Case Law Details
Shree G. T. Sales Vs DCIT/ACIT-1(1) (ITAT Indore)
The Income Tax Appellate Tribunal (ITAT), Indore Bench, allowed the appeal of the assessee for statistical purposes and remanded the matter to the Assessing Officer for verification of Tax Deducted at Source (TDS) credits claimed by the assessee for Assessment Year 2019-20.
The dispute originated from an intimation order passed under Section 143(1) of the Income Tax Act dated 17.02.2020 by CPC Bengaluru, wherein a demand of Rs.4,27,238 was raised. The assessee had declared total income of Rs.33,95,889 and claimed TDS credit of Rs.9,67,280. However, CPC matched only Rs.6,02,418 and treated Rs.3,64,862 as unmatched TDS, resulting in denial of credit and consequential tax demand.
The assessee challenged the intimation order before the CIT(A). The appellate authority upheld the CPC action, observing that TDS credit can be allowed only when conditions under Section 199 are fulfilled, including actual deduction of tax, deposit of tax to the Central Government, and furnishing of TDS certificates. The CIT(A) noted that Form 26AS reflected TDS of only Rs.6,93,587 and therefore upheld denial of TDS credit of Rs.3,64,862 along with consequential demand.
Aggrieved by the appellate order, the assessee filed a second appeal before the Tribunal. At the hearing, the Tribunal first considered delay in filing the appeal. The assessee explained the delay through an affidavit stating that the CIT(A) order was passed electronically and was not physically served. According to the assessee, the email may have gone into the spam or junk folder, and the firm became aware of the order only upon logging into the income tax portal in June 2025. Thereafter, the appeal was filed on 10.07.2025 with a delay of around 130 days.
The Department did not object to condonation of delay, and the Tribunal condoned the delay and admitted the appeal.
On merits, the assessee contended that the denied TDS credit had in fact been deducted and deposited by the deductor, Mahadhan Agritech Limited. The assessee relied upon Form 26AS and Form 16A placed in the paper book to demonstrate that TDS amounting to Rs.9,67,280 had been deducted and paid.
The assessee submitted copies of Form 16A for all quarters from 01.04.2018 to 31.03.2019 as evidence of deduction and payment of TDS. The Revenue did not seriously dispute that the TDS amount had ultimately been paid and left the matter to the discretion of the Tribunal. Both parties agreed that the issue could be remanded for verification of records.
After examining the records, paper book, and rival submissions, the Tribunal observed that the assessee had demonstrated payment of TDS by the deductor in favour of the assessee. The Tribunal therefore found it appropriate to set aside the impugned appellate order and remand the matter back to the Assessing Officer for the limited purpose of verification of TDS deducted and paid.
The Tribunal directed the Assessing Officer to verify Form 16A, Form 26AS, and related records and thereafter grant appropriate relief and TDS credit to the assessee in accordance with law.
Accordingly, the impugned order was set aside and the appeal of the assessee was allowed for statistical purposes.
Assessee was Represented by: Shri Milind Wadhwani, CA
FULL TEXT OF THE ORDER OF ITAT INDORE
This is an Appeal filed by the Assessee under section 253 of the income tax Act 1961,[ herein after referred to as the Act for the sake of brevity] before this tribunal as & by way of a second Appeal. The Assessee is aggrieved by the order bearing Number:-ITBA/APLS/S/250/2024-25/1071722108(1) dated 31.12.2024 passed by the Ld. CIT(A) u/s 250 of the Act, which is herein after referred to as the “Impugned order”. The Relevant Assessment year is 2019-20 and the corresponding previous year period is from 01.04.2018 to 31.03.2019.
2. Factual Matrix
2.1 That as and by way of an intimation order made u/s 143(1) of the Act dated 17.02.2020 passed by the CPC Bengaluru a demand of Rs. 4,27,238/- was made. The total income was at Rs. 33,95,889/- [Rs. 16,97,787 from house property + Rs. 16,98,102/- profit & gain from business & profession]. Gross Tax liability was Rs. 10,59,518/- which was paid. However a fresh demand of Rs. 4,27,238/- was made. On page 44 of appeal memo an amount of Rs. 9,67,280/- was claimed as TDS, the amount Rs. 6,02,418/-was found matched & Rs. 3,64,862/- was found to be mismatched [ Details of unmatched tax deducted at source] hence the demand of Rs. 4,27,238/- u/s 143(1). That the aforesaid intimation order u/s 143(1) bears No. :-CPC/1920/AS/1961789557 with demand identification no. 201920 1937107129042T and that the same is dated 17.02.2020 which is herein after referred to as the “Impugned intimation Order”.
