld.CIT(A).
2.2. Various notices were issued by the Ld.CIT(A). However, no compliance was made on behalf of the assessee. Accordingly, the Ld.CIT(A) confirmed the action of the Ld.AO.
3. Before us, the Ld.AR submitted that the Ld.AO erred in not granting credit of TDS though the corresponding receipts reflected in Form 26AS had been treated as income of the assessee. It was contended that once the receipts were brought to tax, denial of credit for taxes already deducted therefrom would result in unjust enrichment of the Revenue and double taxation to that extent. The Ld. AR accordingly prayed that appropriate directions may be issued to grant due credit of TDS after verification from departmental records.
3.1. Per contra, the Ld. DR supported the orders of the lower authorities and submitted that the assessee neither filed the original return of income nor complied with the notice issued under section 148 of the Act. It was contended that in the absence of any return of income, no valid claim for TDS credit was made before the Ld.AO and, therefore, no infirmity could be found in the action of the Revenue authorities.
We have considered the submissions advanced by both sides in light of records placed before us.
4. It is an undisputed position that the assessment was reopened on the basis of AIR information and, despite issuance of notice under section 148 of the Act, the assessee did not file any return of income. The Ld.AO, therefore, proceeded to complete the assessment ex parte by treating the receipts reflected in Form 26AS as income of the assessee. It is further observed that though tax had admittedly been deducted at source on such receipts, corresponding credit of TDS was not granted while computing the demand.
4.1. At the same time, we also take note of the contention of the Ld. DR that in the absence of a return of income, the assessee had not formally made a claim for grant of TDS credit. However, once the income corresponding to the receipts reflected in Form 26AS has been brought to tax, the taxes already deducted and deposited to the credit of the Central Government on such income cannot be denied merely on technical grounds. Grant of credit for TDS is consequential and co-terminus with assessment of the corresponding income, subject of course to verification of the relevant TDS entries and correlation thereof. We, therefore, set aside this limited issue to the file of the Ld.AO with a direction to verify the claim of TDS from Form 26AS / departmental records and grant due credit in accordance with law after providing reasonable opportunity of being heard to the assessee.
Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal filed by assessee is allowed for statistical purposes.
Order pronounced in the open court on 14/05/2026.
Author Bio
