Shravan Rustagi Vs ACIT & Anr. (Delhi High Court)
TDS credit – tax deducted from salary but not deposited by employer – employee cannot be denied credit for employer’s default – refund of recovery with interest
Summary: The Delhi High Court considered a writ petition concerning Assessment Year 2011-12, where an intimation dated 23.09.2025 issued under Section 143(1) of the Income Tax Act, 1961 raised a demand against Shravan Rustagi because credit for TDS of Rs.5,59,792 deducted from his salary by Kingfisher Airlines, his erstwhile employer, was not granted. The petitioner contended that the issue was covered by the Delhi High Court’s judgment dated 01.10.2024 in Satwant Singh Sanghera Vs ACIT, W.P.(C) 13765/2024. It was further submitted that a substantial portion of the demand had been recovered by the Revenue from a refund due to the petitioner and that, therefore, the petitioner was entitled not only to setting aside of the intimation to the extent of the denied TDS credit but also to refund of the amount recovered. The Revenue did not dispute the legal position advanced by the petitioner.
The High Court observed that the respondent could perhaps have been justified in disallowing the TDS collected by Kingfisher Airlines because the deductor had not deposited the amount, but the petitioner could not be blamed for the deductor’s default or deprived of his legitimate right, as held in Satwant Singh Sanghera. The Court accordingly allowed the writ petition and quashed and set aside the intimation dated 23.09.2025 for AY 2011-12 to the extent that it related to non-grant of TDS credit by Kingfisher Airlines. The consequential demand and recovery made from the petitioner’s refund were also declared illegal. The respondent was directed to refund the amount recovered from the petitioner together with applicable interest under Sections 244(1) and 244(1A) of the Act within three months from the date of the order. The Court clarified that its order was confined to amounts deducted by Kingfisher Airlines and that any other demand raised by the Assessing Officer was not to be affected. The petition and pending applications were accordingly disposed of.
