ALMOND INFRABUILD PRIVATE LIMITED,NEW DELHI V. DCIT CIRCLE-2(1), NEW DELHI

ITA 8896/DEL/2019

AI Insights

The case involves Almond Infrabuild Private Limited appealing against the order of the Commissioner of Income Tax (Appeals)-22, New Delhi, which sustained the Assessing Officer's (AO) rectification under section 154 of the I.T. Act. The AO had initially disallowed the credit of TDS of Rs.34,21,484 claimed on advances from customers, stating no receipts were shown in the Profit & Loss Account. The CIT(A) agreed with the AO but modified the action to withdrawal of TDS instead of addition to income. The Tribunal, referencing similar cases, found the AO's action to be beyond the scope of section 154 as the issue was debatable.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471515 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Other Referred Cases: Sri A.M. Fazil vs DCIT, Circle-1, Alappuzha in ITA No.390/Coch/2018, Bikramjit Ahluwalia, ACIT v. Peddu Srinivasa Rao [ITA No.324/Vizag/2009], Pradeep Kumar Dhir v. ACIT [(2007) 107 ITD 118 (TM) (ITAT- Chandigarh)]
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUNEESH RAJANI
• Assessee Lawyers: VED JAIN; AMAN GARG
• Keywords: Opportunity of being heard; TDS; Rectification of order
• Section: 143(3); 154; 14A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘A’: NEW DELHI BEFORE SHRI VIMAL KUMAR, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.8896/Del/2019 [Assessment Year: 2014-15] Almond Infrabuild Private Limited, 711, 92, Deepali Building, Nehru Place, New Delhi-110019 Vs DCIT, Circle-2(1), New Delhi PAN-AAICA5986A Assessee Revenue Assessee by Shri Ved Jain, Adv. Shri Aman Garg, CA, & Ms. Ishika Dua, CA Revenue by Shri Muneesh Rajani, DR Date of Hearing 18.03.2025 Date of Pronouncement 26.03.2025 ORDER PER BRAJESH KUMAR SINGH, AM, This appeal by the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)-22, New Delhi, dated 24.09.2019 pertaining to Assessment Year 2014-15. 2. Grounds of appeal raised by the assessee are as under:- 1. On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the eye of law and on facts. 2. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in sustaining the order passed by the AO under section 154 of the Act. (ii) That the learned CIT(A) has confirmed the order passed by the AO under section 154 of the Act rejecting the contention of the assessee that AO cannot review it's earlier order under section 154 of the Act. 2 ITA No.8896/Del/2019 (iii) That the learned CIT(A) has confirmed the order passed by the AO despite the fact that there was no mistake apparent from record in the earlier order passed under section 143(3) of the Act. 3. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in disallowing the credit of TDS deducted of Rs. 34,21,484/- on payments received as advance from customers. (ii) That the above action of the CIT(A) is without jurisdiction and beyond the scope of the matter that arouse out of the proceedings before the AO and rectification order passed by the AO. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in disallowing the TDS credit without providing reasonable opportunity of being heard to the assessee.” 3. Brief facts of the case:- In this case, the assessment was completed u/s 143(3) of the Act at a total income of Rs.32,90,250/- against the returned income of Rs.24,75,610/- after making disallowance of Rs.8,14,643/- u/s 14A of the Act. The Assessing Officer noted that the assessee had claimed TDS of Rs.36,38,974/- which included a sum of Rs.2,17,490/- being interest of FDR and remaining amount of TDS of Rs.34,21,484/- relating to advance from customers. According to the Assessing Officer, since no receipts have been shown in the Profit & Loss Account with respect to credit of TDS of Rs.34,21,484/- and therefore, the credit of Rs.34,21,484/- was not allowable u/s 199 of the Act read with rule 37BA of the I.T. Rules. The relevant observation of the Assessing Officer is reproduced as under:- “The assessee has claimed TDS of Rs.36,38,974/-in return of income and credit for the same has been allowed in the assessment. It has been observed that TDS of Rs. 36,38,974/- is on account of interest on FDR and on advance from customer. Out of TDS of Rs. 36,38,974/- amount of TDS of Rs. 2,17,490/- relates to interest of FDR and remaining amount of TDS of Rs.34,27,484/- relates to advance from customers. Since, TDS of Rs.34,21,484/- related to advance from customers and no TDS receipts have been shown in P&L a/c credit of TDS of Rs.34,21,484/- is not allowable to the assessee as per provisions of section 199 of I.T. Act, read with Rule 37BA of I.T. 3 ITA No.8896/Del/2019 Rules and the same should have been withdrawn with interest.” 