2.2 That the assessee being aggrieved by the aforesaid “Impugned assessment Order” prefers the first appeal u/s 246A of the act before the Ld. CIT(A) who by the “Impugned Order” has dismissed the first appeal of the assessee on the grounds & reasons stated therein. The core grounds & reasons for the dismissal of the first appeal were as under:-
“6. Observations, Findings and Decisions
I have carefully considered the facts of the case and the submission of the appellant. I have perused the order dated 17.02.2020 passed u/s. 143(1) of the Income-tax Act by the C.P.C, Bengaluru for A. Y. 2019-20 as well as the grounds of appeal, statement of facts, and written submission filed by the appellant. From the intimation u/s 143(1) dated 17.02.2020 passed by CPC, Bangaluru it is observed that Assessing Officer has made adjustment u/s 143(1) and denying the TDS credit for Rs. 3,64,862/- deducted by from the income and raising a demand of Rs. 4,27,240/- vide order dated 17.02.2020 in the intimation u/s 143(1) of the Income Tax Act.
7.2 Ground no.1,2 and 3 are related to disallowing TDS of Rs. 3,64,862/- and consequently raising demand of Rs. 4,27,240/-vide order dated 17.02.2020 in the intimation u/s 143(1). In this regard fact of the case and submission made. by the appellant it is perused that the credit of TDS shall be allowed in the assessment year in which the income from which tax is deducted, is assessable, has been concur. However, the assessment of income alone is not the criteria for claiming credit of TDS. The credit of TDS is admissible on fulfillment of other conditions prescribed in section 199 namely:
1. The tax deductible at source is actually deducted,
2. The Tax so deducted is paid to the Central Government and
3. A certificate of deduction of tax at source as provided under section 203 is furnished for claiming credit of TDS.
7.3 In this connection it is observed that the while processing income tax return u/s 143(1) and disallowing TDS credit of Rs. 3,64,862/-, it is pointed out by CPC shown in the 26AS/AIS of concerned assessment year and shown by the assessee in his file income tax return of AY 2019-20. It is pertinent to note that the purpose of issuing TDS certificate under Section 203 of the Act is to enable the assessee to avail credit of the tax deducted at source in the relevant assessment year. If the TDS certificate is not issued, then under Section 199 of the Act, the assessee from Whose income, tax has been deducted at source will not be entitled to take credit of the said amount.
7.4 In view of the above it is observed that the appellant gives relevance of the section 205 of the act. In this regard it is stated that the fulfillment of the above conditions cumulatively that the credit of TDS would be allowable in a year in which the income is assessable. The provisions of section 205 of the Act lay down that once tax has been deducted at source, there would be no direct demand from the assessee from whose income tax has been deducted. Thus, the provisions of section 205 are in the context of recovery of demand and have nothing to do with the credit of TDS. For the purpose of claiming credit of TDS, the method of accounting followed by the assessee is also of no relevance. It is now well settled that the credit of TDS can be claimed in a year in which the income is assessable. Or in a later year if the income from which tax has been deducted has already been assessed in an earlier year.
7.5 In this regard, the provisions of Section 199 of the Act and Rule 37BA of the IT Rules governing the credit of Tax deducted at source are to be examined.
Credit for tax deducted.
199. (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unitholder, or of the shareholder, as the case may be
(2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made.
Rule 37BA of the IT Rules:-
Credit for tax deducted at source for the purposes of section 199.
37BA. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority.
(2) ((i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deduc tee:
Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).)
(i) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person.
(ii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.
(3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.
(ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.
1[ (3A) Notwithstanding anything contained in sub-rule (1), sub-rule (2) or sub-rule
(3), for the purposes of section 194N, credit for tax deducted at source shall be given to the person from whose account tax is deducted and paid to the Central Government account for the assessment year relevant to the previous year in which such tax deduction is made.]
(4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of-
(1) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority, and
(1) the information in the return of income in respect of the claim for the credit, subject to verification in accordance with the risk management strategy formulated by the Board from time to time.]
In view of the above, it is inferred that the information regarding the deduction of tax and deposit of such tax deducted by the deductor has to be given to the Central Government and in a certificate to be issued to the deductee. This can be evidenced by TDS certificate and Form 26AS. A perusal of the Form 26AS of the appellant shows that Rs. 6,93,587/- was deducted against a payment of Rs. 33,95,890/-. Since TDS of Rs. 6,93,587/- is evidenced by Form 26AS pertaining to the appellant, the grant of credit of TDS of Rs. 6,93,587/-against the TDS claimed in ITR of Rs. 10,58,449/-by the CPC and disallowed the TDS of Rs. 3,64,862/-is correct and justified. Therefore, the demand raised by the CPC is upheld. The ground raised by the appellant is dismissed.
7.6 Ground no. 4 is related to charging of interest u/s234A, u/s 234B and u/s 234C of the Income Tax Act, 1961. The ground raised by the appellant is consequential in nature. Therefore, this ground is not adjudicated separately and hence dismissed.
