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TDS was deducted and deposited in partner's PAN instead of firm's PAN

CA Sindhuja (Sr.Manager-F&A) (24 Points)

30 September 2019

The organisation which constituted as proprietorship concern changed it's status to partnership firm in A.Y.2016-17. But the deductors have deposited TDS in partner's individual PAN instead of firm's PAN even though they were being informed about the change in the constitution of the business. The deductors however, are not ready to revise the TDS returns. Received notice from IT dept to pay the outstanding demand as they have disallowed the TDS as it is not getting reflected in firm's 26AS. When contacted the IT dept personally, they are asking to file rectification return. Can someone suggest a solution to this. Thanks in advance.

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3 Replies

sabyasachi mukherjee (27858 Points)
Replied 30 September 2019

@ Sindhuja there are possible ways to rectify tds return.
meanwhile have a word with the vendor.
Correct me if I am wrong.

Kapadia Pravin (17264 Points)
Replied 30 September 2019

As you wrote in your query -

The deductors are not ready to revise the TDS returns. You can try once again. Rectification of TDS return is possible through TDS deductors only.

And it pertains to AY 2016-2017 (0ld matter for deductors)

But then practically also it's difficult bcoz all the deductors will be required to rectify TDS return to enable AO to give credit for TDS to Firm.

What the AO has suggested - pl re-confirm

Has he asked TDS rectification return ? or Rectification application under section154.

I hope it should be Rectification application by the Firm under section 154.

Suresh Thiyagarajan (Student) (3986 Points)
Replied 30 September 2019

1. Even in your case if Rectification request the same should be done u/s 154 only after revising the TDS return. It cannot be done if the same is not reflected in firms 26AS.
2. Since the time limit for filing the return got expired, AO would have asked the firm to go for rectification request u/s 154.
3. The only option available is requested the vendor (if the mistake is on your part) and ask them to revise the TDS return as soon as possible and make sure the tax amount is reflected in form 26AS.
4. Then after the above case, go for rectification request u/s 154.
Please correct me if the above solution has an alternative view.