It is incumbent upon AO to give full credit of TDS as per Form 26AS though full TDS could not be filled in the return of income – ITAT
In a recent judgment, ITAT Lucknow has upheld the direction of the CIT(A) to AO to give full credit of TDS as per Form 26AS to the assessee where due to technical glitch, full amount of TDS was not filled in the return of income
ABCAUS Case Law Citation:
4425 (2025) (02) abcaus.in ITAT
In the instant case, the Revenue had challenged the order passed by CIT(A), National Faceless Appeal Centre (NFAC) directing the Assessing Officer (AO) to give credit of TDS as per Form 26AS statement which was not claimed in the return of Income by the assessee.
The assessee was aggrieved by the action of the AO for not giving credit to the entire amount deducted and reflected in Form 26AS. The assessee filed an application before AO for rectification of mistake u/s 154 of the Income Tax Act, 1961 (the Act). This application was rejected.
The assessee had also filed a petition u/s 119(2)(b) of the Act. This petition was also rejected by the Chief Commissioner of Income Tax. Aggrieved against rejection of application u/s 154 of the Act, the assessee preferred an appeal before the CIT(A) who allowed the appeal of the assessee for statistical purposes with direction to the AO to give credit for the prepaid taxes as per the provisions section 199 of the income Tax Act, 1961.
Before the Tribunal, the Revenue contended that the assessee had also approached to the Chief Commissioner of Income Tax by way of an application u/s 119(2)(b) of the Act and the same application was rejected. Therefore, the CIT(A) ought not to have entertained the appeal of the assessee.
The Tribunal observed that the CIT(A) had noted in the impugned order that the claim of appellant towards TDS could be verified from the Form 26AS. As the CIT (A) does not have access to the appellant’s 26AS form, whereas AO has access to verify from Form 26AS. Moreover, this was a matter of prima facie mistake according to the facts of the case furnished by the appellant.
The Tribunal opined that there was no infirmity in the impugned order. The tax-payer should not be subjected to harassment merely on the basis of some mistake occurred due to technical glitch of software.
The Tribunal further observed that the Hon’ble Supreme Court had observed that what is more significant for society are three unhappy features which, we feel confident, the State will seriously consider. They are: (a) that good government involves not only diligent collection of taxes, but also ready refunds of excess levies, (b) that simplicity or easy comprehensibility in drafting legislation, including rules and notifications affecting the laity, is an art found absent, although not difficult to accomplish, given a fresh approach to use of statutory language; and (c) that a fair construction not always one adverse to the assessee is permissible and proper on the part of government and the taxing officers when enforcing fiscal legislation.
The Tribunal observed that undisputedly, the assessee had not claimed credit of tax in its Income Tax Return. As per the assessee, due to technical glitches, full amount of TDS deducted was not updated by the software in the return of income. Therefore, the assessee had made an application for seeking rectification of mistake. Undisputedly, it was not the case of the revenue that the tax deducted as per Form No. 26AS was only the amount as uploaded by the assessee. Moreover, it was incumbent upon the assessing authority to ensure that the credit of tax deducted at source has been given as per Form No. 26AS. The Assessing Officer had not brought any materials to rebut this fact. Even otherwise also, it was not the case of AO that tax so deducted was not deposited in government account. It was apparently a mistake that could not have been the basis of denial of credit of tax under the facts and circumstances of the present case.
Therefore, the Tribunal held that CIT(A) was justified in directing the Assessing Officer to give credit to the tax deducted at source.
Accordingly, the appeal of the Revenue was dismissed.
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