AO Bound To Grant Advance Tax Credit That Was Left By The Taxpayer: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the AO is bound to grant the credit of advance tax that was left by the taxpayer.

The bench of Sandeep Singh Karhail (Judicial Member) and B.R. Baskaran (Accountant Member) has observed that the inadvertence on the part of the assessee to claim the credit for the advance tax while filing its return of income or filing the revised return of income in this regard does not absolve the AO from its statutory duty as per Section 219 of the Act to grant the credit in the regular assessment, particularly when the said amount is duly reflected in Form 26AS, which forms part of the record of the Revenue.

The appellant/assessee is in the business of providing freight forwarding and supply chain management services to global customers of DAMCO Group. The assessee filed its return of income. The return filed by the assessee was selected for scrutiny. In appellate proceedings, the tribunal granted partial relief to the assessee. Upon receipt of the order giving effect to the tribunal’s direction, the assessee noticed that the credit for advance tax amounting to Rs. 1,10,00,000 paid was not claimed in the return of income.

As the due date for filing the revised return of income had expired, the assessee approached the Assessing Officer (AO) by filing the rectification application under Section 154 of the Income Tax Act.

The AO rejected the claim of the assessee for a grant of credit for advance tax paid on the basis that the claim was made after a lapse of almost 3 years after the completion of the assessment.

The CIT (A) dismissed the appeal filed by the assessee on the basis that there is no mistake apparent from the record in the order passed by the AO giving effect to the order of the Tribunal. Thus, the order of the AO cannot be interfered with under Section 154.

The assessee contended that the assessee has filed an application before CBDT under Section 119(2)(b) for condonation of delay in claiming the advance tax credit, which is pending consideration. They placed on record a copy of the challan payments of advance tax amounting to Rs. 1,10,00,000 as well as relevant extracts of Form 26AS in which the payment is duly reflected.

The department relied upon the orders passed by the lower authorities and submitted that this claim was neither made in the return of income nor in any revised return of income filed by the assessee, and therefore the claim has been correctly rejected.

The tribunal held that payments were duly reflected in the relevant extracts of Form 26AS furnished by the assessee. It cannot be disputed that the claim made by the assessee was limited to the grant of credit for the aforesaid advance tax paid during the year under consideration, and the same doesn’t pertain to a fresh claim for any allowance or deduction. It is not a case wherein the assessee sought credit for TDS, which needs to be verified with documentation and correlated with the corresponding income. Section 219 also mandates that the credit for advance tax be given to the assessee in the regular assessment.

Case Title: Damco India Pvt. Ltd. Versus CIT(A)

Case No.: ITA no.140/Mum./2022

Date: 10/08/2023

Counsel For Appellant: Manish Kanth

Counsel For Respondent: Mahita Nair

Click Here To Read The Order