Arpit Pravinbhai Shah Vs ACIT (Gujarat High Court)
The Gujarat High Court allowed the writ petition filed by an individual assessee seeking cancellation of outstanding income-tax demands and consequential relief where Tax Deducted at Source (TDS) had been deducted from his salary but not deposited with the Central Government by his employer. The petitioner, a pilot formerly employed with Kingfisher Airlines, had filed returns of income for Assessment Years 2009–10 to 2012–13 claiming credit of TDS that was reflected in Form 16 issued by the employer. Although the tax was deducted from salary, the employer failed to deposit the TDS with the Government, leading the tax authorities to deny credit and raise demands along with interest. The petitioner made representations seeking deletion of demands and refund of adjusted amounts, but received intimation under Section 245 adjusting refunds against the outstanding demands.
The Court noted that the issue was squarely covered by earlier decisions of coordinate benches involving similarly placed pilots of the same employer. In those cases, the Court had relied on settled legal principles under Sections 199, 201, and 205 of the Income-tax Act, 1961, and held that once tax is deducted at source, the assessee cannot be compelled to pay the tax again merely because the deductor failed to deposit it. The responsibility to deposit deducted tax lies with the deductor, who can be treated as an assessee in default under Section 201. The Court emphasized that denial of TDS credit or recovery proceedings against the employee in such circumstances would amount to subjecting the assessee to double taxation, which is impermissible.
