Aditya Ramniwas Dhoot Vs DCIT (ITAT Mumbai)
The assessee filed a return of income for AY 2022-23 declaring total income of ₹70,36,750 and claimed TDS credit of ₹18,10,000. While processing the return under Section 143(1) of the Income-tax Act, 1961, the CPC allowed TDS credit of only ₹60,000. Aggrieved by the denial of the balance TDS credit, the assessee filed a first appeal. The appellate authority directed the Assessing Officer (AO) to provide the assessee an opportunity of being heard, verify whether the TDS related to income offered to tax during the relevant assessment year by examining Form 26AS and other relevant material, and thereafter grant credit if the claim was found to be correct.
Before the ITAT, the assessee contended that the employer had deducted TDS of ₹17,50,000 from salary of ₹57,50,000 and, therefore, the benefit of such deduction could not be denied merely on account of the employer’s failure to deposit the tax with the Government. The Revenue opposed the claim, submitting that the employer had admittedly not deposited the deducted TDS and, therefore, the assessee was not entitled to the relief sought.
The Tribunal examined the statutory scheme under Sections 201 and 205 of the Income-tax Act. It observed that Section 201 treats a person responsible for deducting tax, including an employer, as an assessee in default where tax is not deducted or, after deduction, is not deposited. Section 205 provides that where tax is deductible at source, the assessee cannot be called upon to pay tax again to the extent it has already been deducted from the income. The Tribunal held that these provisions make it clear that the liability arising from non-deposit of TDS rests on the deductor and not on the employee from whose income tax has already been deducted.
