TMI Blog2023 (2) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 199 of the I.T. Act. Facts being identical, petition is allowed. The department shall not be denying the benefit of tax deducted at source by the employer during the relevant financial years to the petitioner. The credit of the tax shall be given to the petitioner and if in the interregnum, any recovery or adjustment is made by the department, the petitioner shall be entitled to the refund, with the statutory interest, within eight (08) weeks from the date of receipt of copy of this order. - HONOURABLE THE ACTING CHIEF JUSTICE MS. JUSTICE SONIA GOKANI And HONOURABLE MR. JUSTICE SANDEEP N. BHATT MR DARSHAN B GANDHI(9771) FOR THE PETITIONER(S) NO. 1 MR SP MAJMUDAR(3456) FOR THE PETITIONER(S) NO. 1 MR NIKUNT K RAVAL(5558) FOR THE RESPONDENT(S) NO. 1 ORDER ( PER : HONOURABLE THE ACTING CHIEF JUSTICE MS. JUSTICE SONIA GOKANI ) 1. The petitioner is an individual, seeking to challenge the action under Article 226 of the Constitution of India of cancelling the outstanding demand as reflected on income tax portal for the Assessment Year 2010-11, 2011-12 and 2012-13 and to quash the recovery notices dated 14.02.2020, dated 15.02.2020 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,55,917 22,03,117 NA NA 47,200 6 2017-18 29,86,210 27,94,988 NA 1,91,220 NA 7 2018-19 32,60,344 27,81,751 2,70,000 2,08,590 NA 8 2019-20 30,09,273 30,14,452 NA NA 23,150 9 2020-21 29,22,787 30,14,452 NA NA 28,000 10 2021-22 13,42,951 14,99,507 NA NA 1,56,560 Total Refund due 5,86,630 7. According to the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years is not possible due to the reasons that credit of TDS is not shown by e-TDS data because of the system of the Income Tax Department. 9. On hearing the learned advocate Mr. Darshan Gandhi for the petitioner and learned Senior Standing Counsel Mr. Nikunt Raval for the respondent Authorities, this Court notices the Office Memorandum dated 11.03.2016 shows the non-deposit of tax deducted at source by the deductor - recovery of demand against the deductee assessee. The Board issued the direction to the Filed Officer that in case an assessee whose tax has been deducted at source but is not deposited to the Government s account by the deductor, the assessee shall not be called upon to pay the demand to the extent tax has been deducted from his income. It was also specified that Section 205 of the I.T. Act puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch in such situations cannot be enforced effectively. As some of such directions of the Board were not being strictly followed, the Board had reiterated the instructions contained in its letter dated 01.06.2015, directing the Assessing Officers not to enforce deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under - 10. We are in complete agreement with the view taken by the Bombay High Court and Gauhati High Court. Applying the aforesaid two decisions of the Bombay High Court as well as Gauhati High Court, the facts of the case on hand and even considering Section 205 of the Act action of the respondent in not giving the credit of the tax deducted at source for which form no.16 A have been produced by the assessee deductee and consequently impugned demand notice issued under Section 221(1) of the Act cannot be sustained. Concerned respondent therefore, is required to be directed to give credit of tax deducted at source to the assessee deductee of the amount for which form no.16 A have been produced. 11. In view of the above and for the reasons stated petition succeeds. It 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted by the person responsible to deduct the amount under the statutory provisions, the assessee has no control over the matter. In case of default in making over the amount to the account of the Central Government, it is obviously the person responsible to deduct or the person who has made the deduction who is held responsible for the same. The responsibility of such person is to the extent that he has to be deemed to be an assessee in default in respect of the tax. He may be deemed to be an asses see in default not only in cases where after deduction he does not make over the amount to the Central Government but also in cases where there is failure on his part to deduct the amount at source. This responsibility has been fastened upon him under Section 201 of the Income-tax Act. It is, of course, without prejudice to any other consequences which he or it may incur. Presently we are not concerned with the case where the person responsible to make the deductions has not deducted the amount at all. It may or may not fall in a different category from one where the amount has been deducted and not made over to the Central Government. We are concerned with the latter category of cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to total discharge of the tax liability so long as the amount deducted is not deposited in the coffers of the Central Government. It is for this reason Section 199 of the Income-tax Act makes it clear that credit for tax deducted would be given when the amount is deducted and paid to the Central Government and a certificate of deduction is produced as furnished under Section 203 of the Income-tax Act. It is obvious that unless the amount is paid to the Central Government, the tax liability is not discharged, nor can it be said that the assessee has made the payment of the tax amount payable to the Government. We find no force in the submission made on behalf of the petitioner-respondent that on mere deduction of the amount at source, credit for tax deducted must be given and it cannot be withheld even though the person responsible to deduct the tax at source has not made it over to the Central Government. In our view, if that contention is accepted that credit for tax deducted has to be given on mere deduction of the amount at source, in that event, perhaps, there would be no legal justification to treat the person responsible to deduct the amount at source as an assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s noticeable in this provision is that its applicability is not dependent upon the credit for tax deducted being given under Section 199 of the Income-tax Act. What is necessary for applicability of this provision is that the amount has been deducted from the income. In case where the amount has been deducted but not paid to the Central Government that eventuality is taken care of by Section 201 of the Income-tax Act. Learned counsel for the appellant could not show that under the law it may be permissible to proceed against the assessee even after deduction of the tax at source, nor learned counsel for the petitioner-respondent could persuade us to hold that merely by deduction of tax at source, credit for deduction of tax at source has to be given even though the amount may not have been made over to the Government treasury. The reason for this has already been explained by us in the discussion held in the earlier part of this judgment as the mere deduction of tax at source would not close the chapter of tax liability unless it is deposited in the Government treasury. 9. The facts being almost identical, no separate reasoning are desirable and the petition is being ALLOWED ..... X X X X Extracts X X X X X X X X Extracts X X X X
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