The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that once Tax Deducted at Source (TDS) is deducted then liability for non-deposit of TDS by deductor cannot be fastened on the deductee.
The assessee is a salaried employee employed with M/s. Falcon Tyres Ltd. at its Kolkata office and during the year received a salary of Rs. 17,40,264/-. The employer deducted the TDS from the salaries of the assessee of Rs. 3,96,700/-. However, the same was not deposited in the Government treasury.
The assessee filed the return of income on 30.03.2018 and claimed the credit for TDS deducted at the source of Rs. 4,10,292/-. However, the Assessing Officer (AO), Centralised Processing Centre (CPC) allowed the credit to the tune of Rs. 13,592/- in respect of TDS deducted at source thereby denying the credit of Rs. 3,96,700/- to the assessee on the ground that the same was not deposited by the employer M/s. Falcon Tyres Ltd. in the Government treasury.
The Commissioner of Income Tax (Appeal) [CIT(A)] also upheld the order passed by the AO, CPC on the ground that TDS deducted at the source of Rs. 3,96,700/- by the employer has not been deposited in the Government treasury and therefore, the assessee is not entitled to claim the credit thereof and thus, justified the upholding of the order passed by the AO, CPC.
The Two-member bench comprising of Rajesh Kumar (Accountant member) and Sonjoy Sarma (Judicial member) held that since the TDS deducted at source has not been deposited in the Government treasury by the employer, the assessee was not entitled to claim the credit thereof.
Where the TDS has been deducted at source from the salary which has not been deposited with the Government treasury, then the assessee cannot be called upon to deposit the demand arising out of non-credit of the said TDS by the Revenue.
Therefore, it was concluded that the issue of non-deposit of TDS by the deductor has been allowed in favour of the assessee by holding that once the TDS was deducted then the liability resulting from the non-deposit of TDS by the deductor cannot be fastened on the deductee. Thus, the appeal of the assessee was allowed.
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