By TIOL News Service

HYDERABAD, AUG 06, 2018: THE ISSUE IS - Whether if TDS payable to the HUF is paid against the taxpayer's PAN number and it is now too late to rectify the returns, any fault can be found if the taxpayer takes credit of the TDS deposited and pays taxes in the HUF capacity. NO is the answer.

Facts of the case

The assessee, an individual, was an MLA and was also carrying the business of maintaining a petrol bunk and transport business in individual capacity. He filed return for the relevant AY. During the course of scrutiny proceedings, the AO noticed that there was a rental income to the tune of Rs. 8,95,000/- from M/s Unitech Wireless and M/s Axis Bank, and the TDS was credited to the individual account and assessee also made the claim. Since the corresponding income was not offered, the AO asked the assessee as to why the same should not be brought to tax. It was submitted that assessee owned the property in HUF capacity and those companies had remitted TDS against the individual PAN number and since the mistake could not be rectified, assessee claimed the TDS while income was offered in the HUF status. On the reason that assessee was not able to prove that HUF had ownership of the property deriving rental income, the AO brought the same to tax in the hands of the assessee and penalty was also levied on the ground that the assessee had furnished inaccurate particulars. On appeal, the CIT(A) upheld the penalty.

On further appeal, the Tribunal held that,

++ the Assessee has businesses in both capacities. Even though the returns for HUF filed belatedly, there were incomes from business to an extent of Rs. 50,47,110/- in A.Y 2010-11. Along with the same Assessee also offered other incomes from house property, capital gains and other sources, the total income in the HUF capacity was to the tune of Rs. 51,74,081/-. In the A.Y 2012-13, Assessee offered incomes from house property from such properties and also from transport business, including income from theatres and total income offered was to the tune of Rs. 36,60,876/-. In the balance sheet of HUF, there are properties shown, whereas in the balance sheet of the individual there are no properties shown but only the business assets. It cannot be stated that the properties do not belong to HUF. Just because TDS was made and credited to the individual account, the contentions of Assessee that the properties belongs to HUF cannot be rejected. Whatever may be the reason for accepting the addition the same does not lead to levy of penalty unless it is established that Assessee owns the properties. There is no such evidence on record that Assessee owns the properties and the rental income belongs to individual income. Since Assessee has income in both the capacities of individual and HUF, there could be mistake in remitting the TDS pertaining to HUF status to individual status. Since the mistake could not be rectified, Assessee only claimed the TDS in individual capacity, but paid the taxes in HUF capacity separately. There are bonafide reasons in not offering the income in individual capacity.

(See 2018-TIOL-1219-ITAT-HYD)

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