TaxTMI 
TaxTMI 
2014 (8) TMI 418
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.... 3. The facts leading to the present petition in nutshell are as under: 3.1. That the petitioner is an individual and assessed to tax under the Act, therefore, for the AY 2010-11 the petitioner filed his return of income dated 30.12.2010 declaring net taxable income of Rs. 29,54,982/-. In the return of income, the petitioner also claimed the credit of tax deducted at source of total Rs. 5,86,606/- TDS deducted by his employer M/s. Amar Remedies Limited. However, without giving credit of the TDS deducted by his employer M/s. Amar Remedies Limited on the salary income as well as on the amount received towards professional and technical fees received from the said M/s. Amar Remedies Limited, the department has raised the demand of Rs. 6,82,148/by impugned notice issued under Section 221(1) of the Act. 3.2. It is the case of the petitioner that the petitioner was received salary income of Rs. 21,50,400/- from M/s. Amar Remedies Limited, Mumbai and out of the said salary income, TDS is deducted of Rs. 5,86,606/- by the said M/s. Amar Remedies Limited. It is the case of the petitioner that the petitioner was also receiving the professional and technical fees from the said M/s. Ama....
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.... in reference to notice under Section 221(1) of the Act, which has not been disposed of. It is also the case on behalf of the petitioner that petitioner's advocate addressed letter dated 30.10.2013 enclosing therewith Form No.26AS also to respondent no.1 and requested to dispose of application dated 13.1.2012 and to serve so called intimation under Section 143(1) of the Act. It is the case on behalf of the petitioner that thereafter and despite the above, respondent no.2 has issued intimation under Section 245 dated 22.11.2013 starting recovery of demand and adjusted the refund of AY 2013-14 of Rs. 1290/- against the outstanding demand of AY 2010-11. Hence, petitioner has preferred the present Special Civil Application under Article 226 of the Constitution of India. 4. Shri Ketan Shah, learned advocate for the petitioner has vehemently submitted that impugned demand / recovery notice of Rs. 6,82,148/- subject to penalty under Section 221(1) of the Act without giving any credit of the tax deducted at source of total Rs. 5,86,606/- is absolutely illegal and most arbitrary. It is submitted that as per Form No.16 and 16 A deductor M/s. Amar Remedies Limited as such TDS of Rs. 5,....
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....o direct the department to give credit of TDS of total Rs. 5,86,606/-. 4.2. Making above submissions and relying upon the above decisions, it is requested to allow present Special Civil Application and grant the relief as prayed for. 5. Ms. Mauna Bhatt, learned advocate has appeared on behalf of the respondent revenue. An affidavit in reply is filed by the Assessing Officer. It was submitted that as such no TDS credit of Rs. 5,86,606/- on account of Form No.16A by M/s. Amar Remedies Limited appeared on the ITD system of department and therefore, no credit of the TDS was given to the assessee. It was further submitted that even in 26AS statement of the assessee, no such TDS deduction of Rs. 5,86,606/- was reflected. It is submitted that the only the amount of Rs. 24,000/- deposited by Amar Remedies Limited against form No.16A and Rs. 4333/- by Union Bank against form no.16A were reflected in the system, which were given credit to the assessee at the time of processing of return. It was further submitted that however as the credit of TDS of Rs. 5,86,606/- was not given, as no such credit of TDS is available with the department. 5.1. Today, when the present petition was taken....
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....e Income Tax Department. 7. The grievance which is voiced in the present petition by the assessee is that though deductor employer Amar Remedies Limited had deducted TDS for total Rs. 5,86,606/- and for which Form 16 A has been issued by it, department has not given credit of the said TDS to the petitioner assessee deductee and when the assessee has claimed the said deduction, the same has not been granted and demand is raised by issuing notice at Annexure D. Therefore, short question which is posed for consideration of this Court is whether in case the deductor had deducted the TDS and for the same Form no.16 A has been issued by deductor, the credit of the same can be denied to the assessee and deductee solely on the ground that such credit does not appear on ITD system of the department and / or same does not match with the ITD system of the department ? 8. At the outset, it is required to be noted that under Chapter XVII, more particularly, Section 204 of the Act the liability to deduct the tax at source would be upon the employer / payer / deductor in the present case Amar Remedies Limited. As per Section 205 of the Act whether tax is deductible at source under Chapter X....
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.... Gattani (supra). In the said decision the Gauhati High Court after considering the relevant provision under Chapter XVII has observed and held that so far as assessee is concerned, he is not supposed to do anything in the whole transaction except that he is to accept the payment of the reduced amount which is deducted income tax at source. It is observed that on the amount being deducted the assessee only gets a certificate to that effect by the person responsible to deduct the tax. In the said decision Gauhati High Court has quashed and set aside the notice issued under Section 226(3) of the Act to the bankers of the assessee observing in para 7 as under: "7. So far the assessee is concerned, he is not supposed to do anything in the whole transaction except that he is to accept the payment of the reduced amount from which is deducted income tax at source. The responsibility to deposit the amount deducted at source as tax is that of the person who is responsible to deduct the tax at source. On the amount being deducted the assessee only gets a certificate to that effect by the person responsible to deduct the tax. In a case where the amount has been deducted by the person respo....
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.... again to satisfy the tax liability. It is, therefore, provided under Section 201 of the Income-tax Act that the person responsible to deduct the tax at source would be deemed to be an assessee in default in case he deducts the amount and fails to deposit it in the Government treasury. As observed earlier, the assessee has no control over such person who is responsible to deduct the income tax at source, but fails to deposit the same in the Government treasury. In this light of the matter, in our view, the notices issued under Section 226(3) of the Income-tax Act to the bankers of the petitioner respondent to satisfy the tax liability from the bank account of the petitioner respondent are illegal. It is not that the Income tax Department was helpless in the matter. The person responsible to deduct the tax at source would move into the shoes of the assessee and he would be deemed to be an assessee in default. Whatever process or coercive measures are permissible under the law would only be taken against such person and not the assessee." 10. We are in complete agreement with the view taken by the Bombay High Court and Gauhati High Court. Applying the aforesaid two decisions of th....