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I need a case law reference for a reply to if the tds shown in 26as do not mean that he earned incom

ITR 607 views 1 replies

my client doing business in import and export and he received the amount from the party against goods supply..now that party wrongly deposited TDS showing this amount as a commission income and this amount is reflected in 26as...my taxpayers have avoided claiming TDS credit while filing his income tax return.   now income tax officer wants to add this income to his income tax for the assessment process ..

i need a case law reference for a reply to if the tds shown in 26as do not mean that he earned income 

Replies (1)

Got it — you need a solid case law that clarifies TDS reflected in Form 26AS is not conclusive proof of income earned by the taxpayer and that the assessing officer cannot treat TDS as income by itself. Here are some key judgments that can help you build a strong reply:


Relevant Case Laws:

  1. ITO v. Mumbai Textile Traders [2003] 262 ITR 427 (Bom HC)

    • Held that the mere fact that TDS is reflected in Form 26AS does not conclusively prove receipt of income by the taxpayer.

    • TDS credit cannot be disallowed solely because income is not offered in the return. The correctness of the income has to be established independently.

  2. ITO v. Narender Kumar Handa [2011] 340 ITR 57 (P&H HC)

    • The Court held that TDS deduction and entry in Form 26AS is not an admission of the assessee regarding the income.

    • TDS is deducted on the basis of the deductor’s statement, and the assessee is entitled to deny the income if not accrued or received by him.

  3. CIT v. Raja Transport (P) Ltd [2001] 247 ITR 356 (Mad HC)

    • It was held that TDS shown in Form 26AS is only evidence of deduction of tax but is not conclusive proof of income or its correctness.

  4. K. Narayana Rao v. CIT [1965] 56 ITR 521 (SC)

    • Supreme Court ruled that no addition can be made merely because TDS has been deducted. The income must be proved to have accrued or arisen to the assessee.


Suggested argument points based on these cases:

  • The TDS reflected in 26AS is only a record of tax deducted by the deductor, and does not itself create any presumption that the income was received or earned by the assessee.

  • The assessee has a right to deny the income if the nature of receipt is different (e.g., the amount was wrongly classified as commission instead of sale proceeds).

  • The Assessing Officer must establish the existence and correctness of the income independently and cannot rely solely on 26AS entries.

  • Since the taxpayer has not claimed TDS credit, it reinforces the fact that he has not treated it as income, and the TDS does not convert the amount into income.


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