CHENTHANMARA KP NAIR,MUMBAI vs. DY. COMMISSIONER OF INCOME TAX - 42(2)(1), MUMBAI, MUMBAI

In this appeal, the Assessee has raised the following grounds: –

The brief facts of the case are that the assessee is an individual and was working as General Manager - Marketing in M/s. Unimark Remedies Limited. For the year under consideration, the assessee filed its return of income on 28.07.2018, declaring a total income of Rs.17,14,460/-. During the year, the assessee declared salary income to the tune of Rs.21,20,760/- and claimed credit of TDS of Rs.3,44,989/- deducted from his salary income by M/s. Unimark Remedies Limited. The return filed by the assessee was processed vide intimation dated 12.02.2019 issued under section 143(1) of the Act by the AO–CPC accepting the return of income declared by the assessee. However, the AO–CPC did not grant the credit of TDS amounting to Rs.3,44,989/- on the assessee’s salary income. The learned Additional / Joint CIT(A), vide impugned order, after taking into consideration the fact that though the TDS was deducted by the employer, but the employer failed to deposit the same to the Government Treasury, following the instructions issued by the CBDT, directed the AO to not enforce the demand collected as per the provisions of section 205 of the Act. Being aggrieved by the non- granting of TDS credit in relation to the salary income, the assessee is in appeal before us.

We have considered the submissions of both sides and perused the material available on record. During the hearing, the learned AR submitted that the assessee received a salary amounting to Rs.21,41,116/- from his employer, namely M/s. Unimark Remedies Limited. It was further submitted that on the said salary income, the employer deducted TDS amounting to Rs.3,44,989/-. In this regard, the learned AR referred to the manual salary certificate (Form 16) issued by the employer, which forms part of the paper book at pages 9 to 11. The learned AR submitted that the employer did not issue a system-generated Form 16 but instead issued a manual salary certificate, as mentioned above. It was further submitted that the employer has deducted the TDS but has not deposited the same with the Government Treasury, and hence the TDS credit has not been reflected in Form 26AS. The learned AR submitted that, in this regard, the assessee made all possible efforts to communicate with the deductor company for the payment of TDS and filing the revised return of TDS in order to claim the TDS credit. But the company has failed to pay the TDS to the Government.

Upon perusal of the impugned judgment of the Tribunal with the assistance of the learned Counsel for the parties, we notice that the Revenue had objected to the assessee's claim of Tax Deducted at Source (for short "TDS") from the payments made to the assessee on the ground that, there was mis- match in the TDS certificate issued by the deductors and the aggregate amounts arrived at as appearing in form 26-A. The Tribunal referred to and relied on the decision of this Court in case of Yashpal Sahni 293 ITR 539 and observed that, in case, the deductor has failed to upheld the correct details in form 26-A the benefit should be given to the assesssee on the basis of evidence produced before the Department. Resultantly, the Tribunal only directed the Assessing Officer to verify the correct facts and give credit of TDS to the assessee. No question of law arises.

At this juncture, we may also refer to the decision rendered by Hon’ble Gujarat High Court In the case of Devarsh Provinbhal Patel vs. ACIT (R/Special Civil Application No. 12965 of 2018 dated 24-09-2018), wherein Hon’ble Gujarat High Court has held that even If the employer has failed to deposit the TDS so deducted from the salary of the assessee to the credit of Central Government, still the department cannot deny the benefit of tax deducted at source.

The learned DR could not bring any material on record to deviate from the findings as rendered by the Co-ordinate Bench in the aforesaid decision in a similar factual matrix. Therefore, respectfully following the decision of the Co-ordinate Bench cited supra, we direct the AO to grant the assessee the (A.Y. 2018-19) 5 credit of TDS deducted from his salary for the year under consideration. Accordingly, the grounds raised by the assessee are allowed.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 26/09/2025