The CIT(A) upheld the denial of TDS credit, ruling that credit could not be given unless the amount appeared in Form 26AS. The body also advised the taxpayer to ask the deductors to correct their e-TDS filings to allow the credit.
Unhappy with this decision, the taxpayer approached the Income Tax Appellate Tribunal (ITAT) in Mumbai. On Sept. 30, the ITAT ruled in his favour and cancelled the tax demand of Rs 1 crore.
During the hearing, Judicial Member Amit Shukla and Accountant Member Girish Agrawal stated that they carefully reviewed all submissions and documents. They emphasised that the case hinges on a simple principle: TDS credit should not be denied solely because it is missing from Form 26AS, especially when evidence proves tax was deducted and paid.
ITAT Mumbai was quoted as saying by ET: “In our opinion the answer must be in the negative. Section 205 of the Income Tax Act, 1961 erects a clear bar against making a direct demand on the assessee to the extent tax has been deducted at source from his income. The moment deduction is shown on the strength of primary evidence, the embargo of Section 205 attaches and the deductee cannot again be called upon to bear the burden.”
ITAT Mumbai also noted that past high court rulings align on TDS credit issues. In Yashpal Sahni v. Rekha Hajarnavis, the court ruled that once TDS is proven, Section 205 bars the revenue from recovering the same tax again from the taxpayer, the report added.
