TMI Blog2007 (7) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ther permissible benefits. 3. During the period from April to December, 1996 the respondent No.6 paid salary to the petitioner after deducting TDS totalling to Rs.6,66,000/-. Thereafter, disputes arose between the parties and ultimately the respondent No.6 terminated the services of the petitioner in March, 1997. 4. On 30th September, 1997 the petitioner filed return of income for A.Y. 1997-98 inter alia claiming credit of TDS amounting to Rs.6,66,000/-. 5. The return of income was processed and on 29th March, 2000 the assessing officer issued an intimation under section 143(1) (a) of the of the Income Tax Act, 1961 ('the Act' for short) denying credit of the TDS amount of Rs.6,66,000/- and after imposing interest under section 234A, 234B and 234C of the Act raised a demand of Rs.12,73,940/-. 6. The petitioner made an application under section 154 of the Act on 6/4/2000 seeking rectification of the intimation issued under section 143(1)(a) of the Act inter alia on the ground that the credit of the TDS amount of Rs.6,66,000/- cannot be denied to the petitioner and in any event the TDS amount with interest cannot be recovered from the petitioner in view of the bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty can be imposed upon such person under section 221 of the Act and he is liable for punishment under section 276 B of the Act for a term not less than three months. Accordingly, Mr.Jasani submitted that under the Act, tax deducted at source has to be recovered from the person who has deducted tax and the same cannot be recovered from the employee-assessee in view of the specific bar contained in section 205 of the Act. 10. Relying upon a decision of the Gauhati High Court in the case of Assistant Commissioner of Income-tax Ors. V/s. Om Prakash Gattani reported in 242 I.T.R. 638 and a decision of the Karnataka High Court in the case of Smt. Anusuya Alva V/s. Deputy Commissioner of Income Tax Ors. reported in 278 206 I.T.R. 206 , Mr.Jasani submitted that the petitionermay not be entitled to the credit of the TDS amount forwant of TDS certificate, but the said amount cannot berecovered from the petitioner as per section 205 of theAct. Accordingly, Mr.Jasani submitted that the IncomeTax authorities be directed to refund the amount ofRs.17,89,587/- which was illegally collected from thepetitioner with interest at such rate as the Courtdeems fit and proper. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government within the prescribed time. 17. Section 201 of the Act inter alia provides that where a company bound to deduct tax at source fails to deduct tax or after having deducted fails to pay the said tax to the credit of the Central Government within the stipulated time, then the company shall be deemed to be an assessee in default in respect of the tax and the said company shall be liable to pay simple interest @ 12% p.a. on the TDS amount from the date on which such tax was deductible upto the date on which such tax is actually paid to the Central Government. Section 201(2) of the Act further provides that till the TDS amount with interest as stated above is paid to the Central Government, there shall be a charge upon all the assets of the company. Moreover, section 221 of the Act inter alia provides for the levy of penalty and section 276 B of the Act inter alia provides that where a person fails to pay to the credit of the Central Government, the tax deducted at source,such person shall be punishable with rigorousimprisonment for a term which shall not be less than three months but which may extend to seven years andprovides for levy of fine. Thus, the Act provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only question to be considered is, if the employer-respondent No.6 has failed to deposit the tax deducted at source from the salary income of the petitioner to the credit of the Central Government, whether the revenue can recover the TDS amount with interest once again from the petitioner 22. In the present case, though the respondent No.6 has deducted the tax at source from the salary income of the petitioner, the respondent No.6 has not issued the TDS certificate in Form No.16 to the petitioner. As a result, the petitioner is not entitled to avail credit of the tax deducted at source. However, once it is established that the tax has been deducted at source, the bar under section 205 of the Act comes into operation and the revenue is barred from recovering the TDS amount once again from the employee from whose income, TDS amount has been deducted. It is pertinent to note that the purpose of issuing TDS certificate under section 203 of the Act is to enable the assessee to avail credit of the tax deducted at source in the relevant assessment year. If the TDS certificate is not issued, then under section 199 of the Act, the assessee from whose income, tax has been deducted at so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person who has deducted such tax would not entitle the revenue to recover the said amount once again from the employee-assessee, in view of the specific bar contained in section 205 of the Act. 24. As stated earlier, in the present case the petitioner-assessee has established that from his salary income, tax has been deducted at source by the employer-respondent No.6 and, therefore, the revenue has to recover the said TDS amount with interest and penalty from the respondent No.6 alone and the revenue cannot seek to recover the said amount from the petitioner-assessee in view of the specific bar contained under section 205 of the Act. The fact that the petitioner is not entitled to the credit of the tax deducted at source for the non issuance of the TDS certificate by the respondent No.6, cannot be a ground to recover the amount of tax deducted at source from the petitioner. In other words, even if the credit of the TDS amount is not available to the petitioner - assessee for want of TDS certificate, the fact that the tax has been deducted at source from salary income of the petitioner would be sufficient to hold that as per section 205 of the Act, the revenue cannot recove ..... 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