Case Law Details
DCIT Vs Ravi Integrated Logistics (India) Pvt. Ltd. (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi addressed an appeal filed by the Department of Income Tax against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which allowed Ravi Integrated Logistics (India) Pvt. Ltd. to claim Tax Deducted at Source (TDS) credit despite failing to claim it in their income tax return. The assessee had not included the TDS credit in their return, though it was reflected in their audited financial statements and Form 26AS. The CIT(A) directed the Assessing Officer (AO) to examine and allow the TDS credit after verifying the claim, citing legal precedents that emphasize the collection of only legitimate tax dues and the avoidance of depriving taxpayers of rightful relief due to inadvertent mistakes.
The ITAT upheld the CIT(A)’s decision, stating that technical pleas should not override the lawful rights of an assessee. The tribunal agreed that the CIT(A) had passed a reasonable order by directing the AO to verify the TDS claim and ensure that the corresponding income was included in the return. The ITAT acknowledged that the TDS credit was evident in the assessee’s accounts and Form 26AS, reinforcing the legitimacy of the claim. The decision emphasizes the principle that tax authorities should ensure fair tax collection, allowing for the correction of genuine errors to prevent undue hardship on taxpayers. The ITAT dismissed the revenue’s appeal, affirming the CIT(A)’s directive for verification and subsequent credit allowance.
FULL TEXT OF THE ORDER OF ITAT DELHI
The Revenue has filed the instant Appeal against the Order of the Ld. CIT(Appeal)/NFAC, New Delhi dated 10.07.2024, relating to assessment year 2022-23 on the following grounds:-
1. Whether in facts and circumstances of the case and in law, the ld. CIT(A) has erred in directing the AO to examine and allow credit of TDS which was not claimed in income tax return filed by the assessee nor Form 71 was filed by the assessee for claiming refund of TDS.
2. The appellant craves to be allowed to add any fresh ground(s) of appeal and or deleted or amend any of the ground(s) of appeal.
3. In this case, assessee has failed to claim the credit of TDS in the return filed although the same were reflected in the accounts and also in Form No. 26AS. Since assessee had not claimed, CPC in its intimation did not provide the TDS benefit. Against the above order, assessee appealed before the Ld. CIT(A), Ld. CIT(A) considered the issue and concluded as under:-
“4.1 I have considered the submission of the appellant and the intimation issued u/s 143(1) of the Act. I have also considered various case laws cited by the appellant which are reproduced I para 3 above. I find that the appellant failed to claim the credit of TDS in the return filed although the same were reflected in the audited financial statements under ‘Balance with Government Authorities’ grouped under ‘Schedule 9 Other Current Assets’ and Form 26AS. When the appellant realized this mistake, there was no time to revise the return u/s 139(5) of the Act. In the rectification application filed by the appellant, no remedy is provided to the appellant. I find that the present case is squarely covered by the recent judgement of the Hon’ble ITAT, “B” Bench, Ahmedabad dated 02.05.2023 in the case of Kunvarji Fincorp Pvt. Ltd. versus D.C.I.T [Annexure-12] where the Hon’ble Tribunal while allowing the appeal has observed that –
8. The issue in the present case relates whether the assessee can claim the benefit of the TDS which was not claimed in the return of income inadvertently in the given facts and circumstances. In this regard we note that the Hon’ble Gujarat High Court in the case of S.R. Koshti Vs. CIT reported in 276 1TR 165 has held as under:
20. A word of caution. The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This court, in an unreported decision in case of Vinay Chandulal Saba v. N.O. Parekh, CIT [Spl. Civil Application No. 622 of 1981 dated 20-8-1981], has laid down the approach that the authorities must adopt in such matters in the following terms:
“The Supreme Court has observed in numerous decisions, including Ram/al v. Rewa Coalfields Ltd. AIR 1962 SC 361, State of West Bengal v. Administrator, Howrah Municipality AIR 1972 SC 749 and Babutmal Raichand °swat v. Laxmibat R. Torte AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt.”
8.1 From the above it is revealed that the income of the assessee should not be over assessed even if there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income. We also note that the Hon’ble Gujarat High Court in the case of Vareli textile industry versus C1T reported in 154 Taxman 33 wherein it was held as under:
It is equally well-settled that where a cause is consciously abandoned (as in the present case) the party seeking condonation has to show by cogent evidence sufficient cause in support of its claim of condonation. The onus is greater. One of the propositions of settled legal position is to ensure that a meritorious case is not thrown out on the ground of limitation. Therefore, it is necessary to examine, as least prima facie, whether the assessee has or has not a case on merits.
8.2 In the light of the above discussion, we note that the assessee should not be deprived of the benefit of the TDS credit which was inadvertently not claimed in the return of income.”
4.2 In light of the above judgements, I am of the view that only legitimate tax dues ought to be collected by the Revenue, and the assessee should not be deprived of substantial relief owing to inadvertent mistake. It is settled law that technical pleas cannot circumscribe lawful rights of an assessee. Accordingly, Ld AO is directed to allow credit of TDS as per law. Before me, there is no mechanism to further verify the genuineness of the claim made in Form 26AS and the amounts reflected in the audited financial statements under ‘Balance with Government Authorities’ grouped under ‘Schedule 9 Other Current Assets.’ Therefore, I direct the Ld AO to examine the claim of TDS made by the appellant and also examine whether the corresponding income is shown in the return filed, after giving the appellant adequate opportunity of being heard. The appellant is also directed to cooperate with the A.O. as and when called for. Subject to necessary verification by Ld AO, the grounds of the appellant are allowed.”
3. Against the above order, Revenue is in appeal before us.
4. We have heard the Ld. DR and perused the records. None appeared on behalf of the assessee, despite issue of notice, hence, we are proceeding exparte qua the assessee. We find that Ld. CIT(A) has passed a reasonable order and correct in saying that technical pleas cannot circumscribe lawful rights of an assessee. Ld. CIT(A) has also noted that the claim was duly reflected in the accounts and in Form 26AS. Therefore, Ld. CIT(A) directed the AO to examine the claim of TDS made by the assessee and also examine whether the corresponding income is shown in the return filed. In our considered opinion, the aforesaid findings of the Ld. CIT(A) is quite correct, therefore, we do not find any infirmity in the order of the Ld. CIT(A and accordingly, affirm the same.
5. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 06/02/2025.
Author Bio
