DCIT Vs Incred Financial Services Limited (ITAT Mumbai)
ITAT Mumbai upheld the order of CIT(A) directing AO to grant TDS credit after verification where short credit of ₹1.68 crore arose due to mismatch between ITR claim and Form 26AS. The assessee had claimed TDS of ₹22.20 crore, but only ₹20.61 crore was allowed in processing u/s 143(1).
CIT(A) directed AO to allow TDS reflected in Form 26AS and also consider TDS deducted but not appearing in 26AS, subject to verification and indemnity bond, relying on judicial precedents that credit should not be denied merely because deductor failed to deposit tax. Tribunal held that the directions were conditional and required proper verification; hence no infirmity existed.
Accordingly, Revenue’s appeal was dismissed and assessee’s cross-objection became infructuous.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal by the Revenue and cross-objection by the assessee has been filed against the impugned order dated 27/03/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”), by the learned Additional/Joint Commissioner of Income Tax (Appeals), Bhopal, [“learned Addl./Joint CIT(A)”], which in turn arose from the intimation issued under section 143(1) of the Act, for the assessment year 2021-22.
2. In this appeal, the Revenue has raised the following grounds: –
1. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to allow credit of TDS not reflected in Form 26AS merely on the basis of the assessee’s claim and indemnity bond, without ensuring that whether the tax so deducted had actually been deposited to the credit of the Central Government, as required under section 199(1) of the Income-tax Act, 1961 read with Rule 37BA of the Income-tax Rules, 1962.”
2. m”On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in shifting the onus onto the Assessing Officer to allow TDS credit without there being any confirmation from the deductors OR rectification in the TDS records, thereby bypassing the established mechanism for TDS verification and exposing the Revenue to potential loss.”
3. “The appellant craves the leave to add, amend, alter and /OR DLEETE any of the grounds of appeal as above.”
3. We have considered the submissions of both sides and perused the material available on record. For the year under consideration, the assessee filed its return of income on 15/03/2022, after claiming TDS credit of INR 22,20,37,534. The return filed by the assessee was processed vide intimation dated 14/12/2022 issued under section 143(1) of the Act, whereby TDS credit of only INR 20,61,49,733 was granted to the assessee, resulting in a short grant of TDS credit of INR 1,68,87,801.
