Big relief for the working class
Tax should be deducted from your salary every month, but at the end of the year, the Income Tax Department sends you a notice saying that your tax has not been deposited, then what will happen to you? Recently, a similar case came to light in Kolkata, where the Income Tax Appellate Tribunal (ITAT) has set an example by giving great relief to a distressed employee.
Why is the employee punished for the company’s mistake?
This whole matter is related to an employee working in an ed-tech company. The company regularly deducted TDS from the salaries of its employees, the total amount of which was approximately Rs 14.88 lakh. According to law, the company was supposed to deposit this money in the Central Government account, but they did not do so. When the employee has income tax return (ITR) was filled and deducted and claimed tax credit of Rs 14 lakh, the system rejected it. Not only this, the department also gave tax demand notice to the employee. The department’s argument was that since the money did not come into the government treasury, credit for it could not be given.
‘Section 205’ cover
The employee did not give up and the matter reached ITAT Kolkata. There the employee’s representatives, Advocate S.K. Tulsiram and FCA Abha Aggarwal presented their stand strongly in the court. He cited Section 205 of the Income Tax Act, which makes it clear that if tax (TDS) has been deducted from a person’s income, he cannot be asked to pay the same tax again.
The plea also referred to the CBDT (Central Board of Direct Taxes) instructions of 2015 and 2016, which clearly state that the taxpayer should not be harassed due to the mistake of the tax deductor. Apart from this, reference was also made to the old decisions of Mumbai ITAT and Gauhati High Court, where the verdict was given in favor of the taxpayers in similar cases.
Tribunal reprimanded the officials
ITAT Kolkata, while hearing the case, expressed displeasure over the attitude of the lower authority. The Tribunal said in clear words that it is mandatory to follow judicial discipline. When higher courts or tribunals pronounce a judgment, the subordinate authorities must follow it.
The court said in its decision that the Income Tax Department has full authority under Section 201 to collect tax and penalty from the defaulting company (employer). But, the burden of failure in recovery cannot be put on the employee from whose salary the money has already been deducted.
Big relief for the working class
The Tribunal directed the Assessing Officer to give full credit of TDS to the employee and cancel the demand notice sent. The Tribunal held that as soon as TDS is deducted from the salary, the employee is legally deemed to have paid his tax. Now it is a matter between the government and the company as to how that money will reach the government account.
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