Section 205 of the Income Tax Act
Income-tax Act, 2025: s.401
Section 205 of the Income-tax Act, 1961 corresponds to section 401 (Bar against direct demand on assessee) of the Income-tax Act, 2025.
Read section 401 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 205 is Yashpal Sahni v. ACIT (293 ITR 539), cited in 38 of the 119 judgments on BharatTax that turn on this section.
Leading authorities on Section 205
Once tax has been deducted at source (TDS), the bar of section 205 applies, preventing the deductee from being asked to pay the tax again, even if the deductor fails to deposit the tax or issue TDS certificates.
The tax department cannot speculate to deny the benefit of tax deducted at source by the employer to the petitioner.
If a deductor deducts TDS but does not deposit it into the government account, the assessee is not liable for that TDS.
An assessee cannot be denied the credit of tax deducted at source (TDS) if they produce Form 16A, and any demand notice issued under Section 221(1) for non-payment of tax, when TDS credit is due, cannot be sustained.
Section 205 of the Income Tax Act prevents the tax department from demanding tax from an assessee who has already suffered TDS when the liability has shifted to another entity, such as a liquidator.
An assessee cannot be denied credit for Tax Deducted at Source (TDS) solely due to a mismatch in Form 26AS if the mismatch is not attributable to the assessee. The burden of proving why Form 26AS does not reflect all TDS details should not be placed on the assessee.
