TMI Blog2022 (10) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be reduced therefrom. Similarly, when provisions of 234B is considered. It is seen that for charging interest for defaults in payment of advance tax is considered, in terms of Explanation1 to Section 234B(1)(i) again specifically makes a reference to the fact that assessed tax is to be reduced by the amount of any tax deducted or collected at source. Similarly, for attracting the charge of levy of interest for deferment of advance tax as addressed by Section 234C it is seen that Explanation-1 to the 3rd Proviso to Section 234C(1)(b) specifically in sub-clause (1) again makes a clear mention that tax due on the returned income is to be reduced by the amount of any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income. Accordingly, it is seen that for attracting the levy of interest, the calculations necessarily require to be made are to be considered after reducing the TDS deducted in a case like this. Hence, in case the Assessing Officer and the assessee are interpreting the observations/directions in para 8 as a direction to charge interest holding assessee in default, then such an interpretation is contrary to law. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employer had deducted TDS of Rs.9,37,296/-. Credit of the said TDS was denied to the assessee on the ground that the employer had not deposited the same to the credit of the Government of India. The unfairness of the said action was challenged in the proceedings u/s 154 before the AO. It was submitted that it had been argued that the salary received by the assessee was minus the TDS. Form No.16 issued to the assessee in support thereof was relied upon. It was submitted that the assessee has no control over the employer. The Rectification application filed by the assessee before the AO was dismissed requiring the assessee to ask his employer to update TDS data online vide order dated 18.06.2020 passed u/s 154 of the Act. The fact that as far as the assessee is concerned, the amount stood deducted is not disputed by the Revenue also. 3. The assessee carried this issue in appeal before the First Appellate Authority who though held that recovery of this demand may not be affected from the assessee, however, in para 8, AO was directed to charge interest u/s 234A, 234B and 234C. 4. Aggrieved by this, the assessee is in appeal. 5. Reliance was placed on the case of Devarsh P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is employer. As a result of which the same is not reflecting In his Form 26AS. The appellant has furnished a copy of Form 16 issued to him and has also relied on a catena of judgments of various High Courts in his submission. On perusal of the Form 16 furnished by the appellant, it is observed that it only mentions the amount of tax deducted but does not mention the amount of tax deposited in the Central Government account. Further, no challan or reference number is mentioned on the Form 16 which could indicate deposition of the TDS deducted by the employer. Therefore, it is quite evident that the TDS deducted has not been deposited by the employer. In this regard it is pertinent to note the provisions of sub section 1 and 2 of section 199, which are reproduced as under: [Credit for tax deducted. 199. (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. However, as already mentioned in para 6.2, it is the deductor who has to be treated as assessee in default for the purposes of recovery. (emphasis supplied) 7.1 At the outset, it may be appropriate to address the relevant provisions which came to be considered by the Courts on the issue. Section 203 of the Income Tax Act, 1961 casts a duty on the person deducting tax to furnish certificate for tax deducted at source to the person to whose account credit has been given. Section 203 casts the duty on the person deducting tax to prepare statement for such period giving the details of the tax deducted at source and remit it to the credit of the Central Government in the prescribed form and if such a person fails to remit the same, then the provision provides that he would be treated as assessee in default u/s 201(1) of the Income Tax Act. It may also be relevant to refer to Section 205 of the Act which restricts the tax authorities from enforcement of any demand on the assessee payee in so far as the amount of tax which had been deducted by the payer and not deposited with the Government. Reference may be made to the decision of the Hon'ble Karnataka High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions given in para 8 which have caused the assessee to come in appeal before the ITAT, at best can be considered to be ambiguous and at worst the directions were not called forth and infact can be said to be contrary to law. The reason for holding directions to be ambiguous is on account of the fact that levy of interest u/s 234A, 234B and 234C is consequential to the additions made/sustained in the assessment order. Thus, where the addition stood deleted holding that in the facts of the present case, the assessee cannot be said to be an assessee in default. The occasion to attract charging of interest u/s 234A, 234B and 234C did not arise and hence, the alarm of the assessee can be said to be misplaced. However, in case the directions given are being so interpreted by the AO and the assessee that notwithstanding the fact that the assessee is not in default on account of the lapses committed by the assessee's employer who acting as an Agent of the Revenue was tasked to deduct tax at source from the salary of the assessee and deposit it in the credit of the Government of India. In these circumstances also, the assessee cannot be said to be an assessee in default. The position ..... 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