Md. Shahid Ahmad Siddiqui Vs PCIT (Patna High Court)
Summary: Patna High Court considered two connected writ petitions concerning employers who had deducted Tax Deducted at Source (TDS) from employees but allegedly failed to deposit the tax and/or file the requisite TDS statements with the Income Tax Department. In CWJC No. 20499 of 2025, respondent nos. 5 and 6 stated in their counter affidavit that they had taken steps for filing/uploading the statements of tax deduction and depositing the amount in the Treasury and that all pending TDS returns for the relevant assessment years had been filed, updated and uploaded on the Income Tax Department portal. The Court added the Commissioner of Income Tax (TDS), Patna as respondent no. 9 so that these assertions could be duly verified.
The Court noted that respondent nos. 7 and 8 had not filed any counter affidavit despite the matter having been heard on the preceding dates. It granted them two weeks as a final indulgence to file their counter affidavit and take remedial measures, failing which the Court stated that it would consider imposing costs. The Commissioner of Income Tax (TDS), Patna was also asked to look into cases of other employers, including respondent nos. 7 and 8, who had deducted TDS but allegedly neither deposited it nor submitted the returns.
In connected CWJC No. 6441 of 2026, the Sub-Divisional Animal Husbandry Officer relied upon the amendment to Section 200(3) of the Income Tax Act, 1961 and the prescribed limitation period to contend that records relating to periods prior to Assessment Year 2023-24 could no longer be amended. The High Court rejected this stand, observing that the issue was not correction or amendment of an already-filed TDS return; according to the record, the respondent had not filed the TDS statement/return in the first place.
Referring to the statutory scheme of Sections 200, 200A and 201 of the Income Tax Act, 1961, the Court held that employers who deducted TDS from the petitioner but failed to file the returns and deposit the money are assessees in default. It referred to the first proviso to Section 201(1), which provides circumstances in which a deductor who fails to deduct tax will not be deemed an assessee in default where the payee has furnished a return under Section 139, taken the relevant sum into account in computing income and paid the tax due on the income declared.
The Court further noted that Section 201(2) provides that where tax has been deducted but not paid, the tax together with the simple interest referred to in Section 201(1A) becomes a charge upon all the assets of the person or company concerned. When the Department suggested that the Court could direct recovery from defaulting employers, the High Court observed that no separate judicial direction was required where the statute itself already provided the recovery mechanism. Failure to act in accordance with the statute could not be explained by seeking an order from the Court directing the authorities to perform their statutory duties.
The High Court explained that an employer deducting TDS from an employee’s salary acts as an agent and hand of the Income Tax Department for deduction, collection and remittance of the tax. It is for this reason that the statutory scheme treats a person who fails to fulfil those obligations as an assessee in default. The Court categorically held that the petitioner cannot be punished for the default committed by the employer.
Accordingly, in CWJC No. 20499 of 2025, the Commissioner of Income Tax (TDS) was directed to verify the statements/returns filed by respondent nos. 5 and 6 and, after verification, take the necessary steps to address the petitioner’s grievance. In CWJC No. 6441 of 2026, respondent no. 4 was directed to act in accordance with the statutory provisions within three weeks and file the TDS statements/returns. The Commissioner of Income Tax (TDS), Patna was left free to take all action required to ensure compliance by the employers. The matters were directed to be listed on 12 October 2026 for reporting compliance with the Court’s directions.
FULL TEXT OF THE ORDER OF PATNA HIGH COURT
The matter has been heard for sometime.
2. A counter affidavit has been filed on behalf of the respondent nos. 5 and 6. In paragraphs ‘7’, ‘8’, ‘9’ and ‘10’ of the said counter affidavit, the respondent nos. 5 and 6 have shown that they have taken steps for filing/uploading of the statements of deduction of tax and payment thereof in the Treasury. In paragraph ‘12’ of the counter affidavit, it is stated that all pending TDS returns for the relevant assessment years stand duly filed, updated and uploaded on the portal of the Income Tax Department (hereinafter referred to as the ‘Department’). According to these respondents, nothing further remains pending or unacted upon on the part of the answering respondents.
3. In this case, the Commissioner, Income Tax (TDS) is not a party respondent, therefore, learned Senior Standing Counsel for the Department submits that to duly verify the facts stated in the affidavit of respondent nos. 5 and 6, the Commissioner, Income Tax, TDS, Patna be added as one of the respondents.
4. In view of the above submission, let the Commissioner, Income Tax (TDS), Patna, Central Revenue Building, Veerchand Patel Marg, Patna be added as respondent no. 9 in course of the day.
