Denial of TDS credit to deductee because of non-payment by deductor is untenable

Rajesh Dadu Vs DCIT (ITAT Hyderabad)

ITAT Hyderabad held that revenue cannot deny the TDS credit to the deductee for non-payment of TDS by the deductor. Revenue has to proceed against the deductor by holding him as an assessee-in-default.

Facts- The assessee is an individual and filed his return of income for the impugned A.Y on 31.10.2019 declaring total income at Rs.1,57,94,132/- and paid tax of Rs.53,85,276/- consisting of advance tax of Rs.30,00,000/-and tax deducted at source of Rs.25,05,786/- and claimed a refund of Rs.1,20,510/-. The CPC Bengaluru in the intimation u/s 143(1) did not give credit of Rs.10,11,000/- being the TDS u/s 194IA of the Act by Mr. Pradeep Ramrakhyani.

The assessee filed an appeal before the CIT(A)-NFAC and the CIT (A) – NFAC upheld the action of the CPC. Being aggrieved, the present appeal is filed.

Conclusion- Delhi Bench of the Tribunal in the case of Aricent Technologies Holdings Ltd vs. Addl. CIT has held that the revenue is unable to recover the tax deducted at source from the person who has deducted such tax would not entitle the revenue to recover the said amount once again from the employee assessee, in view of the specific bar contained in Section 205 of the Act.

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