JASJIT SINGH,NEW DELHI vs. ITO, NEW DELHI

per the directions of Hon’ble Delhi High Court vide order dated 01.12.2011 despite passing order of appeal effect dated 31.01.2012

by the AO and same is liable to be refunded to the assessee along

with interest u/s 244A of the Act.

Hon’ble High Court of Delhi in Writ Petition (C) 8452/2011 in

case of assessee, amount of Rs.50,00,000/- was deposited on

20.12.2011 and remaining amount of Rs.50,00,000/- each was to

be deposited on 15.02.2012 & 15.04.2012. However, vide order

dated 07.03.2012, copy of which is available at pages 19 to 21 of

the second paper book, Hon’ble High Court dispensed with the condition of depositing amount of Rs.50,00,000/- each on or before

15.02.2012 & 15.04.2012. It is also not in dispute that while

giving effect to the order dated 31.01.2012 passed by the ld.

CIT(A) in quantum appeal filed by the assessee, AO has passed an

order dated 27.01.2015 in the form of ITNS-150 making order to

refund an amount of Rs.50,00,000/- along with interest of

Rs.9,25,000/- (total Rs.59,25,000/-), available at page 10 of the

second paper book, which is extracted as under :-

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13 ITA No.4096/Del./2016 ITA No.4097/Del./2016 16. When we examine the facts as to deducting tax at source to

the tune of Rs.2,04,96,695/- by M/s. Koutons Group on account of

capital gains earned by the assessee, though not deposited with the state exchequer and the fact that subsequently, assessee was made

to deposit Rs.50,00,000/- with the Revenue Department as per

order of the Hon’ble Delhi High Court, it has become apparently

clear that due to apathy of the Revenue Department, assessee has

been pushed to protracted litigation since 2010 as he is running

from pillar to post to get refund otherwise admissible to him.

Department itself has accepted that TDS to the tune of

Rs.2,04,96,695/- of assessee was deducted by the Koutons Group

though not deposited with the state exchequer, the assessee cannot be treated as “assessee in default” and as such cannot be denied the

credit thereof with consequential refund. When deductor of TDS,

Koutons Group in this case, made a deduction under statutory

obligation on behalf of the Revenue as its agent, in case, there is

any omission on the part of the deductor in depositing the tax

deducted at source, it is liable to be prosecuted u/s 409 of the

Indian Penal Code being an agent of Revenue Department.

14 ITA No.4096/Del./2016 ITA No.4097/Del./2016 18. It is pertinent to mention here that the Revenue Department

has not taken any action under the Act or under the Indian Penal

Code against the Koutons Group rather assessee had filed a

complaint with the concerned police station, available at pages 128

to 133 of the paper book, against Koutons Group and its Directors

for illegal misappropriation of an amount of Rs.2,04,96,695/- and

this intimation was given to the Revenue Department. Strangely

enough, Revenue Department has not moved the law into motion

even after filing the complaint by the assessee.

Chandra Jain vs. UOI (2019) 103 taxmann.com 106 (Bombay)

while deciding the identical issue directed the Revenue Department

to make coercive recovery of such unpaid tax from the deductor

and to refund the amount to the assessee within four weeks by

returning following findings :-

“6. Facts on record are not seriously in dispute. As noted, the petitioner sold an immovable property for sale consideration of Rs.9 crores. The purchasers paid only Rs. 8 crores 91 lakhs retaining Rs. 9 lakhs towards TDS. The department does not argue that this amount of Rs. 9 lakhs so deducted is not in tune with the statutory requirements. It appears undisputed that the deductors did not depositing such amount in the Government revenue. Under the circumstances, the petitioner is asked to pay the said sum again, since the department has not recognized this TDS credit in favour of the petitioner. 7. Section 205 of the Act carries the caption "Bar against direct demand on assessee". The section provides that where

15 ITA No.4096/Del./2016 ITA No.4097/Del./2016 tax is deducted at the source under the provisions of Chapter XVII, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income. This provision came up for consideration before division bench of this Court in case of Yashpal Sahni v. Rekha Hajarnavis Asstt. CIT [2007] 165 Taxman 144/293 ITR 539. It was a case where the employer while paying salary to the employee had deducted tax at source Rs. 6.66 lakhs. Subsequently, disputes arose between the employer and employee due to which service of the employee was terminated. The employee filed the return of income claiming credit of TDS of Rs. 6.66 lakhs. The Assessing Officer issued intimation under Section 143(1)(a) of the Act denying credit of TDS of Rs. 6.66 lakhs on the ground that such amount was not deposited by the employer. This Court in such background after referring to Section 205 of the Act held and observed as under:-- "20. From the language of Section 205, it is clear that once the tax is deducted at source, the same cannot be levied once again on the assessee who has suffered the deduction. Once it is established that the tax has been deducted at source from the salary of the employee, the bar under Section 205 of the Act comes into operation and it is immaterial as to whether the tax deducted at source has been paid to the Central Government or not, because elaborate provisions are made under the Act for recovery of tax deducted at source from the person who has deducted such tax.

