Tribunal orders refund of unremitted TDS, emphasizes Department's duty

The Tribunal allowed the appeal, directing the Revenue Department to refund the TDS amount not deposited by Koutons Group and the amount deposited by the assessee, minus tax payable, within two months. The decision emphasized the Department's duty to recover TDS from the deductor and grant the assessee TDS credit.

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Issues Involved:
1. Withdrawal of ITA No.4096/Del./2016.
2. Credit of TDS amounting to Rs. 2,04,96,655/-.
3. Non-enquiry by AO from the deductor and non-action under the Income Tax Act.
4. Non-compliance with higher authorities' orders.
5. Adjustment of Rs. 50,00,000/- without intimation.
6. Refund of Rs. 50,00,000/- deposited as per High Court directions.

Detailed Analysis:

1. Withdrawal of ITA No.4096/Del./2016:
The assessee sought to withdraw the appeal ITA No.4096/Del/2016 via a letter dated 21st January 2021. The department had no objection, and consequently, the appeal was dismissed as withdrawn.

2. Credit of TDS amounting to Rs. 2,04,96,655/-:
The core issue was whether the assessee, a non-resident Indian, was entitled to the credit of TDS deducted by Koutons Group but not deposited with the state exchequer. The assessee sold 25% shareholding in Koutons Group for Rs. 19,89,96,655/- with TDS deducted at Rs. 2,04,96,655/-. However, Koutons Group did not deposit this TDS amount, nor issued a TDS certificate.

The CIT (A) concluded that the assessee could not be treated as "assessee in default" for the non-deposit of TDS by Koutons Group per section 201 of the Income Tax Act. However, the credit of TDS could not be given as per section 199 of the Act and Rule 37BA of the IT Rules, 1962, because the TDS amount was not deposited in the government account.

3. Non-enquiry by AO from the deductor and non-action under the Income Tax Act:
The AO failed to make any enquiry from the deductor or take prescribed actions under the Income Tax Act despite several requests by the assessee and directions from the CIT (A). This inaction contributed to the prolonged litigation faced by the assessee.

4. Non-compliance with higher authorities' orders:
Both lower authorities failed to comply with orders from higher authorities regarding the credit of TDS and the due process for recovery of TDS from the deductor. The Office Memorandum by CBDT dated 11th March 2016 directed that demands created due to non-payment of TDS by the deductor should not be enforced against the deductee assessee.

5. Adjustment of Rs. 50,00,000/- without intimation:
The AO adjusted Rs. 50,00,000/- granted as a refund without giving any intimation to the assessee. This adjustment was part of the larger issue of non-refund of the amount deposited by the assessee as per the directions of the Hon’ble Delhi High Court.

6. Refund of Rs. 50,00,000/- deposited as per High Court directions:
The assessee deposited Rs. 50,00,000/- following the Delhi High Court's order dated 01.12.2011. Despite the AO passing an order for the refund of this amount along with interest, the refund was not issued. The Tribunal directed that the TDS amount of Rs. 2,04,96,655/- and the Rs. 50,00,000/- deposited by the assessee, minus the tax payable, should be refunded along with statutory interest within two months from the date of the order.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, directing the Revenue Department to refund the TDS amount deducted but not deposited by Koutons Group, along with the Rs. 50,00,000/- deposited by the assessee, minus the tax payable, within two months from the date of the order. The Tribunal emphasized that the Revenue Department is obligated to recover the TDS from the deductor and cannot deny the assessee the credit of TDS deducted.

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