BOHAR SINGH,SRI KARANPUR V. ITO WARD 1, SRI GANGANAGAR

ITA 696/JODH/2024

AI Insights

The case involves appeals by Anu Setiya, Ajayab Singh Mukhtyar Singh, and Bohar Singh against the orders of the Commissioner of Income Tax Appeals, which confirmed the disallowance of TDS deduction claims on transactions as Kaccha Arhtia for the Assessment Years 2022-23 and 2023-24. The appellants, acting as commission agents (Kachha Arhatia), argued that their income should only include the commission earned and not the total sales, as per CBDT Circular No. 452 dated March 17, 1986. The AO had disallowed the full TDS credit due to a mismatch between the income reported in the tax returns and the TDS deducted as per Form 26AS. The Tribunal found that the AO did not appreciate the facts correctly and directed a re-examination of the TDS claims in accordance with the provisions of the Income Tax Act and the relevant CBDT circular.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 707231 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2023-2024
• Appeal Filed On: 29-08-2024
• Other Referred Cases: Pravin Kumar Nagpal vs. ITO, Ratnesh Garg Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; TDS; FORM 26AS

Judgement Text

"____ Gupta, C.A. ~b]. 72025. NA, IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH (Virtual) JODHPUR BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND NARINDER KUMAR, HON’BLE JUDICIAL MEMBER ITA No. 572/Jodh/2024 (Assessment Year 2023-24) Anu Setiya, Prop. M/s. Prachi Enterprises, ITO, Ward-1, Shop No. 9,New Dhan Mandi, Sri Ganganagar. Sadulshahar- 335062. PAN No. AULPA2537P ITA No. 695/Jodh/2024 (Assessment Year 2022-23) Ajayab Singh Mukhtyar Singh ITO, Ward, New Dhan Mandi, Padampur — 335041. Sriganganagar. PAN No. AAEFA5452C ITA No. 696/Jodh/2024 (Assessment Year 2023-24) Bohar Singh ITO, Wad-1, M/s. Ramana Industries, Sriganganagar. Dhan Mandi, Sri Karanpur- 335073. PAN No. DGPPS7258A Assessee Shri Vedant Revenue by Date of Hearing 30.06.2025. Date of Pronouncement 6 ORDER . MIT L MEE A.M.: These appeals by the assessees are directed against the separate orders dated 13/06/2024; 10/07/2024 and 08/08/2024 of the Commissioner of Income Tax, Appeals, ADDL/JCIT(A)-1, Vadodara, Aurangabad and Nasik [hereinafter vn hriKarni Dan, Addl. CIT(DR) ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) referred to “the JCIT appeals”] for the Assessment Year 2023-24; 2022-23 and 2023- 24 respectively, challenging therein the sole and common issue regarding confirming disallowance of the claim of TDS deduction on transaction as Kaccha Arahtia. The appeal in ITA No. 572/Jodh/2024 for Assessment Year 2023-24 is taken as a lead case for discussion and adjudication of the issue. 2. Briefly, the facts are that the Appellant had e-filed her return of income for the Assessment Year 2023-24 on July 25, 2023, declaring total income of Rs. 11,08,290/- and paid total tax of Rs. 2,48,444/-. The Appellant is working as a commission agent (Kachha Arhatia) besides his own purchase/ sale of agricultural commodities. The turnover (sales) made on behalf of the arhatia is not included in the turnover of the Appellant (Kachha Arhatia) as per circular no, 452 dated March 17, 1986, but only commission on that amount is included in the total income of the Appellant. The AO/CPC has alleged in intimation under section 143(1) of the Income Tax Act, 1961 (‘Act') that TDS proportionate to the turnover not reflected in trading/ profit & loss account filed along with the Income Tax Return of the Appellant for the Assessment Year 2023-24 and accordingly, it has been disallowed (i.e. Rs. 1,61,463/-) at the time of processing of the Income Tax Return and partial credit of only Rs. 24,621/- has been allowed, as against total TDS of Rs. 1,86,084/- claimed by the Appellant. 3. Being aggrieved by the order under section 143(1) of the Act, the Appellant filed an appeal before the Ld. Addl./ JCIT (A) - 1, Vadodara, who dismissed the appeal of the Appellant by observing as under: “6,2.2, The appellant in ROI has disclosed commission income amounting to Rs.29,43,671/- and income from other source amounting to Rs. 2,898/-. Consequently, TDS on this income totaling to Rsv 1,48,646/- warrants consideration. However, the appellant has omitted to report the sales in her rs Ss See ee ee ee a ies SS = ee ee eee ee ee ee es 2 ee ee, ee ee Bee SS = ed el a — Fie he ee ee a 7 a 2) ee ee ee 2 ka a A a a ae ee le Se Fee ee ee ee ee es ee 2 ee ee ed ed et ie ee ee ee a, - Se ee ee ee a) ee ee 2, ee er a a ee ee ee es a yy es ee Pe Ws se ee ee oe eee Pee, ee eee a ee es ee ee FP ie er er erg Fs ee eS ee ee ——————— ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) ITR, contending that she operates solely as a middleman (\"kachcha adatiya\"). Consequently, credit for the TDS under Section 194Q for Rs.37,438/- cannot be attributed to the appellant. On verification of Form 26AS, it reveals that the appellant has claimed TDS amounting to Rs. 1 inclusive of TDS under Section 194Q. Given the appellant's assertion of acting solely as an agent and not as a principal, with no declaration of sales proceeds in her ROI, any TDS attributed under Section 194Q cannot be claimed or allowed. 