Delhi High Court: In a case wherein petitioner filed a writ petition under Articles 226 and 227 of the Constitution, seeking the relief to declare that demand of tax and interest reflected on income tax portal for the Assessment Year (‘AY’) 2009-10, 2011-12, and 2012-13 on account of TDS admittedly deducted by Company (Employer), do not lie against petitioner, and to direct respondents to delete the impugned demand from the Portal and their records, the Division Bench of Rajiv Shakdher and Girish Kathpalia*, JJ., opined that petitioner’s employer having failed to perform his duty to deposit the deducted tax with the revenue, petitioner could not be penalized, and it would always be open for revenue to proceed against petitioner’s employer for recovery of the deducted tax. The Court thus restrained respondents from carrying out recovery proceedings pertaining to the intimations/communications and directed them to refund petitioner Rs. 3,88,209 which was wrongly adjusted by respondents against the impugned demands pertaining to the above-mentioned AYs.
Background
Petitioner was employed with Kingfisher Airlines Ltd., since 2008, as an airline pilot at the rank of Captain. For AY 2009-2010, income tax payable against petitioner’s salary was deducted at source by his employer but the same was not reflected in his Form 26AS. On 31-03-2010, petitioner filed his return of income for AY 2009-2010 declaring gross total income of Rs. 39,60,051 and claimed TDS of Rs. 12,10,276 and refund of Rs. 2,340. On 21-03-2011, respondents issued intimation under Section 143(1) of the Income Tax Act, 1961 (‘the Act’) whereby TDS credit claimed by petitioner was declined and a demand of Rs. 15,36,020 towards tax and interest was raised.
For AY 2011-2012 also, petitioner’s employer deducted TDS of Rs. 14,90,055 from petitioner’s salary. On 31-03-2012, petitioner filed his return of income for AY 2011-2012 declaring gross total income of Rs. 53,30,384 and claimed TDS of Rs. 14,90,055. On 23-10-2012, respondents issued intimation under Section 143(1) of the Act, thereby again denying TDS credit claim of petitioner, and raising a demand of Rs. 19,15,807 towards tax and interest and adjusting a refund of Rs. 24,248. For AY 2012-2013, from 01-04-2011 to 14-02-2012, petitioner’s employer deducted TDS of Rs. 13,59,207. On 26-03-2013, petitioner filed his return of income for AY 2012-2013 declaring gross total income of Rs. 66,11,970 and declared tax and interest payable at Rs. 19,03,910. On 16-01-2014, respondents issued intimation under Section 143(1) of the Act on the ground of unmatched tax deducted at source and raised demand of Rs. 18,16,870 towards tax and interest.
In view of repeated adjustments of refunds, petitioner filed application dated 11-02-2018 seeking stay of demands appearing on portal of Income Tax Department for AYs 2009-2010, 2011-2012 and 2012-2013. By way of letter dated 27-01-2020, petitioner agitated that respondents had not taken any action on his repeated requests and communications. On 24-02-2021, petitioner sent a reminder email and finally on 03-03-2021, petitioner received the impugned intimation from respondents with reference to his letter dated 27-01-2020, and thereby respondents refused to cancel the demand or give credit of TDS to him, though a stay on the recovery of outstanding demand was granted till finalization of proceedings.
Analysis, Law, and Decision
The Court noted that petitioner was being paid salary after deduction of income tax at source but his employer, Kingfisher Airlines Ltd. did not deposit the same with the revenue and despite repeated communications from petitioner, the said demands were not withdrawn by respondents.
The issue for consideration was “whether any recovery towards the outstanding tax demand could be affected against petitioner inspite of the fact that the tax payable on Petitioner’s salary was being regularly deducted at source by his employer who did not deposit the deducted tax with the revenue?”.
The Court relied on Sanjay Sudan v. CIT, (2023) 1 HCC (Del) 237 and opined that petitioner having accepted the salary after deduction of income tax at source had no further control over it in the sense that thereafter it was employer’s duty acting as tax collecting agent of the revenue under Chapter XVII of the Act to pay the deducted tax amount to the Central Government in accordance with law. The Court also opined that petitioner’s employer having failed to perform his duty to deposit the deducted tax with the revenue, petitioner could not be penalized, and it would always be open for revenue to proceed against petitioner’s employer for recovery of the deducted tax.
The Court thus set aside the intimations/communications pertaining to AY 2009-10; AY 2011-12; and AY 2012-13, all intimations/communications issued by Respondent 3 under Section 143 of the Act raising demands of tax and interest against petitioner and consequently, restrained respondents from carrying out any recovery proceedings pertaining to the said intimations/communications; and also directed respondents to refund to petitioner Rs. 3,88,209 which was wrongly adjusted by respondents against the impugned demands pertaining to the above-mentioned AYs. The Court however clarified that if petitioner was able to obtain any amount of money towards tax deducted from his income at source for AYs 2009-10, 2011-12 and 2012- 13 from his employer, the same shall be deposited by him with the revenue forthwith.
[Chintan Bindra v. Deputy Commissioner of Income Tax, 2023 SCC OnLine Del 7539, decided on 29-11-2023]
*Judgment authored by: Justice Girish Kathpalia
Advocates who appeared in this case :
For the Petitioner: Puneet Agarwal, Yuvraj Singh, Chetan Kumar Shukla, Advocates
For the Respondents: Ruchir Bhatia, Senior Standing Counsel; Deeksha Gupta, Advocate
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