TMI Blog2021 (3) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... on on behalf of the Revenue as its agent, in case, there is any omission on the part of the deductor in depositing the tax deducted at source, it is liable to be prosecuted u/s 409 of the Indian Penal Code being an agent of Revenue Department. Revenue Department has not taken any action under the Act or under the Indian Penal Code against the Koutons Group rather assessee had filed a complaint with the concerned police station, available at pages 128 to 133 of the paper book, against Koutons Group and its Directors for illegal misappropriation of an amount of ₹ 2,04,96,695/- and this intimation was given to the Revenue Department. Strangely enough, Revenue Department has not moved the law into motion even after filing the complaint by the assessee. TDS to the tune of ₹ 2,04,96,695 deducted by the Koutons Group on account of capital gains earned by the assessee and amount of ₹ 50,00,000 deposited by the assessee with the Revenue Department minus the capital gains depicted in the table given in the preceding para is liable to be refunded along with statutory interest within two months from the date of this order. - Decided in favour of assessee. - ITA No.409 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exchequer. Thereafter, the assessee filed rectification application u/s 154/143(1) of the Act, available at pages 138 to 140 of the paper book, seeking rectification of the clerical error as to applying rate of tax @ 20% on the capital gain as against admissible rate of tax @ 10% on capital gain in case of non-resident Indian and also sought rectification as to giving credit of TDS deducted on account of cap gain by Koutons Group to the tune of ₹ 2,04,96,655/-. Rectification application was partly allowed. 3. Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has partly allowed the appeal. Feeling aggrieved by the order passed by the ld. CIT (A), the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Undisputedly, assessee, being a non-Resident Indian holding a British passport, sold 25% shareholding in Koutons Group, a private limited company for a total sale consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in default in terms of provision of section 201 of the Act and tax deducted by them from the long term capital gain 'on sale of shares by the assessee can only be recovered from them. However, the credit of the TDS has to be given as per the provisions of section 199 of the Act read with Rule 37BA of the IT Rules, 1962. As per the provisions of the Act the credit has to be given only if the income is offered for the taxation and the tax so deducted is credited in the Govt. account. Hence, the credit of TDS cannot be given to the appellant because the TDS amount has not been deposited in the Govt. account and this fact has been conceded by the Ld. AR in his written submissions mentioned above that the tax which was deducted by M/s Koutons groups was not deposited by M/s Koutons groups with the govt. authorities. The charging of interest u/ss 2348, 234C and 2340 of the Act is mandatory and consequential as per the decision of the Honourable Supreme Court in the case of CIT Vs. Anjum M.H. Ghaswala (2001) 119 Taxman 352 (SC) and nothing to contrary has been mentioned by the appellant. Accordingly, the Ld. A.O. is directed to give consequential effect regarding intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d officers. 3. In view of the above, the Board hereby reiterates the instructions contained in its letter dated 01.06.2015 and directs the assessing officers not to enforce demands created on account of mismatch of credit due to non-payment of TDS amount to the credit of the Government by the deductor. These instructions may be brought to the notice of all assessing officers in your Region for compliance. This issues with the approval of Member (Revenue TPS). sd/- (Sandeep Singh) Under Secretary (Budget) 10. By applying the aforesaid provisions contained u/ss 195 and 205 of the Act, ld. CIT (A) reached the conclusion that the assessee cannot be treated as assessee in default irrespective of nondeposit of TDS by the deductor, Koutons Group. But ld. CIT (A) has erred in holding that, the credit of TDS cannot be given to the assessee because TDS so deducted has not been deposited by the Koutons Group with the state exchequer. 11. Legislative intent of sections 195 and 205 of the Act, pursuant to which office memorandum (supra) has been issued by the CBDT, is that the assessee whose tax has been deducted by the deductor u/s 195 of the Act, he (asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is held that the petitioner assessee deductee is entitled to credit of the tax deducted at source with respect to amount of TDS for which Form No.16A issued by the employer deductor M/s. Amar Remedies Limited has been produced and consequently department is directed to give credit of tax deducted at source to the petitioner assessee deductee to the extent form no.16 A issued by the deductor have been issued. Consequently, the impugned demand notice dated 6.1.2012 (Annexure D) is quashed and set aside. However, it is clarified and observed that if the department is of the opinion deductor has not deposited the said amount of tax deducted at source, it will always been open for the department to recover the same from the deductor. Rule is made absolutely to the aforesaid extent. In the facts and circumstances of the case, there shall be no order as to costs. 