ITAT Mumbai: CIT(A) Cannot Remand TDS Credit Issue; Directs AO Verification in Estate of Pallonji Mistry Case

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, partly allowed the appeal of the Estate of Pallonji Shapoorji Mistry for Assessment Year 2024–25, holding that the Commissioner (Appeals) lacks power to remand matters to the Assessing Officer under Section 251, while directing factual verification regarding TDS credit.

The case concerned denial of TDS credit of ₹3.56 lakh on dividend income offered to tax by the estate of the deceased. The assessee contended that the income accrued post the demise of Pallonji Mistry and was rightly taxed in the hands of the estate under Section 168, thereby entitling it to corresponding TDS credit under Section 199.

The intimation under Section 143(1) denied the TDS credit. On appeal, the CIT(A) restored the matter to the Assessing Officer for verification of whether the income pertained to the pre-death or post-death period.

The Tribunal held that under Section 251, the CIT(A) is empowered only to confirm, reduce, enhance, or annul an assessment, and does not have jurisdiction to remand matters to the Assessing Officer except in limited circumstances. Accordingly, the remand direction was held to be legally unsustainable.

However, the Tribunal observed that determination of the relevant period of income—whether pre- or post-death—was essential to decide eligibility of TDS credit. It held that income accruing post-death is taxable in the hands of the estate, and corresponding TDS credit must be allowed accordingly.

In absence of complete factual clarity on record, the Tribunal directed the Assessing Officer to verify the period of accrual of income and grant TDS credit in accordance with law.

The appeal was thus partly allowed for statistical purposes.