Tribunal rules appellant not liable for employer's TDS failure.

The tribunal allowed the appeal, ruling that the appellant should not be held responsible for the employer's failure to deposit the TDS. Recovery of the demand was directed to be made from the employer, and the appellant was not liable for interest under sections 234A, 234B, and 234C for the TDS amount. The decision aligned with legal precedents and provisions of the Income Tax Act, safeguarding the appellant from penalties due to the employer's non-compliance.

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Issues Involved:
1. Validity of the CIT(A) order.
2. Disallowance of TDS credit of Rs. 9,37,296/- deducted by the ex-employer.
3. Ignoring the appellant's tax payment including the TDS claim.
4. Ignoring judgments of Hon'ble High Courts on the identical issue.
5. Upheld decision regarding not allowing credit of TDS paid on behalf of the appellant.
6. Levy of interest under sections 234A, 234B, and 234C.

Detailed Analysis:

1. Validity of the CIT(A) Order:
The appellant challenged the correctness of the CIT(A) order dated 18.11.2021. The tribunal acknowledged the appellant's contention but did not specifically adjudicate on this general ground.

2. Disallowance of TDS Credit:
The appellant argued that the TDS of Rs. 9,37,296/- was deducted by the employer but not deposited with the Government. The employer's failure to deposit the TDS was the reason for the disallowance. The tribunal noted that the appellant had no control over the employer's actions and had already suffered the deduction.

3. Ignoring Appellant's Tax Payment:
The appellant claimed to have paid a total tax amount of Rs. 9,97,190/-, which included the TDS of Rs. 9,37,296/-. The tribunal observed that the appellant had provided Form 16 as evidence, which showed the tax deduction but did not confirm the deposit of the TDS into the Government account. Consequently, the credit could not be allowed as per section 199 of the Income Tax Act.

4. Ignoring Judgments of Hon'ble High Courts:
The appellant relied on various High Court judgments, such as Devarsh Pravinbhai Patel Vs ACIT, Smt. Anusuya Alva, Yashpal Sahni, Sumit Devendra Rajani, Executors of the Estate of S. Shanmuga Mudaliar, and Ashok Kumar B Chowatia. These judgments emphasized that the recovery of tax should be made from the deductor (employer) and not the deductee (employee). The tribunal concurred with these precedents, stating that the responsibility lies with the deductor.

5. Upheld Decision Regarding TDS Credit:
The CIT(A) upheld the AO's decision not to allow the TDS credit due to the employer's failure to deposit the TDS. The tribunal found this action to be in line with section 199, which requires the TDS to be deposited for the credit to be given. However, it also noted that recovery should not be enforced from the appellant as per section 205.

6. Levy of Interest Under Sections 234A, 234B, and 234C:
The CIT(A) directed the AO to charge interest under sections 234A, 234B, and 234C, which are consequential in nature. The tribunal clarified that these interests should not be charged to the appellant for the TDS amount not deposited by the employer. It emphasized that the tax authorities must consider the TDS deducted when calculating interest under these sections.

Conclusion:
The tribunal allowed the appeal, stating that the appellant should not be held liable for the employer's failure to deposit the TDS. The recovery of the demand should be made from the employer, and the appellant should not be charged interest under sections 234A, 234B, and 234C for the TDS amount. The tribunal's decision aligns with the legal precedents and provisions of the Income Tax Act, ensuring that the appellant is not penalized for the employer's default.

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