Hemant Enterprises Vs ACIT (ITAT Pune)
Deductor’s Default Can’t Punish Deductee: 26AS Not Gospel: TDS Credit Allowed Though Deductor Failed to Deposit Tax
Pune ITAT held that Assessee cannot be denied TDS credit merely because deductor failed to deposit TDS with Government, once deduction of tax at source is established. In Hemant Enterprises Vs. ACIT, Circle-1, Nashik, CPC denied TDS credit of ₹27.14 lakh while processing return u/s 143(1) for AY 2019-20 as the amount was not reflected in Form 26AS, since deductor Mumbai WTR Pvt. Ltd. had deducted TDS but not remitted it. CIT(A)/NFAC upheld denial holding that issue was debatable & beyond scope of rectification u/s 154. Tribunal, relying on Bombay HC in Hashpal Sahni & Madras HC in Ashok Kumar B. Chowatia, held that u/s 205, once tax is deducted, Assessee cannot be asked to pay tax again, irrespective of failure of deductor to deposit TDS. Remedy of Revenue lies against deductor, not Assessee. Accordingly, ITAT set aside order of CIT(A) & directed AO to grant TDS credit after due verification. Issue of interest u/s 234A having already been allowed by CIT(A), assessee’s appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order of National Faceless Appeal Centre (NFAC)/ Commissioner of Income Tax (Appeals), Delhi [“CIT(A)/NFAC”] dated 22/01/2025 pertaining to the Assessment Year (“AY”) 2019-20.
