No. 275/29/2014-IT-(B)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

Dated New Delhi, the 1st June, 2015

To,

The CCsIT (CCA)

Subject: Non-deposit of Tax Deducted at Source – regarding. Sir/Madam,

Grievances have been received by the Board from many taxpayers that in their cases the deductor has deducted tax at source from payments made to them in accordance with the provisions of Chapter-XVII of the Income-tax Act, 1961 (hereafter ‘the Act’) but has failed to deposit the same into the Government account leading to denial of credit of such deduction of tax to these taxpayers and consequent raising of demand.

2. As per Section 199 of the Act credit of Tax Deducted at Source is given to the person only if it is paid to the Central Government Account. However, as per Section 205 of the Act the assessee shall not be called upon to pay the tax to the extent tax has been deducted from his income where the tax is deductible at source under the provisions of Chapter- XVII. Thus the Act puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch cannot be enforced coercively.

3. This may be brought to the notice of all the assessing officers in your region so that if the facts of the case so justify, the assessees are not put at any inconvenience on account of default of deposit of tax into the Government account by the deductor.

4. This issues with the approval of Chairperson, CBDT.

Yours faithfully

(Sandeep Singh)

Under Secretary to the Govt. of India

More Under Income Tax

Posted Under

Category : Income Tax (25333)
Type : Featured (4127) Notifications (15369) Notifications/Circulars (30576)
Tags : Income Tax Notifications (9612) TDS (907)

0 responses to “Demand on account of tax /TDS credit mismatch cannot be enforced coercively”

  1. v.d.khanwalkar says:

    sir iwas working in western railway in assesment year 09-10and10-11 tan authority no. mums51129b had failed to credit my tds 22005and 49580 to 26AS due to which cpc has raised demand of86000 with interest and with held my refund authority is not paying attention pl guide

  2. Rupin Merchant says:

    The assessee has transferred his business from Individual to P. Firm. Around 40 different parties have deducted TDS in Individual a/c. They are not rectifing their mistake. The amount is around Rs.2.5 lakh. How, to get refund in that case in P. Firm. The assessee has not claimed TDS in his individual capacity also.

  3. NAMDEO CHAUDHARI says:

    Dear Sir,
    I have

    Res.Sir,
    In my case all the tax deducted at suorce by my employer and deposited to government account also.But my employer issued from no.16 to us the incorrect TAN was mentioned on form no.16, due to which when i filed my return i mentioned that TAN in the return. Then i got a demand notice from CPC regarding tax.I sent clerification to cpc, as well as rectification request also.Then from cpc i got reply that rectification rights transferred to related Jurisdiction income tax officer.and advised to contact.After that i sent copy of acknowledgment of return with copy of 26 AS. i sent necessary documents for 2 times , then also yet it is not rectified.In the previous year refund amount also adjusted against this demand.I sent response to Jurisdictional officer but the prolem remains unsolved.
    SIR, guide me what to do. whether i have personally visit to office. Because the refund of the year may be adjust again. pls. guide.

  4. vvmurthy says:

    The problem has many facets. Where TDS is deducted but not paid to govt. account ,it is a case of misfeasance and offence of defrauding govt.and the deductor has to be proceeded against. In the case of deductee ie the person from whose income the tds is made no default attaches to him, as also clarified by the CBDT instructions. But this remains on paper,and tax official will continue to enforce collection.
    There are cases where institutions like banks edu institutions universities etc, whose number is quite sizable, who after deducting tax,do not issue tds certificates. Reason is the function of uploading the TDS deducted and paid to the govt account for each individual as also preparing the TDS certificates, form 16 and 16A is outsourced to outsiders,including chartered accountants, who in turn entrust the work to their unqualified half knowledge irresponsible assistants. Umpteen instances are there where the correct and full particulars are not uploaded,even where PANos are correctly disclosed. Hence arises F 26AS not reflecting the full details. Rarely are f 16 and 16A are issued. “Issued” is a term misunderstood by these institutions. They have the obligation to despatch the certificates by post. They have forgotten and given up the duty of corresponding with clients by post. Sending SMS messages or certificates by email or uploading the certificates on the net, even if done perfectly – which unfortunately is not the case – may only serve miniscule techno-savvy section of the community, but it is a must and paramount that every client gets by post important documents like F16 16A etc within the statutory time limits. In many cases of bank accounts correct postal addresses are not updated. So the culprits are both the institutions like banks and the outsourcing contractor. They never bother to verify 100 per cent that individual TDS details are uploaded for each month and credit for which TDS is made and paid to govt. old well tested norms of multiple checks and rechecks are given a go bye. Names are spelt wrongly. Figures are incorrectly noted. Addresses are not updated. Any action which affects a person physically and financially are done unilaterally and the hapless victims are in the dark for periods long after the events taking place. The result is millions are affected by mismatch of TDS.Compare this with a bank abroad, who invariably send account statements by post. They enter into written correspondence on each issue affecting a client. Pay stubs showing progressive figures of payments and deductions including tds etc are invariably issued periodically in a year, and these serve as TDS Certificates. In India we have to download F 26 AS F 16 etc , which means an average citizen has to seek some body’s help which is an unnecessary inconvenience and burden, and which is necessitated by some one else’s failure to discharge his statutory obligation. We are all living in a hell of sycophants and white collar culture who hardly work even for an hour a day inspite of maximum comforts pay cheques and perqs they enjoy. They have forgotten basic human dignity. They see an opportunity to harass people rather than doing things correctly and truthfully. Civilisation is reducing the common man a victim of untold atrocities. Swami Vivekananda’s exhortations have no effect, and when that happens we are a mature nation. Arise man, be a human being.

  5. RAKESH PRASAD , ADVOCATE, GAYA , BIHAR says:

    The T.D.S. deducted and deposited to Govt account but due to non – filing of E-tds by the concerned department or due to mismatch of challan or PAN error the assessee has been served upon notices by the CPC Ghaziabad notices alongwith the challan attached. Now after this clearification the assessee will feel relax and the tax authorities should give credit of the tax credit mismatch on the basis of Form -16 issued by their concerned department whether manually or electronically.

  6. jpbapat says:

    Dear Sir,
    In my case the self assessment tax paid by me appears in form 26 AS but the Central Processing facility at Bangalore does not pick this amount and this computer automatically raises demand notice.

    Pls guide me what should I do.I am not that expert to file recitification request on line etc. My CA says do not worry since I have actualy paid the tax if the Income Tax people demand payment we will see. I am not happy with this reply.

    regards,
    jpbapat 11/6
    age 72 years

  7. vswami says:

    Offhand
    In view of the unambiguously provided legal bar on direct demand (sec 205),AO cannot , not only enforce, but even raise a demand. As such,any step for enforcement , coercively or otherwise, is a non-starter.A better and more specific , accordingly worded, directive was called for; so that, the correct legal position, that has , for no rhyme or reason,so far not been taken a serious note of by AOs, comes to be made more than clear once for all.

  8. deven kyada says:

    If deductor has not deposit TDS to the government account than respective assessee liable or not for payment of such tax ???

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