Employee Not Responsible if Employer Fails to Deposit TDS with Government: ITAT

The Income Tax Appellate Tribunal (ITAT), Delhi, has ruled that if the TDS is not deducted with the government, then appropriate actions must be taken against the employer company to recover the tax, and the employee should not be punished for the same.

The assessee, Ramita Chaudhuri, was denied a TDS claim of Rs 22,20,182. The facts of the case are that the assessee received a bonus of Rs 83,54,035, on which she paid taxes too. Out of the said amount of bonus, the assessee first received Rs 15,46,135 after deduction of TDS, and the said TDS was deposited in the Central Government Account.

The remaining balance was received after the TDS deduction, but the deducted TDS was not deposited with the Central Government. The assessee presented the salary slip showing that TDS was deducted from the payment bonus. The AO, however, disallowed the TDS credit, as the same was not shown in the 26AS Statement. The assessee filed an appeal before CIT(A), which directed the AO to check whether the TDS was deposited by the employer in the Government Account, and if it is found that the TDS was credited to the Government Account, the AO must allow the TDS credit to the assessee. Being aggrieved by this order, the assessee filed an appeal before the ITAT, Delhi.

The Tribunal ruled that it is the responsibility of the employer to deposit the deducted TDS in the Government’s Account, and if he has not deposited the same, the assessee must not be punished. The AO must receive the TDS along with interest from the employer, and the credit for the same must be given to the employee.

Based on these facts, the ITAT directed the AO to check whether the TDS was deducted by the employer from the payment of bonus, and if the same is deducted, the AO should not deny the TDS claim made by the assessee.