ITAT ruled that TDS credit cannot be denied merely because the taxpayer failed to file a return, especially when the related income shown in Form 26AS has already been taxed by the department.
Vanshika verma | May 30, 2026 |
ITAT Grants Relief on TDS Credit Despite Non-Filing of Return
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has given partial relief to taxpayer Manoj Kumar Soman in a case related to denial of TDS credit for Assessment Year 2011-12.
The case came before the tribunal after the Income Tax Department reopened the assessment under Section 147 based on information available in AIR and Form 26AS. According to the department, certain receipts were reflected in the taxpayer’s records, but no income tax return had been filed for that year.
Even after receiving notice under Section 148, the taxpayer did not file a return or provide details to the Assessing Officer (AO). Thus, the AO completed the assessment ex parte and treated all receipts shown in Form 26AS as taxable income.
However, while computing the tax demand, the AO did not allow credit for TDS already deducted on those receipts.
The taxpayer challenged this before the CIT(A), but there was no response to notices issued during the appeal proceedings. Therefore, the CIT(A) upheld the assessment order.
Before the ITAT, the taxpayer’s representative argued that once the department had treated the receipts in Form 26AS as taxable income, it could not deny the corresponding TDS credit. The representative submitted that denying such credit would amount to double taxation and unfair enrichment of the Revenue.
On the other hand, the Department argued that since no return of income was filed, the taxpayer had not made a proper claim for TDS credit.
After hearing both sides, the ITAT observed that although the taxpayer failed to file the return, the income shown in Form 26AS had already been taxed by the department. Therefore, taxes deducted at source on the same income could not be denied merely on technical grounds.
The tribunal held that TDS credit is directly linked to the assessment of corresponding income and should be granted after verification of records.
Accordingly, the ITAT sent the matter back to the Assessing Officer with directions to verify the TDS entries from Form 26AS and departmental records and grant eligible credit as per law after giving the taxpayer an opportunity of hearing.
The appeal was therefore allowed for statistical purposes.
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