2023 (1) TMI 964 - AT - Income Tax
Denial of TDS credit - non-deposit by employer - appellant was employed with M/s Nilkamal Lifestyle Limited on a salary and the accrual / receipt of which is offered to tax with the corresponding claim of TDS made u/s 192 of the Act by the employer thereagainst - Failure of deductor-employer to deposit the said amount of TDS to the credit of Central Exchequer and reporting thereof through filing of TDS return viz 24Q - HELD THAT:- There are two methods by which tax liability under the Act can be discharged i.e. direct method where the payment of taxes is made by the assessee-taxpayer directly in the form of advance tax & self-assessment tax and indirect method where taxes are deducted & paid on behalf of the assessee i.e. through TDS mechanism and it shall not be out of the box to quote from the decision Hon’ble Bombay High Court laid in “Yashpal Sahni vs Rekha Hajarnavis, ACIT [2007 (7) TMI 7 - HIGH COURT , BOMBAY]
In the matter of recovery of taxes it’s worthy to note that, once the tax liability of the assessee is discharged by indirect method of TDS, then the rule of estoppel by virtue of provisions of section 205 of the Act comes into play, which invariably puts an embargo on the department from enforcing the recovery of taxes from the assessee where tax is deductible at the sources under chapter XVII of the Act from the payment liable for TDS and as such TDS has been deducted therefrom. Thus TDS being one of the two modes of recovery of taxes envisaged in the Act obliterates the assessee from the tax liability and we find that, vide para 33, a similar view found taken by the Hon’ble Madras High Court in “Ashok Kumar B. Chowatia [2021 (5) TMI 37 - MADRAS HIGH COURT]
We are of the view that, the Revenue in terms of Section 205 of the Act, is restrained from enforcing any tax recovery against the assessee insofar as the demand with reference to the amount of tax which had been deducted by the employer from the salary accrued to assessee and assuming that the deductor-employer had not remitted the amount after its deduction to the Central Government, the only course open to the Revenue is to recover same from the very person who has deducted the TDS and not from appellant assessee. Thus in the light of aforestated discussion, we concur with the views of Ld. AR, and deem fit to set-aside orders of both the Ld. TAB as contra-legem. Appeal of assessee allowed.