SHRI. ADIT GUPTA,BANGALORE vs. COMMISSIONER OF INCOME TAX (APPEALS), BANGALORE

PER S. JAYARAMAN, ACCOUNTANT MEMBER : This is an appeal filed by the assessee against the order of the

CIT(A), Benagaluru-2, in ITA No 164/CIT(A)-2/15-16 dt. 16.05.2016, for

the assessment year 2012-13.

Airlines Ltd, filed his return on 29.06.2013, declaring income of

Rs.67,42,890/-. The return was processed by the CPC on 20.02.2015.

The assessee sought rectification u/s.154, seeking credit of TDS which

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was rejected in the original order, for the reason that the tax credit was not

available in the assessee’s account in Form 26AS.

salary certificates issued by his employer, Kingfisher Airlines Ltd, for the

period between July and November, 2011, showing that tax of

Rs.10,50,588/- claimed by him in his return has been deducted from his

salary by the employer. Since tax has been deducted by the employer but

not paid to the Government account, therefore, he claimed that the said the

default has been committed by the employer. The CIT (A) observed that as

per Section 199, the credit to the assessee is to be allowed when the TDS

amount is actually paid. So she held that the action of the AO is in

accordance with law. However, the CIT (A) held that as per section 205,

the assessee shall not be called upon to pay the tax to the extent tax has

been deducted from his income in accordance with the provisions of

Chapter XVII. Thus, the Act puts a bar on direct demand against the

assessee in such cases and the demand on account of tax credit mis-

match cannot be “enforced coercively “ and hence the CIT (A) held that

non-payment of amount deducted from salary of the employee cannot be

enforced coercively against him. While passing the appellate order, the CIT

(A) held that interest u/ss.234A, 234B and 234C is mandatory and

consequential in nature to that extent. This is on account of non-payment

of tax deducted from the employee by the employer. The same treatment

has to be given in respect of tax demand on account of TDS deducted but

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not paid to the Government. Aggrieved against such observation, the

assessee filed this appeal.

assessee and in this regard relied on the following circular/cases:

i) CBDT OM F. No.275/29/2014, dt.11.03.2016 ii) Kar High Court judgment in Anusuya Alva v. DCIT [(2005) 147 TAXMAN 152] and iii) Bombay High Court judgment in Yashpal Sahni v. ACIT [(2007) 165 Taxman 144 (Bom)

rectification order dt. 20.02.2015. A perusal of the order u/s.154 shows

that the assessee claimed Rs.19,76,925/- under the head ‘pre-paid

taxes’ comprising of :

TDS : Rs.16,32,885

140A : Rs. 3,44,040.

Whereas the CPC allowed a total tax credit of Rs.9,18,497/- comprising of

TDS of Rs.5,74,457/- and self-assessment tax of Rs.3,44,040/-. Thus, TDS

of Rs. 10,58,428/- deducted from the assessee’s salary has not been

given credit in this order as the assessee’s employer has not paid it to the

Govt. Account. That is why as against Rs.76,710/- interest liability

computed by the assessee, the CPC determined the interest liability

u/ss.234A, 234B and 234C at Rs.5,92,588/, apparently for want of TDS

payment. Although, the levy of interest u/ss.234A, 234B and 234C are

mandatory, the interest liability in this case apparently arises on account

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of non-payment of TDS by the employer . As there is a bar against the

direct demand on the assessee u/s 205 to the extent of Rs.10,58,428/-

which has been deducted , the levy of interest made u/ss.234A, 234B and

234C proportion to the shortfall of the impugned amount at Rs.10,58,428/-

cannot be enforced from the assessee. This decision, however, does not

preclude the AO in levying the interest u/ss. 234A, 234B and 234C on

taxes other than the impugned TDS and enforcing them.

Order pronounced in the open court on 21st day of April 2017.

Sd/- Sd/-

(SUNIL KUMAR YADAV) (S. JAYARAMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER