Ashish Ranjan Vs ITO (ITAT Patna)
Employee Not Liable for Employer’s TDS Default — Demand for Non-Deposit of Salary TDS Quashed
The Patna Bench of the ITAT allowed the assessee’s appeal and set aside the demand of ₹9.42 lakh raised due to non-deposit of TDS by the employer, holding that the employee cannot be fastened with tax liability once TDS is deducted from salary.
The assessee, an employee of M/s Think and Learn Pvt. Ltd., had received salary after deduction of TDS, but the employer—subsequently gone into liquidation—failed to deposit the deducted tax with the Government. While processing the return under Section 143(1), the CPC denied TDS credit due to mismatch with Form 26AS, resulting in demand, which was upheld by the CIT(A).
The Tribunal held that the issue is squarely covered by Section 205 of the Income-tax Act, which bars direct demand on the assessee to the extent tax has been deducted at source. Relying extensively on the Delhi High Court decision in Chintan Bindra v. DCIT and Sanjay Sudan v. ACIT, the ITAT ruled that:
- Once tax is deducted from salary, the employee’s obligation ends;
- Non-deposit by the employer cannot be recovered from the employee, even indirectly; and
- The Revenue’s remedy lies only against the employer under Sections 200/201, not against the deductee.
Accordingly, the ITAT quashed the demand and directed the AO not to recover any amount from the assessee, granting full relief.
FULL TEXT OF THE ORDER OF ITAT PATNA
