TDS Credit will be allowed to the assessee/deductee even if the same is not reflecting in the form 26AS of the assessee:-
Recently, Delhi High Court held that TDS credit is allowed even if the same is not reflecting in the form 26AS.
A. Facts of the case are as under:-
– The assessee/ deductee in the present case got his payment after deduction of the TDS.
– However, the TDS deducted by the deductor was not deposited with the Tax Department.
– Income Tax Department raised the demand of the TDS claimed by the assessee as the same was not deposited with the Income Tax Department and thus not reflecting in the form 26AS of the assessee.
– Income Tax Department proceeded with the adjustment of the above demands from the future refunds of the assessee.
– Assessee sent the communication on the email to the income tax department for the non-adjustment of the refunds of the assessee, however income tax department refused to cancel the demand or give credit of TDS to the assessee.
B. Key observations by the Court:-
– Section 205 of the Income Tax Act read with the CBDT instruction dated 01.06.2015 clearly point in the direction that the deductee/assessee cannot be called upon to pay tax, which has been deducted at source from his income.
– Section 205 of the Income Tax Act puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch cannot be enforced coercively.
– The adjustment of demand against future refund amounts to an indirect recovery of tax, which is barred under section 205 of the Income Tax Act.
Thus, neither a demand can be raised on the assessee/deductee on the fault of the deductor for the non-payment of the TDS nor the demand can be adjusted against the future demand.
Copy of the judgement attached below.
