Case Law Details
Rajesh Kumar Vs D.D.I.T (ITAT Delhi)
Rajesh Kumar’s appeal against the CIT(A) order before the Income Tax Appellate Tribunal, Delhi, concerning the denial of TDS credit raises crucial questions about the tax liabilities of Kachha Arthias.
The crux of the matter lies in the contention that the assessee, being a Kachha Arthia, is not liable for the tax on the income in question. The argument revolves around the interpretation of CBDT Circular No. 452 and whether the assessee should be entitled to credit for TDS deducted at the source.
Upon review, the CIT(A) held that despite the applicability of the circular, the assessee cannot benefit from erroneously deducted tax, as it was not declared as income. This decision underscores the significance of accurately reflecting income in tax filings and the consequences of discrepancies therein.
The appellant vehemently argued for the recognition of their status as a Kachha Arthia, citing the circular in their favor. Conversely, the Departmental Representative supported the CIT(A)’s stance, leading to a thorough examination of legal provisions and precedents.
The Tribunal’s verdict upheld the CIT(A)’s decision, emphasizing the importance of adhering to tax regulations and ensuring proper reporting of income. While acknowledging the applicability of the circular, the Tribunal deemed the denial of TDS credit justified in this instance.
The Rajesh Kumar Vs. D.D.I.T case highlights the complexities surrounding TDS credit and the obligations of taxpayers, particularly Kachha Arthias. It underscores the significance of meticulous income reporting and adherence to tax laws.
This analysis elucidates the implications of the tribunal’s decision, providing insights into the broader implications for similar cases. Ultimately, the case serves as a reminder of the importance of compliance and accurate disclosure in tax matters, shaping the landscape for future disputes and interpretations.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is preferred against the order of the ld. CIT(A) – 8, Mumbai dated 15.12.2023 pertaining to A.Y 2022-23.
2. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in not allowing credit of TDS deducted at source by the purchaser ignoring the fact that the assessee is only a Kachha Arthia and, therefore, not liable to pay tax on the alleged income.
3. Briefly stated, the facts of the case are that the assessee being a Kachha Arthia, filed its return of income for commission earned by it. The total turnover of commission shown by the assessee was Rs. 15,78,693/-. However, taking a leaf out of Form No. 26AS, proportionate credit of TDS was allowed to the assessee.
4. When the matter was agitated before the ld. CIT(A), the ld. CIT(A) held as under:
5. The ld. counsel for the assessee vehemently stated that being a Kachha Arthia, the assessee is not liable. Strong reliance was placed on CBDT Circular No. 452 dated 17.03.1986.
6. Per contra, the ld. DR supported the findings of the ld. CIT(A).
7. I have carefully considered the orders of the authorities below. There is no dispute that the assessee is a Kachha Arthia and CBDT Circular No. 452 squarely applies. However, I am of the considered opinion that the assessee should not get benefit of tax erroneously deducted by the payer in as much as the assessee has not shown the same as its income.
In my considered opinion, the findings of the ld. CIT(A) mentioned elsewhere do not call for any interference.
8. In the result, the appeal of the assessee in ITA No. 278/DEL/2024 is dismissed.
The order is pronounced in the open court on 27.03.2024