6.2.3 CBDT vide Instruction No. 5/2013 has laid down the procedure to verify the TDS claim of the assessee and allow the same if itis found to be in order. Looking to the facts and circumstances of the case and respectfully following the instructions issued by the CBDT in this regard, the AO is directed to verify the TDS claim of the appellant & allow the TDS credit excluding the claim u/s 194Q of the Act to the extent of Rs. 37,438/-, after examining the claim as well as availability of TDS credit and corresponding income declaration in the assessment year under consideration in view of clause 3(ii) of rule 37BA of the 1.7. Rules. The appellant is also directed to furnish all supporting documentary evidence before the A.O.” The Ld. AR for the assesee, has reiterated the submission made before the 1* appellate authority by stating that the assessee is engaged in the business of sale of agriculture crop produce on behalf of farmers on commission basis, commonly known as Kachhi Arhatiya, or Commission Agent. The nature of business of the kachha arhtiya is to/with providing of services to the farmer in selling his crop in the recognised Mandies, or the factory owners or the traders on the appropriate Ae x ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) market rate, and further kachha arhtiya provide advances to the farmers for cultivation of his crop. For providing such type of services the kachha arhtia generally receive 2 percent commission i.e. arhat of value of crop. As per law the said commission receipt is treated as gross turnover of the kachha arthiya. Here it is important to note that sale value of the crop sold by the farmer through arhtiya is not to be treated as turnover of the kachha arhtiya. In the present case the assessee has claimed to be done transaction as kacha arhtiya and trader who has filed his ITR treating income as gross turnover in terms of the CBDT circular no. 452 dated 17.03, 1986. 5. He further submitted that as per CBDT circular a kachha arahtia acts only as an agent of his constituent i.e. farmer and never acts as a principal. The remuneration of a kachha arahtia consists solely of commission and he is not interested in the profits and losses made by his constituent, as the kachha arahtia, does not have any dominion over the goods. The Board has advised that so far as kachha arahtias are concerned, the turnover does not include the sales effected on behalf of the principals and only.the gross commission has to be considered for the purpose of section 44AB. In the case of agents whose position is similar to that of kachha arahtia, the turnover is only the commission and does not include the sales on behalf of the principals. 6. The AR contended that while processing the Return of Income u/s 143(1) of the Act, AO/CPC has accepted Returned income, but it has restricted the claim of TDS to Rs. 24,621/- as against Rs. 1,86,084/-. Thus disallowed the claim of TDS on the ground that gross receipts as per form 26AS is more than that of what were shown in the ITR. This appears due to TDS deducted by the buyer under section 194Q of the Income Tax Act. It is contended by the Ld. AR that Buyer has deducted TDS under section 194Q on the purchase value of crop of the farmer purchased ——_— + ee ee ee ee el es at + ee ee ee CS = ee ee ee ee ee a Se ee ee ee ee ee —— ee ee ee ee i 2 ree | 0 se ee ee — Oe ee | ee ee a ts ee oe ee ee —e OO ee Ps a Fr a. a a : ed oe eda ee ee oo oe a ee ee ee ee ee a ee ed ee ee el eee ee et ee ee eS hee Coe) oe = ee er 0 ei cee ee ee ee ee ee ee ees et oe ee Bt rs a ek ee ee J - ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) through kacha arhtiya, and it is not the sale or turnover of the kacha arthia, and actually it was sale of the farmer. The Ld. AR pleaded that considering the legal and factual position, the assessee is entitled for credit of whole amount of TDS as claimed in the ITR for the assessment year relevant and as such requested to allow credit of the TDS to the assessee being kacha arhtia as a covered matter by Tribunal decisions including ITA No. 82/Jodh/2024 Pravin Kumar Nagpal vs. ITO, decided on 02.09.2024, with respect to the assessment year 2022-23, 6, On the other hand, the Ld. Addl. CIT Sr. DR relied on impugned Order. He contended that matter is covered in favour of Revenue by Coordinate Jodhpur Bench Decision in the case of “Ratnesh Garg Vs. ITO” in ITA No. 589/Jodh/2024 Asst. year 2002-23 and several other judgements including Delhi Bench in ITA No. 278/Del/2024 dated 27/03/2024. 