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July 11, 2022

Credit for TDS deducted cannot be denied due to the Deductor’s non-payment

by CA Shivam Jaiswal in Income Tax

Credit for TDS deducted cannot be denied due to the Deductor’s non-payment

Facts and Issue of the case

The grounds of appeal raised by the assessee are as follows:

1.The Ld Faceless CIT(A) has erred and was not just and proper on the facts of the case and in law in dismissing the appeal of the assessee without affording proper opportunity and not considering the submission made.

2. The Ld Faceless CIT(A) has erred and was not just and proper on the facts of the case and in law in not allowing the credit of “TAX deducted but not paid into Government a/c” disregarding the provisions of section 205 of the Act.

The facts of the case are that assessee before us is an individual and during the assessment year he earned income from “house Property”. The Tenant, while paying the rent to assessee had deducted TDS from the payment, but did not deposit in the Government account. The assessee had claimed the whole of the amount of TDS as credited against the tax payable. However, since the deductor (tenant), did not deposit the TDS amount to the credit of the Government account, therefore it was not reflected in the Form 26AS of the assessee. Though the Assessing Officer (CPC) did not allow the credit of TDS of Rs.5,71,770/-.

Aggrieved by the order of Assessing Officer (CPC), assessee carried the matter in appeal before Ld. NFAC/CIT(A) who has confirmed the action of Assessing Officer. Aggrieved, the assessee is in further appeal before us. Before us, Shri Suresh K Kabra, Learned Counsel for the assessee submits that in case of the assessee, the deductor has deducted TDS but not deposited to the Central Government Account, therefore, it is mistake committed by the Deductor and for that assessee should not be penalized. There is no default on the part of assessee, therefore, assessing officer may be directed to grant the benefit of TDS. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

Observation by the court

The court had herad both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Before us, Ld. Counsel for the assessee filed copy of Form 26AS up to 05.08.2021 vide page 1-2 of the paper book. Copy of TDS chart- Rent receipt from Tenant for the financial year 2018-19 is filed.

Copy of ledger account of Tenant for the financial year 2018-19 is filed. The copy of ledger account of Tenant for financial year 2019-20 is furnished. The contra account of Tenant for the financial year 2018-19 is furnished. The TDS receivable ledger account is furnished. The copy of bank statement of Vijaya Bank, is furnished.

From the above documents furnished by the assessee, it is evidently clear that assessee received the rent income, and the Tenant (Deductor) has deducted TDS but has not deposited the TDS so deducted into the Central Government Account. Considering these facts, we note that issue under consideration is no longer res integra. The Hon`ble High Court of Gujarat in the case of Kartik Vijaysinh Sonavane, [2021] 132 taxmann.com 293 (Gujarat) held that where TDS has been deducted by employer of assessee, it will always been open for department to recover same from said employer and credit of same could not have been denied to assessee.

Conclusion

The appeal of the assesse is allowed by the court.

Liladevi-Dokania-Vs-ITO-ITAT-Surat

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