Mumbai: Mumbai Bench Income tax The Appellate Tribunal (ITAT) has come down heavily on the IT Department for its failure to take cognizance of Tax Deducted at Source (TDS). TDS was on business income a . earned by taxpayer And, consequently, the IT department raised the demand for penal interest as well as tax on the same.

Most taxpayers always levy TDS against their income – be it against salary, professional income or interest income. To continue with the illustration, it is the employers’ organisation, customers and banks which are respectively responsible for deducting tax at source and depositing it with the government.

This TDS amount is available in the hands of taxpayers as a deduction for their final IT liability. In cases where the aggregate of advance taxes and TDS paid is more than the final IT liability, it results in refund, which has to be paid to the IT department.

In the recent case, which was heard by ITAT, taxpayer Kirtida Rameshchandra Chandrana duly claimed Rs 4.5 lakh as deduction as it was deducted at source, paid to her against professional fee. For the financial year 2012-13, the disputed year, he deducted TDS and advance taxes paid by him against his final IT liability and claimed a refund of Rs 19,816.

However, a ‘correction’ order was sent to him. The IT Assessing Officer denied the TDS amount and also imposed penal interest totaling Rs 79,539 on it. The Commissioner (Appeals) also upheld this action, despite TDS appearing in his Form 26AS. This form, available on the e-filing website of the IT department, contains all tax related information of the taxpayer such as TDS and advance tax paid.

The ITAT bench – made up of judicial member AB T Varkey and accountant member Gagan Goel – clearly expressed its displeasure, noting that a rectification order can be issued only if a mistake is evident in the record.

The bench said, “The taxpayer filed his IT return on the basis of records prepared by the tax department, viz. Form 26AS and 16A. These are documents that have been processed and issued by the tax department, which are relied upon by the taxpayer. How can a case of error clear from the record? We declare this full action of the Centralized Processing Center in Bangalore and in turn the jurisdictional IT officers who are ‘bad in law’, therefore set aside.”

ITAT directed that full credit of TDS claim should be given to the taxpayer, refund should be given (with interest to be paid by the IT department for the delay) and any other money which he has to release should be refunded. deposited later. correction order.

The ITAT Bench held that such action by the IT officials and the insensitive decision of the Commissioner (Appeals) was in clear violation of the equity and citizens charter issued by the Central Board of Direct Taxes (CBDT).