7. Having heard both the sides and perusal of record, we find that AO/CPC has not allowed the full credit of the TDS due to the mismatch of total receipt in ITR and Form-26AS. In this respect, appellant in his submission before Ld. CIT(A) and before us has submitted that he has acted as \"Kaccha Arhatia\" registered with Rajasthan Krishi Upaj Mandi and works as a middleman. As per the Circular No. 452(F.No. 201/3/85-/T(A-//)], dated 17.03.1986) the Kaccha Arhatia if verified with documentation certificate issue by Krushi Upaj Mandi Samiti under the relevant act, it is presumed to be an agent of his constituent and never acts as a principal. In the present case, the certificate issued has been for the purpose of doing business as a trader and not as a commission agent (Kachha Adatiya ) of either category. The certificate issue by Krushi Upaj Mandi Samiti under the relevant act, (APB, Pg.33) is reproduced here under: Uw eevee = aay) ae ap acto a aehqere) aR Ya age re adh WGATT [sega J raft eer a“ season td nee eh tas ee, se oe oT A ses aah \"A ET eo ser ces rcv nF ger af ae fr PT ET ETL awh her lh en a we eed co wT TE ere ah afi RT se ek agate mh 8 et hee aT BST ame, to trea 8 eae Paks Spee emt et rh 2 rer Perera SAT & vet afer 1961 tre Pron shre ee ec nr Fg eg TTT eG HH aE TE satay fv) frat rer ek eR MPS seh ute fren so FR ewe tre THN: rr ri raga Fre etre etm STE A argh ahh aT eh ers ardent Bad Porat arent at Ca ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) Wo we VIII zat Crores BAR waa FH Prom, 1.969 Pom 69/72 % ara TIX) ROTA TMT TCT ZAP essere fart Pa oe a ee epeM ence ay ATER” Cary, van) SH Trae PS STG we FT, 1963 Pram 69/72 B rer, aS Ae SeeheA racers ahr erat Te BAY TIT Br VATA BLT H fey and wed & fare orgarfea oy a MA & aie & Praia werre/ WR ard Ge (lL __ _ GT fa pete al AB ahi /e TG OR 2 =) 3 eae . : aL a a . ake cts . ob Parert 33 of 50 (1) _ Pe eee a : ee oe Se 6 ies re et le es | ee ee es es ee ed ee ee foe) ee ee a ee te ee i oo eS Pe ee ee ee ee — See Se a a =e Se ee eS se bl a ee ee eee frees fey 1 .— 2 ee ee Ss ee ee ee ee ee ee ee! ee => ie ee 2 ee eee ie Fe ee ee ye = Sd ee ee ee ee - 7 ei es ee es ee ee ee oe! ee a ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) 8. In our view, the appellant assessee is required to substantiate the privilege of being a kachha arahtia engaged in selling crops on behalf of farmers, with support of documentary evidence so that only gross commission may be considered for the purpose of computing its turnover in the light of CBDT Circular 452 of 1986 dated 17.03.1986 while computing tax liability. It is further clarified that the short credit of TDS granted in respect of TDS deducted against his own PAN is dependent upon filing of TDS statement by the assessee as mandated u/s 199 and rule 37BA(1). If there is any mismatch in the TDS claim as per the return vis-a-vis the TDS statement filed by the deductor, the assessee ought to have been allowed due opportunity of being heard and furnish updated reconciled TDS statement by getting appropriate corrections carried out in the TDS statement issued in its name by the deductor, by way of filing the details transactions with the deductor so that appropriate updated TDS statement be issued in the name of the clients. Accordingly, in our view, in the given set of facts, the appellants claim does not stand forthwith at this stage, particularly when the certificate is not conclusive as it stands being issued for joint business activities as trade and kachha adatiya without specific categorisation. 9. The coordinate Delhi Bench (Supra) observed that the appellant should not get benefit of Tax erroneously deducted by the Payer in as much as the is ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) assessee has not shown the same as its income/receipts viz-a-viz the turnover shown in form No.26AS 10. The Coordinate Jodhpur Bench in the case of Ratnesh Garg (Supra) has held as under: 7. Having heard both the sides and perusal of record, we find that AO/CPC has not allowed the full claim of the TDS due to the mismatch of total receipt in ITR and Form-26AS. In this respect, appellant in his submission before Ld. CIT(A) and before us has submitted that he is a \"Kaccha Arhatia\" registered with Rajasthan Krishi Upaj Mandi and works as a middleman. As per the Circular No. 452(F.No. 201/3/85-/T(A-//)], dated 17.03.1986) the aforesaid Kaccha Arhatia acts only as an agent of his constituent and never acts as a principal. 8. The JCIT(A) has not appreciated the facts of the case in right perspective. Considering the peculiar facts of the present cases, the matter is required to be restored to the AO fer limited purpose with the direction to examine the contents of the Form 26AS at the time of giving appeal effect and give credit of TDS mismatch claimed subject to provision of section 199 of the |. T. Act and rule 37BA of the I. T. Rules. Thus, the AO has to verify the total receipts shown in 26AS and ITR and give credit of TDS to the appellant if the corresponding income has been offered either by the assessee , the Kachha Adatiya or its principle by for taxation in his income tax return in the relevant year after due verification. 