Case Law Details
Jivanbhai Somabhai Patel Vs DCIT (ITAT Ahmedabad)
In Jivanbhai Somabhai Patel vs DCIT, the Income Tax Appellate Tribunal, Ahmedabad Bench, considered whether a commission agent is entitled to claim TDS credit when the underlying income belongs to third parties, namely agriculturist farmers.
The assessee filed a return for A.Y. 2022–23 declaring total income of Rs. 5,26,460 and claimed TDS credit of Rs. 1,47,522. However, while processing the return under Section 143(1), the Centralized Processing Centre (CPC) allowed only Rs. 5,777 as TDS credit. The assessee appealed before the Commissioner of Income Tax (Appeals), who partly allowed the appeal. The present appeal before the Tribunal involved a delay of 204 days, which was condoned after considering the reasons as genuine.
The assessee contended that TDS credit of Rs. 52,663 under Section 194Q had been wrongly denied. It was argued that the assessee acted as an APMC-registered commission agent (Adatiya), facilitating the sale of agricultural produce belonging to farmers to traders in auction markets. The assessee relied on CBIC Circular No. 13/2021 dated 30.06.2021 and argued that denial of TDS credit resulted in unjust enrichment by the department.
The Revenue relied on the processing order under Section 143(1) and the findings of the CIT(A).
Upon examining the record, the Tribunal noted that the assessee had admitted that the sales on which TDS was deducted did not belong to him but to the agriculturists/farmers. The Tribunal observed that under Section 199 of the Income Tax Act and Rule 37BA(2), TDS credit must be granted to the person in whose hands the corresponding income is assessable.
The CIT(A) had found that the TDS was wrongly reflected in the assessee’s PAN, even though the income was not offered to tax in his return. The assessee, being merely a commission agent, should have ensured that the TDS certificates were issued in the names of the actual beneficiaries (farmers) or sought correction of TDS statements by submitting appropriate declarations to the deductor. Despite opportunities and deficiency notices, no such corrective steps were taken, and the TDS continued to appear in the assessee’s PAN without corresponding income disclosure.
The Tribunal agreed with these findings and held that the assessee was not entitled to claim TDS credit on income that did not belong to him. It further observed that any mismatch in TDS credit must be resolved by seeking corrections in TDS returns filed by the deductor or through appropriate statutory remedies, rather than claiming such credit in the return.
The Tribunal found no infirmity in the actions of the Assessing Officer, CPC, or the CIT(A) in denying the TDS credit under Section 194Q. Accordingly, it upheld the order of the CIT(A) and dismissed the appeal.
The order was pronounced on 09.04.2026.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The appeal filed by the assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT(A)-6, Delhi on 14.02.2025 for A.Y. 2022-23.
2. The grounds of appeal raised by the assessee are as under:
“1. The Ld. CIT(A) has erred in law and on facts in upholding the non-grant of TDS credit claimed u/s 194Q of Rs. 52,663/- without properly appreciating the facts and submission made by the appellant for granting of said credit.
2. He has further erred in law and on facts in not appreciating the facts of appellant being agent Adatiya registered with APMC engaged in the activity of facilitating sales of agriculture produce of farmers to the traders in the auction held in open market of APMC.
3. He has erred in law and on facts in not properly appreciating circular No. 13 of 2021 dated 30.06.2021 issued CBIC.
4. On the facts of the appellant TDS credit of Rs. 52,663/- u/s 194Q ought to have been allowed and by not allowing TDS credit it is submitted to have resulted into unjust enrichment by the department.
5. The appellant craves leave to add alter and or modify any ground of appeal.”
3. The brief facts of the case are that the assesse filed his return of income for the year under consideration on 15.11.2022 declaring total income of Rs. 5,26,460/-. The assessee had calimed TDS of Rs. 1,47,522/-. However, while processing the ITR, the CPC allowed TDS of Rs. 5,777/- only as against Rs. 1,47,511/- claimed by the assessee in his return of income.
4. The assessee filed appeal before CIT(A). The CIT(A) partly allowed the appeal of the assessee.
5. There is a delay of 204 days in filing the present appeal before the Tribunal for which the assessee has filed condonation of delay along with Affidavit. The reasons stated by the assessee appears to be genuine, hence, the delay is condoned.
6. The Ld. AR submitted that the CIT(A) erred in holding that the non-grant of TDS credit claimed under Section194Q of Rs. 52,663/- was without proper verification of the details filed by the assessee. The Ld. AR submitted that the assessee being agent Arathiya registered with APMC engaged in the activity of facilitating sales of agriculture produce of farmers to the traders in the auction held in open market of APMC. The Ld. AR relied upon the CBIC Circular No. 13/2021 dated 30.06.2021. the Ld. AR submitted that the Revenue should have allowed the TDS credit under Section 194Q as non-allowance of the said TDS credit resulted into unjust enrichment and deprive the assessee of its right for claiming the refund.
7. The Ld. DR relied upon the order under Section 143(1) dated 31.05.2023 and the order passed by the CIT(A).
8. I have heard both the parties and perused all the relevant materials available on record. The claim of the assessee / Ld. AR that only 01% commission income should be charged as the assessee is a licensed commission agent of APMC does not have a support as the assessee himself has accepted / admitted that the TDS made by the purchasers are not his sales, that of the agriculturist / farmer. Hence, the TDS had been made wrongly in the PAN of the assessee and the credit thereof ought not have been claimed by the assessee in the return. Para 5.5 (iii) and (iv) categorically mentioned by the CIT(A) as follows:
“iii) As per the provisions of Section 199 of the Act and Rule 37BA(2) of the Rules, h income and TDS are to be considered in the hands of the same person. It is an admitted fact that the TDS made by the purchaser are not his sales but that of the agriculturist/farmer. Hence, the TDS had been made wrongly in the PAN of the appellant and the credit thereof ought not to have been claimed by the appellant in the return. Instead, as provided u/s 199 and Rule 37BA(2) of the Act, the appellant ought to have filed the declaration with the deductor that the sales are not his sales and he is merely a commission agent facilitating the sale and purchase transactions. The appellant ought to have got the TDS certificates issued in the name of the clients on whose behalf he claims to have acted as an agent, or in the alternative, ought to have got appropriate corrections carried out in the TDS statements filed by the deductor, by filing with the deductor the necessary declarations requesting that TDS be issued in the name of clients. Despite the deficiency letter issued by the AO, CPC, no such action has been carried out by the appellant and the TDS continues to appear in his own PAN without offering the corresponding income.
iv) As on the date of processing, the impugned income was appearing in Form 3AS of the appellant’s PAN but was not included in computing the total income in the return filed by the appellant, credit for such TDS was not allowed proportionately and necessary adjustments u/s 143(1)(a) have been carried out by CPC as per the Act which is found to be tenable on facts and in law.”
9. Therefore, the CIT(A) has rightly concluded that assessee is at liberty of seeking appropriate remedy in respect of any mismatch in TDS as per the return filed by the deductor, the same cannot be rectified by getting appropriate correction statement filed by the deductor. On the issue of granting of credit for TDS under Section 194Q, there is no infirmity in the action of the AO, CPC and therefore, no interference is needed, thus, there is no need to interfere with the findings of the CIT(A), hence, the appeal of the assessee is dismissed.
10. In result, the appeal of the assessee is dismissed.
This Order pronounced in Open Court on 09/04/2026
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