Appeal lies with CIT(A) against non-grant of TDS credit by CPC Intimation u/s 143(1) of the Act

Appeal lies with CIT(A) against non-grant of TDS credit by CPC Intimation u/s 143(1) of the Act.

 ABCAUS Case Law Citation:
ABCAUS 3760 (2023) (06) ITAT

Important Case Laws relied upon:
Deere & Company138 taxmann.com 46

In the instant case, the assessee had challenged the order passed by the CIT(A) in not allowing TDS credit which was brought forward from earlier assessment years.

The appellant assessee filed return of income for the relevant assessment year which was processed under section 143(1)  of the Income Tax Act, 1961 (the Act) by CPC, Bengaluru. In the intimation u/s 143(1) , CPC did not allow the credit of TDS brought forward from earlier years to the assessee.

In the earlier years, the assessee had received advance towards sale of property on which TDS was deducted,   however,  since  the conveyance deed with respect to this  property was entered into during the impugned assessment  year, the assessee offered the income from sale of aforesaid  property in impugned year and took the credit of TDS  deducted in the earlier assessment year, during impugned assessment year. 

The ssessee filed appeal before CIT(Appeals) against non-granting of TDS which was denied vide intimation issued under section 143 (1) of the Act.

The CIT(A) dismissed the appeal of the assessee on the ground that in the instant case, no adjustment to the income had been made in the section 143(1) intimation and accordingly, no appeal lies against the non-granting of TDS credit in order passed under section 143(1) of the Act.

Referring to the provisions of section 246A of the Act, the CIT(A) held that the appellant had sought grant of TDS credit of earlier years which was not an adjustment u/s 143(1) of the total income. Therefore, the issue raised by the appellant is not within the mandate provided u/s 246(1)(a) of the Act. In view of this, the issue raised by the appellant cannot be adjudicated.

The Tribunal observed that section 246A speaks about appeal against order passed under sub-section (1) or sub-section (1B) of section 143(1) of the Act, where the assessee objects to “the making of adjustments”… to the income  assessed, or “to  the  amount  of  tax  determined”.

The Tribunal opined that a reading of section 246A shows that appeal against section 143(1) lies before CIT(Appeals) in the case where the assessee objects to the making of adjustments, both to the “income assessed” as well as to the “amount of tax determined”.

The Tribunal opined that section 246A cannot be read in a manner so as to only include those cases where adjustments have been made to the “income” of the assessee and exclude adjustments made in the intimation issued under section 143(1), which have an impact on the “amount of taxed determined”.

Accordingly, the Tribunal held that appeal before CIT(Appeals) lies against the intimation issued under section 143(1) of the Act, wherein adjustments have been made in  the said intimation, which have a bearing on the “amount of  tax determined”.

The Tribunal opined that CIT(Appeals) took a very restrictive view of the provisions of section 246A of the Act, and accordingly, the ITAT set aside matter to the file of CIT(Appeals) to hear the appeal of the assessee on merits,  after giving due opportunity of hearing to the assessee, in accordance with law.

The Tribunal also observe that Co-ordinate Bench had held  that any order passed under Act against assessee, impliedly including an order under section 139(9), having effect of  creating liability under Act which he denies or jeopardizing  refund, gets covered within the ambit of clause (a) of section 246A(1). The Co-ordinate Bench held that where Assessing Officer treated return as invalid under section 139(9) because of mismatch between figure of income shown in return and that in Form 26AS, order passed by him was akin to an order refusing refund under section 237 making it appealable under section 246A(1)(i). 

Thus, the Tribunal opined that even otherwise, appeal lies before the CIT(Appeals) against the adjustments to the TDS credit made by the assessing officer under section 143 (1) of the Act, in view of the observations made by the Co-ordinate Bench.

Accordingly, the appeal of the assessee was allowed.

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