9. Without prejudice to above, it is pertinent to mention that appellant is being a kachha arahtia involved in selling crops on behalf of farmers and therefore, only gross commission has to be considered for the purpose of computing the turnover in the light of aforementioned CBDT Circular 452 of 1986 dated 17.03.1986 while computing tax liability. It is clarified that the short credit of TDS granted in respect of TDS deducted against his own PAN is dependent upon the filing of TDS statement by the deductor as ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) mandated u/s 199 and rule 37BA(1). If there is any mismatch in the TDS Claim as per the return vis-a-vis the TDS statement filed by the deductor. The assessee has been allowed due liberty by the LD. JCIT(A) that the TDS statement can be rectified by getting appropriate corrected TDS statement issued filed by the deductor. 10 Considering the factual matrix of the case and the CBDT Circular 452 of 1986 dated 17.03.1986, we direct the AO to examine and verify the contents of the Form 26AS at the time of giving appeal effect and give credit of TDS mismatch if any, to the appellant assesses. 11. In the present case, it is evident from the certificate issued in the appellant’s name by the Krishi Upaj Mandi Samiti, Sadulshahar, dated 04/01/2011 (APB, Pg. 33) that the appellant assessee has been acting as a businessman as trader in joint status who is trading in agricultural commodities on regular trading in the Krishi mandi. However, the Ld. AR Counsel argued that it is routine language of the certificate and in fact the assesee has acted as Kachha Adatiya and an appropriate certificate and documentary evidence in support of its claim would be submitted, provided given adequate opportunity by the authorities below. 12. On perusal of the aforesaid Certificate/ Licence date 01/04/2011, it is revealed that the same pertains to Prachi Enterprises, Sadulsahar. In arguments, Ld. AR for the appellant has submitted, on query by the Bench, that this is the proprietorship concern under the said name is being run by the assessee, where Mealeng — 10 ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) She is engaged in sale/purchase of agriculture produce and also acts as a commission agent. However, from this very document, it cannot be made out that the appellant assesse is a proprietor of the said concern. 12. Considering the factual matrix of the case and the CBDT Circular 452 of 1986 dated 17.03.1986, we direct the AO to examine and verify the contents of the Form 26AS at the time of examining the claim of the assessee and give credit of TDS mismatch if any, to the appellant assesses after due verification TDS claim of the assessee with reference to the status of the assessee whether it has acted as kachha Adatiya during the assessment year relevant. In view of that matter, . ‘af? we consider it Agen appropriate, the assessee may be given one more opportunity before the AO which appears to be denied by the Ld. ADDL. CIT, Appeal while rejecting its appeal. 13 Thus, the matter is remanded to the AO to examine the veracity of the documentary evidence the reconciled TDS statement off fe , the mandi certificate/Licence, in the name of assessee, issued by the Krishsi Upaj Mandi, wech Sardulshahar while the claim of the assessee It is clarified that clarification on the short credit of TDS granted in respect of TDS deducted against his own PAN is dependent upon the filing of TDS statement by the deductor as mandated u/s 199 and rule 37BA(1). If there is any mismatch in the TDS claim as A cyan -hasbeen-allowed backdrop of t “Xposed” al fors f ce, rectified by getting appropriate corrected TDS statement issued filed by the deductor. Accordingly, the matter is restored to the file of the AO. 14. The facts and issue raised in ITA Nos. 695 and 696/Jodh /2024 are identical to that of ITA No. 572/Jodh /2024. Therefore, our finding and observation given in ITA No. 572/Jodh /2024 shall apply to ITA Nos. 695 and 696/Jodh /2024, in mutatis mutandis, ordered accordingly. 15. Inthe he aforesaid discussion, the instant three appeal of the assessee are tatistical purposes. Order pronounced on.9.7).../.8.Fx../2025 under Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. (NARINDER KUMAR) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT a Dated :...2./..2./2025 ITA No. 572,5958596/Jodh/2024 (Assessment Year 2022&2023-24) per the return vis-a-vis the TDS statement filed by the deductor, fhe assessee due liberty by this Bench that the TDS statement opt be allerden / Sd /- Sd /- 12 ITA No. 572,595&596/Jodh/2024 (Assessment Year 2022&2023-24) opie (1 the appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By Oder Assistant Registrar, Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur. "