Credit for TDS inadvertently not claimed in return of income allowed by ITAT

Credit for TDS inadvertently not claimed in return of income allowed by ITAT holding that assessee should not be deprived of the benefit of the TDS credit which was inadvertently not claimed in the return of income

ABCAUS Case Law Citation:
ABCAUS 3734 (2023) (05) ITAT

Important Case Laws relied upon:
S.R. Koshti vs. CIT 276 ITR 165
Vareli textile industry versus CIT 154 Taxman 33
Vinay Chandulal Satia vs. N.O. Parekh, CIT

In the instant case, the assessee had challenged the order passed by the CIT(A) arising out of rectification order passed u/s 154 of the Income Tax Act, 1961 (the Act).

The assessee filed return of income under section 139 of the Act declaring loss. However, credit of tax deducted at source was inadvertently not claimed as refund in the return filed.

The return was processed under section 143(1) of the accepting the loss without grating the refund of the tax credit though reflecting in form 26AS by the centralised processing cell (CPC).

The assessee filed an application under section 119(2)(b) of the Act before the PCIT for allowing the belated claim of refund of the TDS.  However, the PCIT rejected the application of the assessee by holding that case of the assessee was not covered under the provision of section 119(2)(b) of the Act.

Subsequently, the assessee e-filed rectification application under section 154 of the Act before the CPC which was also rejected by the CPC stating the reason that the issue has been assigned to the jurisdictional Assessing Officer (AO).

Then, the assessee filed rectification application under section 154 before the AO. But the AO rejected the application of the assessee by holding that the application of refund by the assessee has already been dismissed by the PCIT.

The CIT(A) also dismissed the contentions of the assessee observing that it the assessee had not challenged the order of PCIT.

The Tribunal noted that the Hon’ble High Court had held that if an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected.

The Hon’ble High Court had relied upon the catena of judgments of the Hon’ble Supreme Court had held that authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds.

The Tribunal opined that the income of the assessee should not be over assessed even if there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income.

The Tribunal opined that in the instant case, the assessee should not be deprived of the benefit of the TDS credit which was inadvertently not claimed in the return of income.

Accordingly, the ITAT set aside the finding of the CIT-A and directed the AO to allow the benefit of the TDS credit as per the provisions of law.  

Download Full Judgment Click Here >>

• Empanelment of General Observers for ICSI Examinations June 2026. Last date 28.04.2026
• Engagement of Young Professionals CA for assistance in ITAT representation
• IDBI online application for empanelment of Concurrent Auditor. Last date : 27.04.2026
• Audit reports must be disclosed by bank before classifying account of a customer as fraud
• ICAI sets up a branch of CIRC at Korba city, Chhattisgarh w.e.f. 6th February, 2026