5. Facts in both case are very similar. Under the circumstances, by allowing these petitions we hold that the Department cannot deny the benefit of tax deducted at source by the employer of the petitioner during the relevant financial years. Credit of such tax would be given to the petitioner for the respective year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the assessee, though not deposited with the state exchequer and the fact that subsequently, assessee was made to deposit ₹ 50,00,000/- with the Revenue Department as per order of the Hon ble Delhi High Court, it has become apparently clear that due to apathy of the Revenue Department, assessee has been pushed to protracted litigation since 2010 as he is running from pillar to post to get refund otherwise admissible to him. 17. As discussed in the preceding paras, when Revenue Department itself has accepted that TDS to the tune of ₹ 2,04,96,695/- of assessee was deducted by the Koutons Group though not deposited with the state exchequer, the assessee cannot be treated as assessee in default and as such cannot be denied the credit thereof with consequential refund. When deductor of TDS, Koutons Group in this case, made a deduction under statutory obligation on behalf of the Revenue as its agent, in case, there is any omission on the part of the deductor in depositing the tax deducted at source, it is liable to be prosecuted u/s 409 of the Indian Penal Code being an agent of Revenue Department. 18. It is pertinent to mention here that the Revenue Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.66 lakhs on the ground that such amount was not deposited by the employer. This Court in such background after referring to Section 205 of the Act held and observed as under:-- 20. From the language of Section 205, it is clear that once the tax is deducted at source, the same cannot be levied once again on the assessee who has suffered the deduction. Once it is established that the tax has been deducted at source from the salary of the employee, the bar under Section 205 of the Act comes into operation and it is immaterial as to whether the tax deducted at source has been paid to the Central Government or not, because elaborate provisions are made under the Act for recovery of tax deducted at source from the person who has deducted such tax. 21. In the present case, the petitioner assessee has furnished monthly pay slips and bank statements to show that from his salary tax was deducted at source by the employer - respondent No. 6. Authenticity of the said pay slips and bank statements have not been disputed by the revenue. Thus, it is clear that the tax has been deducted at source by the respondent No. 6 from the salary paid to the petitioner. Therefore, the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mode of collecting tax by deduction at source is adopted, that mode alone is to be adopted for recovery of tax deducted at source. Although it is obligatory on the part of the person collecting tax at source to pay the said TDS amount to the credit of the Central Government within the stipulated time, if such person fails to pay the TDS amount within the stipulated time, then, Section 201 of the Act provides that such person shall be deemed to be an assessee in default and the revenue will be entitled to recover the TDS amount with interest at 12% p.a. and till the said TDS amount with interest is recovered there shall be a charge on all the assets of such person or the company. Penalty under Section 221 of the Act and rigorous imprisonment under Section 276B of the Act can also be imposed upon such defaulting person or the company. Thus, complete machinery is provided under the Act for recovery of tax deducted at source from the person who has deducted such tax at source and the revenue is barred from recovering the TDS amount from the person from whose income, tax has been deducted at source. Therefore, the fact that the revenue is unable to recover the tax deducted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of the petitioner. In that view of the matter, at best petitioner may not be entitled to claim interest on the amount to be refunded. 10. Under the circumstances, petition is disposed of with following directions: (i) Taking note of the fact that the respondents have lifted the bank account attachment, no need to quash the attachment. (ii) Two impugned notices dated 5th February, 2018 as at annexure B to the petition and 10th September, 2018 as at annexure J to the Petition for recovery are quashed. (iii) The respondents shall refund a sum of ₹ 3,67,600/- to the petitioner within four weeks from today. If so done, there shall be no interest liability, failing which beyond such period the respondents shall pay simple interest at the rate of 8% p.a. on such amount till actual payment. 20. Computation of tax deducted at source by the deductor, amount of ₹ 50,00,000/- deposited by the taxpayer vide order (supra) passed by Hon ble High Court order and capital gains accrued to the assessee is provided by the assessee, which is extracted below for read perusal :- ASSESSMENT YEAR 2009-10 COMPUTATION SHEET OF TAX REFUNDABLE ..... X X X X Extracts X X X X X X X X Extracts X X X X
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