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Income Tax Appellate Tribunal, BENGALURU BENCH C, BENGALURU
Before: SHRI SUNIL KUMAR YADAV
PER S. JAYARAMAN, ACCOUNTANT MEMBER :
This is an appeal filed by the assessee against the order of the CIT(A), Benagaluru-2, in dt. 16.05.2016, for the assessment year 2012-13.
The assessee, an individual, is a salaried employee of Kingfisher 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 ITA.1387/Bang/2016 Page - 2 was rejected in the original order, for the reason that the tax credit was not available in the assessee’s account in Form 26AS.
The assessee filed an appeal before the CIT (A). He filed copies of 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 ITA.1387/Bang/2016 Page - 3 not paid to the Government. Aggrieved against such observation, the assessee filed this appeal.
The AR submitted that the interest should not be charged on the 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)
We have heard the rival submissions and gone through the 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 ITA.1387/Bang/2016 Page - 4 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.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 21st day of April 2017.