ASHISH RANJAN,DARBHANGA vs. INCOME TAX OFFICER, DARBHANGA

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ITA 160/PAT/2025Status: DisposedITAT Patna05 January 2026AY 2024-256 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee employee cannot be forced to make good the shortfall in the deposit of TDS by the employer. Once tax is deducted at source by the employer, the assessee has no further control over its deposit. The Revenue should proceed against the employer for recovery. In this case, since the employer is under liquidation, no action can be taken against them. The Tribunal found support in the Delhi High Court's decision in Shri Chintan Bindra Vs. DCIT, which held that Section 205 of the Act bars direct demand on the assessee for tax deducted at source, and such demands cannot be enforced coercively or adjusted against future refunds. Therefore, the Tribunal set aside the CIT(A)'s order and directed the AO not to recover any demand from the assessee, allowing the AO to proceed against the employer for recovery.

What were the facts?

The assessee, Ashish Ranjan, is appealing an order from the CIT(A) for Assessment Year 2024-25. The dispute arises from a demand of ₹29,42,570 raised by the AO due to non-deposit of TDS by the assessee's former employer, M/s Think and Learn Private Limited, which is now in liquidation. The assessee claimed TDS credit in their return of income, but this did not match the TDS reflected in Form 26AS. The DCIT, CPC, Bangalore processed the return under Section 143(1) and created the demand. The CIT(A) upheld the AO's order, dismissing the assessee's grounds of appeal.

What were the issues?

1. Whether the assessee can be held liable for the shortfall in TDS deposit by their employer, when the tax was deducted at source from their salary, as per Section 205 of the Income Tax Act, 1961. Assessee's contention: The assessee argued that they had earned salary income, and their employer had deducted TDS of ₹8,48,953. The employer defaulted in remitting this TDS to the government, causing a mismatch in Form 26AS. The assessee contended that since the default was not theirs, they should be allowed credit for the TDS, supported by a "Full & Final Settlement" from the employer. Revenue's contention: The Revenue, through the CIT(A)'s order, argued that the assessee failed to furnish evidence of tax deduction by the deductor by not submitting a TDS certificate and that credit for TDS is given only when the amount is paid to the Central Government account, as per Section 199 of the Act.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 200,Section 201,Section 139(1),Section 199,Section 205

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “DB” BENCH, PATNA

Before: SHRI DUVVURU RL REDDY, VP & SHRI RAJESH KUMAR, AM

For Appellant: Shri Sudeep Sinha, AR
For Respondent: Shri Ashwani Kr. Singal, DR
Hearing: 28.11.2025Pronounced: 05.01.2026

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Mysore (hereinafter referred to as the “Ld. CIT(A)”] dated 31.01.2025 for the AY 2024-25.

2.

The only issue raised by the assessee in the various grounds of appeal is against the order of ld. CIT (A) upholding the assessment order, wherein the ld. AO has raised a demand of ₹9,42,570/- resulting from non-deposit of TDS by the employer of the assessee.

2.1. The facts in brief are that the assessee was employed with M/s Think and learn Private Limited, which is gone into liquidation and therefore, the tax conducted on behalf of the assessee from the salaries was not deposited resulting into mismatch of TDS claimed by 2.2. The appeal of the assessee was dismissed by the ld. CIT (A) by observing and holding as under:-

“8. The Ground No. 2, 3, 5 and 6 raised by the appellant are related to the same issue i.e. denial of TDS amounting to Rs.8,48,953/-. As the issue involved in the grounds of appeal is same, the grounds are adjudicated together. The appellant submitted that during the period relevant to the instant AY he has earned salary income against which his employer deducted TDS of Rs.8,48,953/-. There was default on the part of the employer in remitting the TDS amount in Government Account and therefore, this TDS amount was not reflected in 26AS and in turn, the TDS claim in the return was denied while processing return of income u/s.143(1). The appellant submitted that as there was no mistake from the appellant, the appellant should have been allowed for credit of TDS. The appellant furnished "Full & Final Settlement" from his employer in support of the claim. 8.1 The impugned order u/s.143(1) along with 26-AS statement and the appellant's submission is verified. Form 16/16A is the certificate of TDS or TCS that is issued by the deductor which serves as an evidence that tax deducted or collected by him is deposited to the Government account under a particular PAN. There is a need to obtain a TDS Certificate. The rationale behind introducing Form 26AS was to enable the taxpayers to cross-check and verify their details in the TDS certificates with the details recorded in Form 26AS and maintain transparency of information. In this instant case, the appellant failed to furnish the evidence of tax deduction by the deductor by not submitting TDS certificate. In view of the fact of the case, the grounds of appeal of the appeal are dismissed.” 2.3. After hearing the rival contentions and perusing the materials available on record, we find that the assessee was employed with M/s Think and learn Private Limited and received salary which was paid to the assessee after deduction of tax at source. The assessee was also issued TDS Form showing full amount of Tax Deducted at source. However, the employer company did not deposit the same in 3. The factual position pleaded by the petitioner and admitted by the respondents is that the respondents raised multiple demands of outstanding income tax and interest pertaining to Assessment Years 2009-10, 2011-12 and 2012-13. It is also not in dispute that as reflected from records, the petitioner was being paid salary after deduction of income tax at source but his employer namely Kingfisher Airlines Limited did not deposit the same with the revenue. Despite repeated communications from petitioner, the said demands were not withdrawn by the respondents, so the petitioner approached this court by way of writ action.

4.

That being so, the core issue to be considered by us is as to whether any recovery towards the said outstanding tax demand can be effected against the petitioner in view of the admitted position that the tax payable on salary of the petitioner was being regularly deducted at source by his employer namely Kingfisher Airlines Ltd. who did not deposit the deducted tax with the revenue.

5.

The said issue stands covered by the judgment of this court in the case of Sanjay Sudan v. Asstt. CIT [2023] 148 taxmann.com 329/292 Taxman 138/452 ITR 107 (Delhi). The relevant observations made in the said judgment are set forth hereafter: "5. Mr Sanjay Kumar, learned senior standing counsel, who appears on behalf of the respondents/revenue, says that the credit for withholding tax can only be given in terms of Section 199 of the Act, when the amount is received in the Central Government account.

Order pronounced in the open court on 05.01.2026.

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