S RAMASUBRAMANIAM ASSOCIATES,CHENNAI V. DCIT, NCC-7(1), CHENNAI

ITA 2768/CHNY/2025

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The case involves S.Ramasubramaniam Associates, a partnership firm providing legal services, appealing against the order of the Commissioner of Income Tax (Appeals) which confirmed the Assessing Officer's decision. The primary contention was regarding the non-allowance of Tax Deducted at Source (TDS) credit on certain advances received from clients, which were not recognized as income in the profit and loss account but were included in Form 26AS. The CIT(A) had dismissed the appeal in limine due to non-compliance by the assessee in responding to notices, which the assessee contested, claiming they had only sought adjournments and not completely failed to respond.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 825013 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 07-10-2025
• Other Referred Cases: ITA No.940/Chny/2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LATCHANA
• Assessee Lawyers: SRINITHI
• Keywords: Principle of natural justice; TDS; FORM 26AS

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ ा यपीठ, चे\u0012ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0015ी यस यस िव\u0018ने\u001a रिव, ा ियक सद एवं सु\u0015ी प ा वित यस, लेखा सद क े सम$ BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND MS. PADMAVATHY.S, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2768/Chny/2025 िनधा %रण वष% /Assessment Year: 2016-17 S.Ramasubramaniam Associates, 6/1, Bishop Wallers Avenue, Mylapore, Chennai – 600 004. PAN: AAAFS 2352P Vs. The Dy. Commissioner of Income Tax, Non Corporate Circle-7(1), Chennai. (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीला थ( की ओर से/ Assessee by : Ms. Srinithi, Advocate *+थ( की ओर से /Respondent by : Ms. Latchana, JCIT सुनवा ई की ता रीख/Date of Hearing : 16.12.2025 घोषणा की ता रीख /Date of Pronouncement : 31.12.2025 आदेश / O R D E R PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short \"CIT(A)\") passed u/s. 250 of the Income Tax Act, 1961 (in short \"the Act\") dated 01.09.2025 for Assessment Year (AY) 2016-17. The assessee has raised the following grounds of appeal: 1. The order of the Commissioner of Income Tax (Appeals) [\"CIT (A)\"] is against the law, the facts and circumstances of the case and the principles of equity and natural justice. 2. The CIT(A) erred in completing the appellate proceedings ex-parte, without giving the appellant sufficient opportunity of Printed from counselvise.com ITA No.2768/Chny/2025 S.Ramasubramaniam Associates :- 2 -: being heard. The CIT(A) ought to have served notices manually before completing the proceedings. 3. The CIT(A) erred in not following the order of the Hon'ble ITAT in ΓΙΑ Νο ITA No.940/Chny/2023 rendered in appellant's own case for the AY 2014-15. 4. The CIT (A) erred in not appreciating that the Assessing Officer had erroneously denied the credit of Tax Deducted at Source to the extent of Rs.39,14,742/- without appreciating that the TDS has been deducted even on sums advanced by the clients of assessee, being sums advanced towards expenses and that the appellant has offered to tax the professional fees from such clients as its income. 5. The CIT (A) failed to appreciate that the sums standing to the credit of advance received from clients represents sum received for expenditure are not income of the appellant. After incurrence of expenses if any balance is left over, the same is adjusted to the fees claimed from the clients. 6. The CIT (A) failed to appreciate that the tax deducted at source on such sums advanced is offered to tax as part of its gross receipts and TDS is correctly claimed. 7. The CIT (A) failed to that the Tax Deducted is the income of the appellant and the balance sum is only the advance for incurrence of expenditure. The TDS having been duly offered to tax the credit for the same is to be given. 8. The CIT (A) failed to appreciate that the appellent's clients have transferred money to the appellant firm for payment of court fee and other expenditure during the year and have deducted tax at source even on such payments. The CIT (A) failed to appreciate that such sums will never form part of the income of the appellant firm since they are only reimbursement of expenses. 9. The CIT (A) erred in failing to appreciate that that the view adopted by the AO in the assessment would result in denial of credit ever. Printed from counselvise.com ITA No.2768/Chny/2025 S.Ramasubramaniam Associates :- 3 -: 10. The appellant craves the leave of the Hon'ble Tribunal to raise additional grounds before and during the course of hearing of this appeal.” 2. The assessee is a partnership firm rendering legal services. The assessee filed a return of income for A.Y 2016-17 on 22.09.2016 declaring total income of Rs.4,12,96,338/-. The A.O noticed during the course of assessment that the gross receipts as per Form 26AS is Rs. 10,48,04,860/- as compared to the receipts reflected in the profit and loss account amounting to Rs.7,31,94,665/-. The assessee submitted that a portion of the amount reflected in the Form 26AS pertaining to advances received from the clients towards court fees and other expenses. The assessee further submitted that the said advances will not be credited to the profit and loss account since the same does not pertain to the income of the assessee. The A.O completed the assessment accepting the income returned by the assessee. However, the A.O did not allow TDS credit to the extent of Rs. 29,69,428/- stating that the TDS credit pertaining to the amount not recognized as income cannot be given and that the same will be considered in the year in which the receipts are offered to tax. Aggrieved, the assessee filed further appeal before the CIT(A). The CIT(A) issued various notices and the assessee requested for adjournments. Since the assessee did not respond to the last of the notices issued the CIT(A) dismissed the appeal in limine confirming the A.O's order. 3. We have heard the both the parities, perused the material available on record. The Ld. AR submitted that the assessee had responded to all the notices of the CIT(A) by seeking adjournments to compile the details sought for. The Ld. A.R further submitted that the assessee did not respond only to the last notice and that the CIT(A) has dismissed the appeal in limine without Printed from counselvise.com ITA No.2768/Chny/2025 S.Ramasubramaniam Associates :- 4 -: giving further time. The A.R accordingly prayed for one more opportunity to represent the case properly before the CIT(A). The ld. DR, on the other hand, vehemently objected stating that the assessee has been non-compliant and therefore, the CIT(A) has rightly dismissed the appeal. The issue on merits is that the AO did not give TDS credit to the extent of the amount not reflected as the income of the assessee whereas the claim of the assessee is that the said TDS pertain to the advance received towards various expenses to be incurred on behalf of the assessee. We are of the view that the said contention of the assessee needs to be factually examined before allowing the TDS credit. Considering the overall facts and circumstances peculiar to the assessee's case, we are inclined to give one more opportunity to the assessee in the interest of natural justice and fair play. Accordingly, we are remitting the appeal back to the CIT(A) with a direction to call for the necessary details in order to decide the appeal on merits in accordance with law. The assessee is directed to submit the required details as may be called for and cooperate with the appellate proceedings. It is ordered accordingly. 4. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 31st day of December, 2025 at Chennai. Sd/- Sd/- (यस यस िव\u0018ने\u001a रिव) (SS Viswanethra Ravi) \u0001या \u0001या \u0001या \u0001याियक ियक ियक ियक सद\u0006य सद\u0006य सद\u0006य सद\u0006य / Judicial Member (प ावित यस) (Padmavathy.S) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 31st December, 2025. EDN, Sr. P.S Printed from counselvise.com ITA No.2768/Chny/2025 S.Ramasubramaniam Associates :- 5 -: आदेश क\u0019 \bितिल प अ े षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF Printed from counselvise.com "