16 ITA No.4096/Del./2016 ITA No.4097/Del./2016 of the petitioner, the respondent No. 6 has not issued the TDS certificate in Form No. 16 to the petitioner. As a result, the petitioner is not entitled to avail credit of the tax deducted at source. However, once it is established that the tax has been deducted at source, the bar under Section 205 of the Act comes into operation and the revenue is barred from recovering the TDS amount once again from the employee from whose income, TDS amount has been deducted. It is pertinent to note that the purpose of issuing TDS certificate under Section 203 of the Act is to enable the assessee to avail credit of the tax deducted at source in the relevant assessment year. If the TDS certificate is not issued, then under Section 199 of the Act, the assessee from whose income, tax has been deducted at source will not be entitled to take credit of the said amount. In that event, on account of the non availability of the credit, the assessee would be liable to pay tax once again even though the tax was deducted at source. Thus, it would be a case of double taxation which is not permissible in law. To avoid such anomaly, Section 205 has been enacted, to the effect that, once the tax is deducted at source by the employer-company, then, the person from whose income, the tax has been deducted at source shall not be called to pay the said tax again. From the language of Section of 205 of the Act, it is clear that the bar operates as soon as it is established that the tax has been deducted at source and it is wholly irrelevant as to whether the tax deducted at source is paid to the credit of Central Government or not and whether TDS certificate in Form No. 16 has been issued or not. Also the mere fact that the employer may not issue TDS certificate to the employee does not mean that the liability of the employer ceases. The liability to pay income tax if deducted at source is upon the employer. 23. As held by the Gauhati High Court in the course of Omprakash Gattani (supra), once the mode of collecting tax by deduction at source is adopted, that mode alone is to be adopted for recovery of tax deducted at source. Although it is obligatory on the part of the person collecting tax at source to pay the said TDS amount to the credit of the Central Government within the stipulated time, if such person fails to pay the TDS amount within the stipulated time, then, Section 201 of the Act provides that such person shall be

17 ITA No.4096/Del./2016 ITA No.4097/Del./2016 deemed to be an assessee in default and the revenue will be entitled to recover the TDS amount with interest at 12% p.a. and till the said TDS amount with interest is recovered there shall be a charge on all the assets of such person or the company. Penalty under Section 221 of the Act and rigorous imprisonment under Section 276B of the Act can also be imposed upon such defaulting person or the company. Thus, complete machinery is provided under the Act for recovery of tax deducted at source from the person who has deducted such tax at source and the revenue is barred from recovering the TDS amount from the person from whose income, tax has been deducted at source. Therefore, the fact that the revenue is unable to recover the tax deducted at source from the person who has deducted such tax would not entitle the revenue to recover the said amount once again from the employee- assessee, in view of the specific bar contained in Section 205 of the Act. 24. As stated earlier, in the present case the petitioner-assessee has established that from his salary income, tax has been deducted at source by the employer-respondent No. 6 and, therefore, the revenue has to recover the said TDS amount with interest and penalty from the respondent No. 6 alone and the revenue cannot seek to recover the said amount from the petitioner-assessee in view of the specific bar contained under Section 205 of the Act. The fact that 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." 8. The situation arising in the present petition is similar. The department does not contend that the petitioner did not suffer deduction of tax at source at the hands of payer, but contends that the same has not been deposited with the Government revenue. As provided under Section 205 of the Act and as elaborated by this Court in case of Yashpal Sahni

18 ITA No.4096/Del./2016 ITA No.4097/Del./2016 (supra) under such circumstances the petitioner cannot be asked to pay the same again. It is always open for the department and infact the Act contains sufficient provisions, to make coercive recovery of such unpaid tax from the payer whose primary responsibility is to deposit the same with the Government revenue scrupulously and promptly. If the payer after deducting the tax fails to deposit it in the Government revenue, measures can always be initiated against such payers. 9. Counsel for the revenue is correct in pointing out that for long after issuing notice under Section 266(3) of the Act, petitioner has not brought this fact to the notice of the respondent No. 2 which led the respondent No. 2 to make recoveries from the bank account of the petitioner. In that view of the matter, at best petitioner may not be entitled to claim interest on the amount to be refunded. 10. Under the circumstances, petition is disposed of with following directions: (i) Taking note of the fact that the respondents have lifted the bank account attachment, no need to quash the attachment. (ii) Two impugned notices dated 5th February, 2018 as at annexure "B" to the petition and 10th September, 2018 as at annexure "J" to the Petition for recovery are quashed. (iii) The respondents shall refund a sum of Rs. 3,67,600/- to the petitioner within four weeks from today. If so done, there shall be no interest liability, failing which beyond such period the respondents shall pay simple interest at the rate of 8% p.a. on such amount till actual payment.”

amount of Rs.50,00,000/- deposited by the taxpayer vide order

(supra) passed by Hon’ble High Court order and capital gains

accrued to the assessee is provided by the assessee, which is

extracted below for read perusal :-

19 ITA No.4096/Del./2016 ITA No.4097/Del./2016 “ ASSESSMENT YEAR 2009-10 COMPUTATION SHEET OF TAX REFUNDABLE TDS deducted at source by Koutons Group Rs.2,04,96,655/- Amount deposited as per order of Delhi High Court dated 01.12.2011 Rs. 50,00,000/- Total : Rs.2,54,96,655/- Less : Tax payable as per ITNS 150 Dated 18.06.2015 Rs. 40,84,589/- Total Refund Due : Rs.2,14,12,066/- Needless to say that this computation would be subject to the verification of the AO.”

decisions rendered by the Hon’ble High Court discussed in the

preceding paras, we are of the considered view that TDS to the

tune of Rs.2,04,96,695 deducted by the Koutons Group on account

of capital gains earned by the assessee and amount of Rs.50,00,000

deposited by the assessee with the Revenue Department minus the

capital gains depicted in the table given in the preceding para is

liable to be refunded along with statutory interest within two

months from the date of this order.

SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 3rd day of March, 2021/TS

20 ITA No.4096/Del./2016 ITA No.4097/Del./2016