Bangalore ITAT: TDS Credit Cannot Be Denied Merely Because It Was Omitted in Original Return

Vinayaka S Veerabasappa Vs ITO (ITAT Bangalore)

Bangalore ITAT: TDS Credit Cannot Be Denied Merely Because It Was Omitted in Original Return

The Bangalore ITAT held that TDS credit reflected in Form 26AS cannot be denied merely because the assessee failed to claim it in the original return of income. The assessee had inadvertently omitted to claim TDS of ₹2.77 lakh deducted by his employers while filing the return. Consequently, CPC processed the return and raised a demand without granting the TDS credit. The assessee subsequently sought relief through a rectification application under section 154.

The Tribunal observed that the TDS was duly reflected in Form 26AS and there was no dispute that the corresponding income had been offered to tax. It held that a genuine omission in the return cannot deprive the taxpayer of legitimate tax credit. The Bench further remarked that denying such credit would result in unjust enrichment of the Revenue, as tax already deducted and deposited cannot be retained without authority of law.

Accordingly, the ITAT remanded the matter to the Assessing Officer with directions to verify the TDS claim and ascertain whether the corresponding income had been disclosed in the return. If the claim is found correct, the AO was directed to grant the TDS credit. The appeal was allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT MUMBAI