Facts of the Case

The assessee, Brijesh Kumar Angi (HUF), carrying on business as a Kachha Arhatiya under the name M/s Murari Lal Om Prakash at Padampur, filed his return of income for Assessment Year 2022-23 claiming TDS credit of ₹31,548 deducted under Section 194Q. The CPC/Assessing Officer did not allow the full TDS credit on the ground of mismatch between total receipts shown in the return of income and the amounts reflected in Form 26AS. The CIT(A), Addl./JCIT(A)-1, Surat, upheld the disallowance. Aggrieved, the assessee filed an appeal before the ITAT.

Issues Involved

Whether TDS credit claimed under Section 194Q can be denied due to mismatch between Form 26AS and ITR in the case of a Kachha Arhatiya, whether only commission income constitutes turnover for such agents, and whether the Assessing Officer is required to verify Form 26AS and grant due credit under Section 199 read with Rule 37BA.

Petitioner’s Arguments

The assessee contended that he is a Kachha Arhatiya acting merely as an agent for farmers and traders and not as a principal. It was argued that only gross commission forms part of his income and turnover, and not the entire sale value of crops. The assessee relied upon CBDT Circular No. 452 dated 17.03.1986 clarifying that Kachha Arhatiyas act only as agents. It was submitted that denial of TDS credit solely due to mismatch in Form 26AS is unjustified and the matter is squarely covered by several coordinate bench decisions.

Respondent’s Arguments

The Revenue did not object to adjudication of the issue as a covered matter and fairly accepted that the issue is governed by coordinate bench decisions of the ITAT Jodhpur on identical facts.

Court Order / Findings

The ITAT Jodhpur observed that the issue involved is a covered matter on parity of facts by earlier decisions of the coordinate bench, including Ratnesh Garg vs. ITO and Amrit Lal Jain vs. ITO. The Tribunal noted that in the case of a Kachha Arhatiya, only commission income is liable to tax and only such income is required to be matched with Form 26AS. The Tribunal held that short grant of TDS credit often arises due to mismatch caused by deductors reporting gross receipts instead of commission. Relying on CBDT Circular No. 452 of 1986 and the statutory provisions of Section 199 and Rule 37BA, the Tribunal directed the Assessing Officer to verify the contents of Form 26AS at the time of giving appeal effect and grant due credit of TDS to the assessee after appropriate verification.

Important Clarification

The Tribunal clarified that denial of TDS credit merely on account of mismatch between Form 26AS and return of income is unsustainable, particularly in cases of Kachha Arhatiyas who act only as agents. Only commission income is relevant for taxation, and TDS credit must be allowed once the corresponding income has been offered to tax, subject to verification.

Final Outcome

The appeal filed by the assessee was allowed. The Assessing Officer was directed to examine and verify Form 26AS at the time of giving appeal effect and grant due credit of TDS to the assessee in accordance with law.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1768993672_BRIJESHKUMARANGIHUFPADAMPURVS.ITOWARD1SRIGANGANAGAR.pdf

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