TDS credit cannot be denied for system mismatch when deduction is proved by statutory certificate.

Tax deducted at source credit cannot be denied to a deductee merely because the deduction is not fully reflected in the department's ITD system, where deduction is otherwise established by statutory certificates. Once TDS is deducted and Form 16A or equivalent material is produced, the deductee remains entitled to credit, and any failure by the deductor to deposit the tax does not shift the recovery burden to the deductee. The department's remedy lies against the deductor under the statutory scheme, so a recovery notice issued without allowing the TDS credit is not sustainable.

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Issues: Whether credit of tax deducted at source could be denied to the assessee merely because the deduction did not fully appear in the department's ITD system, and whether a recovery notice raised without granting such credit was sustainable.

Analysis: The liability to deduct tax at source lies on the deductor under the Act, and once tax is deducted and a certificate is issued, the deductee is entitled to credit of the amount so deducted. Section 205 bars recovery of tax from the assessee to the extent tax has been deducted at source from the income. If the deductor fails to deposit the deducted amount, the department's remedy is against the deductor, who may be treated as an assessee in default under the statutory scheme, and not against the deductee. A mismatch or non-reflection in the department's system does not by itself defeat the assessee's statutory right to TDS credit when deduction is otherwise established by the material produced.

Conclusion: The assessee was entitled to credit for the tax deducted at source evidenced by the Form 16A certificates, and the recovery notice issued without granting such credit could not be sustained.

Ratio Decidendi: Where tax is admittedly deducted at source and the deductee produces the statutory certificate, credit cannot be denied merely because the amount is not reflected in the department's system; the proper remedy for non-deposit lies against the deductor, not the assessee.

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