Payee cannot be denied TDS Credit for Failure of deductor to pay TDS

Ashok Kumar B. Chowatia Vs JCIT (TDS) (Madras High Court)

To the extent tax was deducted by the second respondent and not remitted by the second respondent to the Income Tax Department, recovery can be only directed against the second respondent as the second respondent is the assessee in default. The petitioner cannot be made to pay tax twice. Recovery of any of such Tax Deducted at Source but not remitted by the second respondent has to be recovered only from the second respondent.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

By this common order all the four writ petitions are being disposed. The respective petitioners have challenged the respective impugned demand notices which called upon them to clear the arrears of tax purportedly due from them.

2. These demand notices are challenged by the respective petitioners on the ground that the tax that has been demanded as arrears of tax from the petitioners Tax Deducted at Source by the second respondent but was not paid the credit of the Central Government and therefore the petitioners cannot be fastened with the tax liability as the second respondent is an assessee in default within the meaning of Section 201 of the Income Tax Act, 1961.

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