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2023 (2) TMI 1079 - HC - Income TaxBar against direct demand on assessee u/s 205 - Withholding tax payable on salary - Adjustment of the withheld tax not been deposited by the deductor in the Central Government Account against the refund due and payable to the deductee/assessee - whether the respondents/revenue can do indirectly what they cannot do directly? - petitioner was an employee of Kingfisher Airlines - Revenue says that the credit for withholding tax can only be given in terms of Section 199 of the Act, when the amount is received in the Central Government account - HELD THAT:- According to us, Section 205 read with instruction dated 01.06.2015, clearly point in the direction that the deductee/assessee cannot be called upon to pay tax, which has been deducted at source from his income. The plain language of Section 205 of the Act points in this direction The adjustment of demand against future refund amounts to an indirect recovery of tax, which is barred under Section 205 of the Act. The fact that the instruction merely provides that no coercive measure will be taken against the assessee, in our view, falls short of what is put in place by the legislature via Section 205 of the Act. Therefore, in our view, the petitioner is right inasmuch as neither can the demand qua the tax withheld by the deductor/employer be recovered from him, nor can the same amount be adjusted against the future refund, if any, payable to him. Thus,we are inclined to quash the notice dated 28.02.2018, and also hold that the respondents/revenue are not entitled in law to adjust the demand raised for AY 2012-13 against any other AY. It is ordered accordingly.
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