Employee is entitled to get credit for the TDS deducted on salary even when the employer has defaulted in the payment of TDS

The petitioner who is a pilot by profession and was an employee of M/s. Kingfisher Airlines. The Kingfisher Airlines deducted the Tax Deducted at Source (‘TDS’ hereinafter) to the tune of Rs. 7,20,100/- for the Assessment Year 2009-10 and Rs. 8,70,757/- for the Assessment Year 2011-12 in case of the petitioner. The amount since had not been deposited by the Airlines in the Central Government Account, the credit when claimed by the petitioner, the same was obviously not given by the respondent and the demand had been raised with interest.

This since had aggrieved the petitioner, he approached this Court challenging the recovery notices dated 19.11.2013 and 21.08.2014.

It is averred that the petitioner had filed the return of income for the assessment years 2009-10 and 2011-12 and he claimed the TDS of Rs. 7,20,100/- and Rs. 8,70,757/- respectively as the tax paid in advance. The department had raised the demand of the said amount

He preferred an application under Section 154 of the Income Tax Act before the respondent no. 1 on 29.03.2010 and sought the refund for the assessment year 2009-10. On 19.11.2013, a notice had been issued to the petitioner for recovery of the outstanding arrears to the tune of Rs.
11,26,775/- for the assessment year 2011-12.

The request was made by the petitioner for canceling the demand for the assessment year 2009-10 vide its communication dated 07.12.2013. He also filed an application under Section 154 of the IT Act on 18.12.2013 for the assessment year 2011-12 and made a similar request to the respondent no.1. He reiterated such request in a combined manner on 17.09.2014 and urged for the cancellation of the
demands.

His essential plea was that the obligation of the employer cannot be thrust upon him however, paying no head to such a request, the respondent issued the recovery notice on 21.08.2014 for both the assessment years 2009-10 and 2011-12. Once again, the demand notice had been issued on 22.12.2015 for the assessment year 2011-12. The petitioner made request on 13.01.2016 to the respondent to drop the recovery proceedings and cancel the demands. This was reiterated on 23.12.2019.

As all such requests fell on deaf ears, he has chosen to approach this Court with the aforementioned prayers.

The Gauhati High Court in this case was considering the case of an employee of the defunct airline Kingfisher airlines which had deducted tds of Rs 7.20 lacs and Rs 8.70 lacs for AY 2009-10 and AY 2011-12 respectively and the same having not been deposited by the employer, the department initiated recovery proceedings against the employee. The department while opposing the Writ petition interalia contended that the Appellant having not pleaded Kingfisher Airlines as a respondent, the petition should be rejected. It was also contended that the system does not allow the credit without the necessary deposit of the TDS by the employer. The court however relying on Gauhati High Court’s earlier decision in the case of Omprakash Gattani and the provisions of Section 205 which clearly provides that an assessee shall not be called upon to pay himself to the extent to which tax has been deduced from that income , allowed the Writ and directed the department to allow the credit for the TDS and start recovery proceedings if any against the Kingfisher airlines.

The credit of the tax shall be given to the petitioner and if in the interregnum any recovery or adjustment is made by the respondent, the petitioner shall be entitled to the refund of the same, with the statutory interest, within eight (8) weeks from the date of receipt of copy of this order