The Mumbai SMC Bench of the Income Tax Appellate Tribunal (ITAT) has held that grant of credit for TDS is consequential and co-terminus with assessment of the corresponding income, subject of course to verification of the relevant TDS entries and correlation thereof. Accordingly, the ITAT directed the AO to grant due credit in accordance with law, after verifying the claim of TDS from Form 26AS.
The Division Bench comprising Beena Pillai (Judicial Member) and Arun Khodpia (Accountant Member) found that though tax had admittedly been deducted at source on the receipts of the assessee, corresponding credit of TDS was not granted by the AO while computing the demand. At the same time, the Bench noted the contention of the DR that in the absence of a return of income, the assessee had not formally made a claim for grant of TDS credit.
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However, the Bench observed that once the income corresponding to the receipts reflected in Form 26AS has been brought to tax, the taxes already deducted and deposited to the credit of the Central Government on such income cannot be denied merely on technical grounds.
Briefly, as the appellant/ assessee did not file the regular return of income, the case was reopened under section 147 of the Income Tax Act on the basis of information received through AIR/Form 26AS reflecting certain receipts in the name of the assessee. In response to notice issued under section 148, the assessee again failed to file any return of income or furnish requisite details before the AO.
Consequently, the AO completed the assessment ex parte and treated the entire receipts reflected in Form 26AS as taxable income. However, while computing the tax liability, credit for tax deducted at source appearing in Form 26AS was not granted. On appeal, the CIT(A) also confirmed the action of the AO.