Sanjay Sudan Vs. ACIT (Delhi High Court)
Assessee cannot be called upon to pay the tax which has been deducted at source from his income, even though not deposited by his employer – Quashes demand on employee arising from TDS not deposited by Kingfisher Airlines.
Delhi High Court allows Assessee’s writ petition, quashes the demand arising from tax deducted at source by Kingfisher Airlines (Assessee’s employer) which was not duly deposited; Holds that the Assessee cannot be called upon to pay the tax which has been deducted at source from his income, even though not deposited by his employer, under Section 205 read with CBDT Instruction dated 01.06.2015;
Further holds that the said demand cannot be adjusted against the future refund payable to the Assessee, as it will amount to indirect recovery of tax and grants Assessee the refund of Rs. 1.94 Lacs due to him for Assessment year 2015-16; Assessee-Individual, was an employee of Kingfisher Airlines and for Assessment year 2012-13 Assessee’s employer withheld Rs. 13.98 Lacs as withholding tax payable on salary, which was reflected in Form 16;
Revenue found that Assessee’s employer did not deposit the withholding tax for the relevant Assessment year and served Assessee with notice raising the demand of Rs. 11.62 Lacs; Revenue did not grant the Assessee a refund of Rs. 1.94 Lacs due to him for Assessment year 2015-16 because of the outstanding demand concerning Assessment year 2012-13 and set off the said refund against demand; Aggrieved Assessee preferred the present writ petition;
High Court peruses Section 205 and observes that it provides that the Assessee shall not be called upon to pay the tax to the extent to which tax has been deducted from his income; Analyses CBDT Instructions dated 01.06.2015, which provides that since the Act places a bar on a direct demand qua the deductee, the same cannot be enforced coercively; Thus, holds that Section 205 read with CBDT instruction dated 01.06.2015, clarifies that the Assessee cannot be called upon to pay tax, which has been deducted at source from his income;
Observes that adjustment of demand against future refund, amounts to the indirect recovery of tax, which is barred under Section 205; Opines that, “the instruction merely provides that no coercive measure will be taken against the assessee, in our view, falls short of what is put in place by the legislature via Section 205 of the Act”;
Holds that neither the demand for tax withheld by the deductor be recovered from the Assessee nor can the same amount be adjusted against the future refund, if any, payable to the Assessee; Thus, quashes the demand notice and reasserts that the Revenue is not entitled in law to adjust the demand raised for Assessment year 2012-13 against any other Assessment year;
Allows Assessee’s claim for the refund of Rs. 1.94 Lacs for Assessment year 2015-16, which was not disputed by the Revenue. [In favour of assessee] (Related Assessment year : 2012- 13) – [Sanjay Sudan v. ACIT Date of Judgement : 17.02.2023 (Del.)]
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