5. Since Ms. Archana Sinha, learned Senior Standing Counsel accepts notice for the respondent no. 9, no separate notice is required to be issued.
6. The respondent nos. 7 and 8 have not filed any counter affidavit even as the matter is being heard for last two dates. We do not understand this approach of respondent nos. 7 and 8 in sitting over the matter and not filing any counter affidavit.
7. By way of one indulgence, we are granting two weeks’ time to respondent nos. 7 and 8 to file a counter affidavit and take remedial measures as may be advised to them, failing which this Court shall consider imposing cost against the respondent nos. 7 and 8 on the next date of hearing.
8. The Commissioner, Income tax, TDS, Patna shall also look into the cases of other employers in this case including respondent nos. 7 and 8 who have though deducted the TDS, but not deposited the same and have not submitted the returns.
CWJC No. 6441 of 2026
9. In this case, a counter affidavit has been filed by respondent no. 4 who is the Sub-Divisional Animal Husbandry Officer, Bhabhua, Kaimur. In his counter affidavit, unlike the stand of the same Department in CWJC No. 20499 of 2025, he has taken a stand that in view of the amendment introduced in Section 200(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act of 1961’) whereby a prescribed time limit has been provided for the amendment, the Department is unable to carry out amendment in respect of the periods prior to Assessment Year 2023-2024. According to him, because of the six years’ period of limitation introduced in matter of filing of an amended statement or in the matter of carrying out corrections, at this stage, the respondent is unable to modify the records maintained on the Income Tax portal.
10. It, however, appears to this Court that respondent no. 4 has not made any statement in his counter affidavit that earlier a statement/return of the TDS for the relevant years was filed by the Department.
11. To this Court, it appears that the statements made in the counter affidavit of respondent no. 4 are only half-hearted statements. The fact is that the respondent no. 4 has not filed the statement of TDS and return thereof. It is not a case of carrying out corrections/amendments in the filed return of the TDS, therefore, the respondent no. 4 is not correct in taking a stand such as in paragraph ‘9’ of the counter affidavit. We reject this stand.
12. We would briefly say that in terms of the scheme of Sections 200, 200-A and 201 of the Act of 1961, the respondent employers who deducted the TDS from the petitioner, but have not filed the returns and have not deposited the money are the assessee in default. According to the first proviso to sub-section (1) of Section 201, if any person including the Principal Officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee shall not be deemed to an assessee in default in respect of such tax if such payee-
(i) has furnished his return of income under Section 139;
(ii) has taken into account such sum for computing income in such return of income; and
(iii) has paid the tax due on the income declared by him in such return of income.
13. Sub-section (2) of Section 201 very clearly states that where the tax has not been paid after it is deducted, the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1-A) shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in sub-section (1).
14. Ms. Archana Sinha, learned Senior Standing Counsel for the Department has, having understood the scheme of the statute, submitted that this Court may pass an order directing the Department to recover the money from the employers who have deducted the money, but not deposited with the Department so far.
15. We are of the opinion that once the provision exists in the statute book for the recovery of the money from the assets of an assessee in default taking the said money as charge on all his assets, no separate direction from this Court is needed. Failure to act in terms of the statute cannot be explained by seeking a direction from the Court to act. It is for the competent authority in the Department to explain as to why they have not acted in terms of the statute so far against the assessee in default.
16. From the scheme of the statute, it is evident that the employer who deducts the money from the salary of the employee as a Tax Deducted at Source (TDS) acts as an agent and a hand of the Department of Income Tax in the matter of deduction, collection and remittance thereof to the Department. It is for that reason only the statute declares such person who failed to act and fulfill their obligations under the statute as an assessee in default. The petitioner cannot be punished for the default committed on the part of the employer.
17. In view of the above, we direct the Commissioner, Income Tax (TDS) to verify the statements/returns filed by respondent nos. 5 and 6 in CWJC No. 20499 of 2025 and after verification, he will do the needful to address the grievance of the petitioner.
18. Similarly, we direct respondent no. 4 in CWJC No. 6441 of 2026 to act in terms of the statutory provisions within a period of three weeks from today, file the statements/returns of the TDS as has been done by respondent nos. 5 and 6 in CWJC No. 20499 of 2025.
19. It will be open to the Commissioner, Income Tax (TDS), Patna to take all such action as may be required to ensure compliance by the employers.
20. Let this case be listed under the same heading on 12th of October, 2026 to report the compliance with the directions issued by the Court hereinabove.
