Salary TDS credit cannot be denied where deduction is proved, even if the employer failed to deposit the tax.

Where tax was deducted from salary by the employer but not deposited with the Revenue, section 205 of the Income-tax Act bars recovery of the same tax from the employee once deduction is proved. The assessee supported the claim with salary slips, Form 16, bank statements and related records, showing that tax had in fact been deducted even though the amount was not fully reflected in Form 26AS because the employer failed to remit it. The assessee was therefore entitled to full TDS credit, and the Assessing Officer was directed to verify the claim and allow the credit.

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Issues: Whether the assessee was entitled to full TDS credit and deletion of the resulting demand where tax was deducted from salary by the employer but not deposited with the Revenue.

Analysis: The assessee produced salary slips, Form 16, bank statements and related material to show deduction of tax from salary payments. The full credit was not reflected in Form 26AS because the employer had deducted tax but failed to remit it to the Revenue. In such circumstances, the bar under section 205 of the Income-tax Act, 1961, as recognized in the cited CBDT Instruction, prevents recovery of the same tax from the assessee when tax has already been deducted at source.

Conclusion: The assessee was held entitled to full TDS credit, and the Assessing Officer was directed to verify the claim and grant the credit.

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