Jain Rajesh & Associates vs ITO Ward 61(1)

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of Ld. National Faceless Appeal Centre (NFAC) Delhi dated 23-Jan-2026 for the Assessment Year 2020-2021 arising from the assessment order dated 21.04.2025 under section 154 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) for the Assessment Year 2020-21.

The Assessee has raised the following grounds of appeal:

Brief facts of the case are that the assessee is a partnership Firm engaged in providing professional services as chartered accountants. The income tax return was filed on 13.02.2021 and net taxable income was shown as NIL, and carry forward unabsorbed depreciation declared as Rs.2,25,236/-. A tax refund of Rs.1,57,208/- was claimed against prepaid tax (TDS). The assessee received intimation order from CPC dated 09.07.2021 passed u/s 143(1) of the Act, whereby income was assessed at NIL as declared in the return filed, however, refund of Rs.1,51,108/- along with interest u/s 244A of Rs.12,088/- was allowed as against the claim for a refund of Rs.1,57,208/-, with principle amount of refund short by Rs.6,100/- (1,57,208 minus 1,51,208) and alleged mismatch of TDS totaling Rs.6,100/- was given in the annexure attached to the Order.

Subsequently, assessee received an order dated 27.04.2022 from CPC passed u/s 154 of the Act whereby refund amount was rectified to Rs.1,52,208/- along with interest u/s 244A of Rs.12,171/- disregarding the claim of the assessee for a refund amount of Rs.1,57,208/- and alleged mismatch of TDS of Rs.5,000/- was given in the annexure attached to the order against TAN DELU00188G which is of the Union Bank of India. The assessee, thereafter, submitted a letter to the Jurisdictional AO, ITO Ward 61(2), Delhi for rectification u/s 154 under acknowledgement dated 07.04.2023 with a request for refund of balance amount of Rs.5,000/- and request for transfer of jurisdictional rights was sent by the office of the AO to CPC cell for transfer of jurisdictional rights. Thereafter, assessee again filed a rectification request dated 26.03.2025 online through portal stating that there was a mistake apparent from the record u/s 154 and requested for the refund of balance amount of refund of Rs.5,000/-. The CPC passed the rectification order u/s 154 dated 21.04.2025 in which raised a demand of Rs.15,700/- by giving credit of TDS of Rs. 1,47,208/- only as against claimed TDS of Rs. 1,57,208/- on account of mismatch of TDS amounting to Rs. 10,000/- .

Aggrieved by the order of the ld. AO, Assessee was in appeal before the ld. CIT(A). The ld. CIT(A) dismissed the appeal as infructuos.

Aggrieved by the order of ld. CIT(A), assessee is now in appeal before us.

Before us, ld. Counsel for the assessee submitted that the dispute is with regard to the TDS credit claimed by the assessee which has not been examined.

On the other hand ld. DR relied on the appellate order.

We have heard the rival submissions and perused the material available on record. We find that the dispute is with regard to the TDS credit claimed by the assessee which has not been examined by the AO. In such facts and circumstances, we deem it appropriate, in the interest of natural justice, that the issues be set aside to the AO for examination and reconciliation of the TDS credit claim. We hereby direct the AO to consider the explanation and adjudicate on the issue of the case afresh. The AO is directed to accord three effective and adequate opportunities of being heard to the assessee. Needless to say, that the assessee is also directed to provide necessary information /documents as required by the authorities.

In the result, appeal of assessee in ITA No.1542/DEL/2026 is allowed for statistical purposes.