SHISHIR WASANT BORLE vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 67.1, DELHI & ANR.

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W.P.(C)/4280/2025HC DelhiDLHC01018431202504 April 2025Bench: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA3 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the writ petition. The Court set aside the impugned demand communicated by the letter dated 10.01.2020. Furthermore, the Court directed that any adjustment made by the Revenue from the refunds due to the petitioner in respect of other assessment years should be refunded to the petitioner as expeditiously as possible, preferably within a period of eight weeks from the date of the order. The Court noted that the issue involved was covered by its previous decision in Sanjay Sudan v. Assistant Commissioner of Income-tax and other similar decisions. The reasoning implicitly follows the principle that an employee cannot be held liable for the employer's failure to deposit TDS, especially when Section 205 of the Act prohibits such recovery. The ratio decidendi is that the employer's default in depositing TDS does not create a legally enforceable demand against the employee for the defaulted amount, and any refunds due to the employee cannot be adjusted against such invalid demands.

What were the facts?

The petitioner, Shishir Wasant Borle, filed a writ petition before the Delhi High Court challenging a letter dated 10.01.2020 issued by the Assistant Commissioner of Income Tax (ACIT). This letter demanded payment of outstanding tax demands of ₹7,63,340/- for Assessment Year (AY) 2011-12 and ₹7,96,240/- for AY 2012-13. These demands arose from the failure of the petitioner's former employer, Kingfisher Airlines Ltd., to deposit Tax Deducted at Source (TDS) on salaries paid to the petitioner. The Revenue had already adjusted a refund of ₹1,38,390/- for AY 2020-21 against these alleged outstanding demands. The petitioner sought to quash the demand letter, the demand references, and the adjustment of the refund, praying for the refund of the adjusted amount with interest and a direction to extinguish the demands.

What were the issues?

1. Whether the demand raised by the Revenue for AY 2011-12 and AY 2012-13, arising from the employer's failure to deposit TDS, is legally sustainable against the petitioner, particularly in light of Section 205 of the Income Tax Act, 1961 (the Act)? 2. Whether the adjustment of the petitioner's refund for AY 2020-21 against the alleged outstanding demands for AY 2011-12 and AY 2012-13 is permissible under the Act? Assessee's Arguments: The petitioner argued that the demands for AY 2011-12 and AY 2012-13 were illegal and contrary to the provisions of the Act, specifically Section 205, which prohibits the recovery of tax from a person when the employer has failed to deposit TDS. The petitioner also contended that the adjustment of the refund for AY 2020-21 against these demands was unlawful and sought its refund along with interest. The petitioner relied on the decision in Sanjay Sudan v. Assistant Commissioner of Income-tax. Revenue's Arguments: The Revenue accepted notice and did not record any specific arguments against the petitioner's claims in the provided judgment.

Which sections of the Income-tax Act were involved?

Section 205,Section 143(1)(a)

AI-generated summary — verify with the full judgment below

$~33 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 4280/2025, CM APPL. 19795/2025 & CM APPL. 19796/2025

SHISHIR WASANT BORLE

.....Petitioner Through: Mr. Nikhil Goyal & Mr. Bankim Garg, Advocates.

versus

ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 67 1, DELHI & ANR.

.....Respondents Through: Mr. Anurag Ojha, Sr. Standing Counsel with Ms. Hemlata Rawat, Jr.SC, Mr. V.K. Saksena, Jr.SC with Mr. Dipak Raj & Mr. Subham Kumar, Advocates.

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU

HON'BLE MR. JUSTICE TEJAS KARIA

O R D E R %

04.04.2025 1. Issue notice. The learned counsel for Revenue accepts notice. 2. The petitioner has filed the present petition, inter alia, praying as under: “(i) Issuance a writ in the nature of Certiorari for quashing of a letter dated 10.01.2020 (Annexure P-12) being illegal and contrary to the provisions of the Act; (ii) Issue a writ in the nature of Certiorari for quashing demand reference 2012201110023785892T in AY22 2011-12, and demand reference 2013201237048723512T in AY 2012-13, (Annexure P-9), created by the Respondents being illegal and contrary to the provisions of the Act;

(iii) Issue a writ in the nature of Certiorari, quashing the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 23:40:24

adjustment of the refund for the Assessment Year 2020-21 against the alleged outstanding demand for the Assessment Year 2011-12, being illegal and bad in law. Further, direct the Respondents to refund the sum of Rs. 1,38,390/-, which was unlawfully adjusted on 12.02.2021, as communicated vide intimation dated 10.02.2021 (Annexure P-7), along with interest as per the provisions of the Act (iv) Issue a writ in the nature of Mandamus directing the Respondents to extinguish the demand created against the Petitioner for AY 2011-12 and AY 2012-13 in terms of section 205 of the Act; (v) Issue a writ in the nature of Mandamus restraining the Respondents from adjusting any refund due to the petitioner against any demand reflected for the AYs 2011-12, and 2012- 13;”

3.

The petitioner has filed the present petition impugning an letter dated 10.01.2020 passed by the Assistant Commissioner of Income Tax Circle 69(1), Delhi [AO] calling upon the petitioner to pay an outstanding demand of ₹7,63,340/- in respect of assessment year [AY] 2011-12 and ₹7,96,240/- in respect of AY 2012-13. The said demands have been raised pursuant to an intimation under Section 143(1)(a) of the Act. The demand is on account of failure on the part of the petitioner’s then employer Kingfisher Airlines Ltd. to deposit the tax deducted at source [TDS]. There is no cavil that the Kingfisher Airlines Ltd. had deducted TDS on the salaries paid to the petitioner which were not deposited with the department resulting in the outstanding demand. 4. Concededly, the issue involved in the present case is covered by the decision by this Court in Sanjay Sudan v. Assistant Commissioner of Income-tax: Neutral Citation: 2023:DHC:1342 as well as other decisions. 5. The Revenue has recovered part of the said demand by This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 23:40:24

adjustment of the refund is due in later assessment years. 6. In view of the above, the present petition is allowed. 7. The impugned demand, as communicated by the letter dated 10.01.2020, is set aside and any adjustment made by the Revenue from the refunds due to the petitioner in respect of other assessment years are directed to be refunded to the petitioner as expeditiously as possible and preferably within a period of eight weeks from date.

VIBHU BAKHRU, J

TEJAS KARIA, J APRIL 04, 2025/‘A’

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This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 23:40:24

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