8. In the final result, appeal filed by the appellant is disposed of as Dismissed.
2.3 That the assessee being aggrieved by the “Impugned Order” has preferred the instant second appeal before this Tribunal & has raised the following grounds of appeal in the form No. 36 against the “Impugned Order” which are as under:-
1. That on the facts and in law, the Ld. JCIT(A) erred in upholding the intimation under section 143(1) dated 17.02.2020, which is incorrect, bad in law and liable to be quashed.
2. On the facts and circumstances of the case and in law, the Ld. JCIT-(A) erred in confirming the action of CPC Bangalore erred in denying the credit of TDS of Rs. 3,64,862/-.
3. That on the facts and circumstances of the case and in law, the Ld. JCIT-(A) erred in upholding the action of CPC Bangalore in making an adjustment and raising a demand of Rs. 4,27,240 while passing an intimation order u/s. 143(1) of the Income Tax Act, 1961.
4. That on the facts and in the circumstances of the case, and in law, the consequential interest charged under sections 234A, 234B, and 234C is also incorrect and ought to be recomputed after granting due credit of the TDS amount.
5. For that the appellant craves leave to add, amend, alter vary and or withdraw any or all the above grounds of appeal.
3. Record of Hearing
3.1 The hearing in the matter took place before this Tribunal on 27.04.2026 when the Ld. AR for & on the behalf of the assessee appeared before us & interalia contended that the “Impugned Order” is bad in law, illegal & not proper. It therefore deserves to be set aside. It was pointed out to us that the registry has calculated the delay of 132 days in filling the instant second appeal. An affidavit of shri Abhishek Kumar Baheti partner of GT sales dated 23.04.2026 is placed on the records of this Tribunal in support of the condonation of delay. It is stated therein that the “Impugned Order” dated 31.12.2024 was passed in electronic mode & was not served manually or physically. The mail might have gone in to spam/junk folder and therefore firm remained unaware of the same. That in the month of June 2025 upon logging in to the income tax e-filing portal it came to the notice that the “Impugned Order” was passed & immediately thereafter the instant appeal was filed albeit with a delay of 130 days. On 10.07.2025 the appeal was filed. It is avered in the aforesaid affidavit dated 23.04.2026 that the delay in filling the appeal was neither deliberate nor intentional, but occurred solely due to the lack of knowledge of passing of the “Impugned Order”. There was no negligence or malafide intent. In the interest of ends of justice appeal be admitted after condoning the delay. Per contra the Ld. DR appearing for & on the behalf of the revenue contended that department of income tax has no objection if the delay is condoned. Accordingly we condone the delay in filling the present appeal. The appeal is admitted & taken up for hearing.
3.2 The Ld. AR then contended that core issue in the instant appeal is that the required TDS credit is disallowed to the assessee by the orders of the lower authorities. Our attention was invited to PB page 147 (26AS) wherein the deductor “Mahadhan Agritech Limited” had deducted Rs. 9,67,280/- & that same was deposited. Our attention was also invited to PB page 132 form 16A of Mahadhan Agritech Limited deductor for assessee shree GT sales & subsequent pages up to Page 143. [Q1 to Q4] [01.04.2018 to 31.03.2019], as evidence of payment of the TDS amount. The Ld. AR has placed on the record of this Tribunal a “synopsis” of two pages & a page book page 45-168. Synopsis important points were readout during hearing. The Ld. DR appearing for & on the behalf of the revenue submitted that in the ultimate analysis the required TDS amount is paid & left the issue to be decided by the Bench. In the end of the hearing both the Ld. AR and the Ld. DR were at adidem that let the matter be remanded back to the file of Ld. AO for due verification of records of TDS paid.
4. Observations Findings & conclusions
4.1 We have to decide the legality, validity and proprietary of the “impugned order” basis records of the case & the rival submission canvassed before us.
4.2 We have carefully perused the records of the case and have heard the submissions.
4.3 We basis records of the case & after hearing & further upon examining the rival contentions of the Ld. AR & the Ld. DR canvassed before us, are of the considered opinion that the “Impugned Order” deserves to be set aside as the Ld. AR basis synopsis & paper book filed before us has demonstrated full payment of TDS by deductor (Supra) in favour of duductee the assessee. Under these facts & the circumstances we deem fit to set aside the “Impugned Order” & remand the matter for the limited purpose of due verification of TDS amounts deducted by the deductor & paid to duductee for Tax credits claims. The due verification of form 16A, 26As etc. be done & then appropriate relief & benefit be granted to the assessee basis law.
4.4 In view of above, we set aside the “Impugned Order” & remand the case back to the file of Ld. AO for due verification as directed aforesaid.
5 Order
5.1 In the Result the “Impugned Order” is set aside as aforesaid with due verification to be done by Ld. AO.
5.2. Appeal of the assessee is allowed for statistical purpose.
Pronounced in open court on 08.05.2026.
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