AI Drafter 
TaxTMI 
TaxTMI 
2026 (1) TMI 305
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....t order, wherein the ld. AO has raised a demand of Rs.9,42,570/- resulting from non-deposit of TDS by the employer of the assessee. 2.1. The facts in brief are that the assessee was employed with M/s Think and learn Private Limited, which is gone into liquidation and therefore, the tax conducted on behalf of the assessee from the salaries was not deposited resulting into mismatch of TDS claimed by the assessee in the return of income vis-à-vis the TDS amount appearing in form 26AS. The assessee filed the return of income u/s 139(1) of the Act which were processed u/s 143(1) of the Act vide order dated 10.09.2024, passed by the DCIT, CPC, Bangalore in which the demand of Rs.9,43,570/- was created on account of mismatch of Tax Deduc....
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....th the details recorded in Form 26AS and maintain transparency of information. In this instant case, the appellant failed to furnish the evidence of tax deduction by the deductor by not submitting TDS certificate. In view of the fact of the case, the grounds of appeal of the appeal are dismissed." 2.3. After hearing the rival contentions and perusing the materials available on record, we find that the assessee was employed with M/s Think and learn Private Limited and received salary which was paid to the assessee after deduction of tax at source. The assessee was also issued TDS Form showing full amount of Tax Deducted at source. However, the employer company did not deposit the same in the government treasury resulting into mismatch bet....
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....were not withdrawn by the respondents, so the petitioner approached this court by way of writ action. 4. That being so, the core issue to be considered by us is as to whether any recovery towards the said outstanding tax demand can be effected against the petitioner in view of the admitted position that the tax payable on salary of the petitioner was being regularly deducted at source by his employer namely Kingfisher Airlines Ltd. who did not deposit the deducted tax with the revenue. 5. The said issue stands covered by the judgment of this court in the case of Sanjay Sudan v. Asstt. CIT [2023] 148 taxmann.com 329/292 Taxman 138/452 ITR 107 (Delhi). The relevant observations made in the said judgment are set forth hereaft....
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.....2. As per section 199 of the Act credit of Tax Deducted at Source is given to the person only if it is paid to the Central Government Account. However, as per section 205 of the Act the assessee shall not be called upon to pay the tax to the extent tax has been deducted from his income where the tax is deductible at source under the provisions of Chapter XVII. Thus the Act puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch cannot be enforced coercively..." 9. The question, therefore, which comes to fore, is as to whether the respondents/revenue can do indirectly what they cannot do directly. 9.1 The adjustment of demand against future refund amounts to an indire....
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....oyer acting as tax collecting agent of the revenue under Chapter XVII of the Act to pay the deducted tax amount to the Central Government in accordance with law. The employer of the petitioner having failed to perform his duty to deposit the deducted tax with the revenue, petitioner cannot be penalized. It would always be open for revenue to proceed against employer of the petitioner for recovery of the deducted tax. 9. Same view has been taken by this court in the case of Pr. CIT v. Jasjit Singh [IT Appeal No. 295 of 2023, dated 2-11-2023] (subsequent to the date when judgment in this case was reserved). Section 199 of the Act, in our view cannot operate as impediment to grant relief to the petitioner. 10. In view of the ....