TaxTMI 
TaxTMI 
2023 (2) TMI 753
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....f an amount which is adjusted against the outstanding demand. 2. As averred, the petitioner is a pilot working with Indigo Airlines since 2013. During the Assessment Years 2010-11 to 2012-13, he was working with Kingfisher Airlines. 3. The petitioner filed his return of income under Section 139 of the Income Tax Act ('the Act' for short) for AY 2010-11, 2011-12 and 2012-13. 4. The notice was received from the office of the Assessing Officers on 19.11.2013 and 21.08.2014 seeking recovery of outstanding demand of Rs.19,40,707/- for Assessment Year 2011-12 and further notice of 03.03.2015 recovery of 25,12,913/- for Assessment Year 2012-13. In fact, the petitioner, as averred, is eligible for the refund of Rs.45,570/- for the AY 2012-13. 5. The department has issued recovery notices. The petitioner approached his employer - Kingfisher Airlines, requesting to furnish the certificate in relation to the TDS amount deducted. Certificate was given along with the computation of salary on 19.11.2015 stating the Form-16 is under process and filing of annual TDS return will be completed shortly. 6. The summary of income tax return and refund due to the petitioner is given below.....
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....12-13 at Annexure - D (Colly.) as well as direct the respondent not to take corrective action against the outstanding demand as reflected on Income Tax Portal for the Assessment Year 2011-12 and 2012-13 at Annexure - F;" 8. The affidavit-in-reply of the respondent disputes that the demand of refund on the ground that the credit of TDS of an assessee after granting the said TDS amount matched with e-TDS return filed by the tax deductor, would be otherwise automatic. However, in the case of petitioner, the system of Income Tax Department is not allowing any credit of TDS for AY 2010-11, 2011-12 and 2012-13 as per his claim. His return was processed under Section 143(1) of the Act without grant of credit of TDS and therefore, the demand has been raised for the respective assessment years, which includes tax and interest. According to respondent, the online credit of TDS claims for these years is not possible due to the reasons that credit of TDS is not shown by e-TDS data because of the system of the Income Tax Department. 9. On hearing the learned advocate Mr. Darshan Gandhi for the petitioner and learned Senior Standing Counsel Mr. Nikunt Raval for the respondent - Authorit....
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....employee of the Kingfisher Airlines and worked as a pilot. In his case also the TDS on the salary made to the petitioner had not been deposited. It is only when the department raised the tax demand with interest and initiated the actions of the recovery that this Court was approached. Relying on the decision of the Bombay High Court rendered in case of Assistant Commissioner of Income Tax and Others vs. Om Prakash Gattani [(2000) 242 ITR 638], this Court allowed the same. Vital would be to reproduce the relevant findings and observations. "4. The issue is no longer res integra. The Division Bench of this Court in case of Sumit Devendra Rajani (Supra) examined the statutory provisions and in particular Section 205 of the Income-tax Act, 1961. The Court concurred with the view of the Bombay High Court in case of Asst. CIT VS. Om Prakash Gattani, reported in (2000) 242 ITR 638 and observed as under - 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 the Bombay High Court as well as Gauhati High Court, the facts of the case on hand and even considering Section 205 of the Act action of t....
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....same to the credit of the Central Government and to issue a certificate of deduction. So far as credit for the amount deducted is concerned, it is to be given on the deposit being made to the credit of the Central Government on production of a certificate furnished under Section 203 of the Income-tax Act. On payment of the amount to the credit of the Central Government, it would be treated as payment of tax. 14. 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 responsible to deduct the amount under the statutory provisions, the assessee has no control over the matter. In case of default in making over the amount to the account of the Central Government, it is obviously the person responsible to deduct or the ....
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.... 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 petitionerrespondent 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. 15. However, the position as indicated above would not mean that mere deduction of the tax amount at source would amount to total discharge of the tax liability so long as the amount deducted is not deposited in the coffers of the Central Government. It is for this reason Section 199 of the Income-tax Act makes it clear that credit for tax deducted would be given when the amount is de....
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....d to be an assessee in default so that he can be proceeded against for recovery of the amount instead of the assessee who has already parted with the amount, but due to some commission or omission on the part of the person responsible to deduct the amount at source over whose activity he has no control, he may not be subjected to double payment of tax and brunt of arduous recovery proceeding. The provisions as contained in Section 201 of the Act provide a kind of protection to the assessee where tax liability as standing against him is not yet discharged and credit for the amount deducted cannot be given in terms of Section 199 of the Income-tax Act. 16. A perusal of Section 205 of the Income-tax Act clarifies the position where it provides that where tax is deductible at source, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income. What is noticeable in this provision is that its applicability is not dependent upon the credit for tax deducted being given under Section 199 of the Income-tax Act. What is necessary for applicability of this provision is that the amount has been deducted from the income. In....