3.1. The Assessing Officer issued notice u/s 154/155 of the Act and noted that since the mistake was apparent from the record, hence, he revised it accordingly and made addition of Rs.34,21,484/- to the total income. 4. Aggrieved with the said order, the assessee filed an appeal before the ld. CIT(A). The Ld. CIT(A) agreed with the findings of the Assessing Officer but stated that the Assessing Officer instead of making addition of Rs.34,21,484/- to the total income should have withdrawn the TDS of Rs.34,21,484/- claimed during the year and directed the Assessing Officer to do accordingly. 5. Aggrieved with the said order of the Ld. CIT(A), the assessee is in appeal before us. 6. The ld. AR submitted that the Assessing Officer, under the provisions of section 154 of the Act cannot review its earlier order. The ld. Counsel for the assessee further relied upon the decision of the Coordinate Bench of Tribunal of Cochin in the case of Sri A.M. Fazil vs DCIT, Circle-1, Alappuzha in ITA No.390/Coch/2018, dated 15.03.2019 and submitted that such action of the Assessing Officer was not correct because such mistake as rectified by the Assessing Officer was not mistake apparent from record. 7. We have considered the rival submissions and perused the material available on record. On identical facts, Cochin Bench of the Tribunal in the case of Sri A.M. Fazil vs DCIT, Circle-1, Alappuzha in ITA 4 ITA No.8896/Del/2019 No.390/Coch/2018, dated 15.03.2019 held that withdrawal of tax credit which was given in the assessment completed u/s 143(3) of the I.T. Act by resorting rectification proceedings u/s 154 of the I.T. Act is legally untenable and cannot be sustained. The relevant finding of the Tribunal is reproduced as below:- 7. We have heard the rival submissions and perused the material on record. The only issue that is raised is whether the credit of Rs.2,57,500 which was given in the assessment order can be withdrawn in an order passed u/s 154 of the I.T.Act on the ground that corresponding income was not been offered for tax in the relevant assessment year? We are of the view that the issue is debatable and would not come within the purview of section 154 of the I.T.Act. The Delhi Bench of the Tribunal in the case of Bikramjit Ahluwalia (supra) had held that when tax has been deducted and paid into the Government account, the credit of the same should be given to the assessee in the year of deduction of TDS. The relevant finding of the Tribunal in this regard reads as follows:- “10. From a careful perusal of the legal propositions laid down through the aforesaid orders by the Tribunal and the relevant provisions of the Act, we are of the view that once the TDS was deducted and paid to the Central Government, a credit of the same should be given to the assessees in order to avoid all sorts of complications in the year of deduction of the TDS. Therefore, we find no infirmity in the order of the CIT(A) who has rightly directed the A.O. to allow the credit of the TDS in the impugned assessment year. Accordingly, the order of the CIT(A) is confirmed.” 8. Similar view was held by the Visakhapatnam Bench of the Tribunal in the case of ACIT v. Peddu Srinivasa Rao [ITA No.324/Vizag/2009 – order dated 03.03.2011]. The very fact that the CIT(A) had placed reliance on the Third Member case in the case of Pradeep Kumar Dhir v. ACIT [(2007) 107 ITD 118 (TM) (ITAT- Chandigarh)] shows that the issue raised u/s 154 of the I.T.Act is a debatable one. For the aforesaid reasons, we are of the view that withdrawal of tax credit which was given in the assessment completed u/s 143(3) of the I.T. Act by resorting rectification proceedings u/s 154 of the I.T.Act is legally untenable and cannot be sustained. However, we make it clear that TDS of Rs.2,57,500/- which is given due credit in this assessment year, the same should not be given credit during any other assessment year when income was offered for taxation. It is ordered accordingly. 9. In the result, the appeal filed by the assessee is allowed. 8. Respectfully following the order of the Tribunal, we hold that the addition of Rs.34,21,484/- by the Assessing Officer is not a mistake 5 ITA No.8896/Del/2019 apparent from the record in the given facts of the case and therefore the same is deleted. However, we make it clear that TDS of Rs.34,21,484/- which is given due credit in this assessment year, the same should not be given credit during any other assessment year when income is/was offered for taxation. It is ordered accordingly. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26th March, 2025. Sd/- Sd/- [VIMAL KUMAR] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 26.03.2025 f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Assessee 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, "