| SooperKanoon Citation | sooperkanoon.com/75801 |
| Court | Income Tax Appellate Tribunal ITAT Mumbai |
| Decided On | Aug-13-2007 |
| Judge | O Narayanan, S Chawla |
| Appellant | Shri Pranab Kumar Chakraborty |
| Respondent | The Dy. Commissioner of |
1. The learned Cy. CIT was not justified in failing to appreciate and in not complying with the directions given by the learned CIT (Appeals) in his appellate order dated 12.02.2001. The learned CIT(Appeals) has also erred in dismissing the appeal of the assessee in this regard.
2. The appellant specifically challenges the following statements, findings, conclusions of the learned CIT (Appeals) in para 2.5 of his order dated 21.10.2004: (a) No evidence has been filed by the appellant regarding T.D.S. deducted.
(b) Credit for T.D.S. cannot be given in the absence of statutory certificate.
3. The learned CIT(Appeals) has erred in holding that the Assessing Officer was justified in not allowing the credit of tax claimed by the appellant.
4. The appellate order passed by the learned CIT(Appeals) is not valid and is not in accordance with law.
5. The learned CIT (Appeals) was not justified in confirming the charging of interest Under Section 234A, 234B and 234C. The appellant denies his liability in respect of the same.
3. We heard Shri Hiro Rai, the learned Counsel appearing for the assessee and Shri D.Z. Patel, the learned Senior D.R. appearing for the Revenue.
4. The crucial question involved in this appeal is the question of credit available to the assessee against the tax deducted at source by his former employer. The employer has already terminated the service of the assessee. According to the assessee, the tax has been deducted by the employer every time the payment of salary was made. But the employer has not so far furnished Form No. 16 or any other relevant evidence to prove that tax has been deducted from the salary paid to the assessee. The assessee is not in a position to enforce the furnishing of such relevant document from his former employer. But, at the same time, the assessee has filed copies of pay slips for two months, i.e., April and May 1996 to show that income-tax was deducted from those payments. This is a prima facie evidence to show that the former employer has been deducting income-tax from the salary paid to the assessee. But as far as the Assessing Officer is concerned, obviously, this alone is not sufficient. In order to give credit for the tax deducted at source, the Assessing Officer must have the original document or evidence to support the claim. In the present case that is not available, even though it was not because of the fault of the assessee.
5. This is the dilemma faced by the lower authorities in the present case. It is also true that the Assessing Officer has made certain attempt to collect the details of tax deducted at source and paid over to the Government from the employer-company. But the Assessing Officer was not successful.
6. Now coming to the point in question, we have to say that the issue cannot be kept for long, open ended, without any remedy. We also find that the assessee cannot be penalized for no fault of his. In this context, we have to refer to the recent judgement of the Bombay High Court delivered on 18 July, 2007, in the case of Yashpal Sahni v. ACIT.The judgement has been delivered by the Bombay High Court in Writ Petition No.950 of 2006. In that case, the employer of the assessee had deducted tax at source, but the assessee could not produce Form No. 16 before the Assessing Authority. But the assessee has proved the deduction of tax by other documentary evidences including pay slips and bank pass book. The Court has held in paragraph 24 of its judgement that "...the fact the petitioner is not entitled to the credit of the tax deducted at source for the non-issuance of the TDS certificate by the respondent No.6, cannot be a ground to recover the amount of tax deducted at source from the petitioner. In other words, even if the credit of the TDS amount is not available to the petitioner-assessee for want of TDS certificate, the fact that the tax has been deducted at source from salary income of the petitioner would be sufficient to hold that as per section 205 of the Act, the revenue cannot recover the TDS amount with interest from the petitioner once again...." 7. The Hon'ble Court continued further in paragraph 25 that "...In the result, the petition succeeds. As the respondent No. 6 had deducted the tax at source from the salary income of the petitioner the revenue could not have recovered the said amount with interest from the petitioner in view of the bar contained in Section 205 of the Act.
Accordingly, the revenue is directed to refund to the petitioner within 8 weeks from today the amount of Rs. 17,89,587/- with interest @ 6% from the date of recovery till the date of payment. Though the credit of the tax deducted at source is not available to the petitioner, since the said liability is not recoverable from the petitioner, the revenue is directed to earmark the said TDS liability as 'not recoverable' from the petitioner...." 8. From the above, it is clear that the Court has held that once the employer has deducted the tax at source, the employee-assessee cannot be held responsible for the payment once again and any such demand raised against such employee-assessee, cannot be recovered.
9. The ratio of the above decision must apply to the present case also.
But the problem in the present case is that the assessee has furnished the pay slips only for two months and there are no documentary evidences in respect of the remaining ten months. As the assessee is not in a position to procure the said details and certificate from his former employer, it is not possible to expect that the assessee would be able to file such details and evidences before the Assessing Authority. If taxes were deducted at source from the entire salary paid to the assessee, then it is the duty of the former employer of the assessee to remit the amount to the credit of the Government of India.
If the amounts were not so remitted, the assessee's former employer is an "assessee in default". Moreover, if the employer has not made the payment to the credit of the Government, it is to be seen that the employer is retaining the money due to the Govemment.
10. Therefore, it is all the more the duty of the Assessing Authority to see that the said amount of money is recovered from the former employer of the assessee. Therefore, it is the duty of the Assessing Officer to use his statutory authority by enforcing the appropriate provisions of the Income-tax Act to see that the details of payment made by the former employer are collected and if not such payments were made by the former employer, the payments are made by the employer. The Assessing Authority may also take the assistance of the Assessing Authority having jurisdiction over the former employer of the assessee, M/s. Skyline NEPC Ltd. The Assessing Authority is directed to enforce his statutory powers and authority to collect the said details and evidences/to recover the payment from the former employer. If it is found that the tax has been deducted from the salaries paid to the assessee, no recovery shall be made from the assessee. If the Assessing Officer is able to obtain the IDS certificate itself, then credit shall be given to the assessment account of the assessee.
11. The issue is remitted back to the Assessing Officer for proceeding further in this matter as directed and in accordance with law. The order of the Assessing Authority as well as the CIT(A) are, therefore, set aside. The file is remitted back to the Assessing Authority.
12. In result, this appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the open Court at the time of hearing on the 7^th day of August, 2007.