TDS not reflected in Form 26AS:
Dinendra Biswas vs. Revenue [W.P.(C) No. 2260 of 2023]
Background of the Case
The appellant, Justice Dinendra Biswas, a former judge of the Gauhati High Court and later the Upa-Lokayukta of Assam, filed a writ petition challenging the demand notices issued by the Income Tax Department under Section 143(1) of the Income Tax Act. These demands, amounting to Rs. 8,40,370 for financial years 2008-09, 2010-11, 2011-12, 2012-13, and 2013-14, arose due to the non-allowance of credit for taxes deducted at source (TDS) from his salary. The appellant contended that the respective employers—Gauhati High Court and the Office of the Lokayukta had deducted and deposited the TDS, but the same was not reflected in Form 26AS, leading to the erroneous tax demands.
Arguments by the Appellant
The appellant submitted that all relevant taxes had indeed been deducted by his employers and duly deposited with the Central Government, and he supported his claim with Form 16s and deduction certificates. He invoked Section 205 of the Income Tax Act, which clearly states that if tax has been deducted at source, the appellant cannot be asked to pay it again. Justice Biswas highlighted that the error lay not with him, but with the employers’ failure to ensure proper reflection of the deducted tax in the 26AS statements, and therefore, any demand raised against him was unjustified.
Respondent’s Response
The Revenue in its response, stated that the credit can only be given for taxes that are reflected in the appellant’s Form 26AS. It was asserted that since no TDS appeared in the appellant’s 26AS for the relevant years, the department was within its rights to raise a demand. They argued that it is the employer’s responsibility to deposit the TDS correctly under the taxpayer’s PAN and ensure proper reporting, and that in the absence of such evidence, the appellant’s claim for TDS credit could not be accepted.
Court Findings and Decision
The High Court of Gauhati ruled in favor of the appellant and held that the Income Tax Department’s action of raising demands and refusing credit was unsustainable. The Court relied on precedents and the principle under Section 205, emphasizing that once tax is deducted and deposited by the employer, the appellant cannot be burdened with repayment. Since affidavits and treasury records from both the Gauhati High Court and the Lokayukta, Assam, proved that the taxes had indeed been deducted and paid, the Court ruled that non-reflection in Form 26AS was a technical lapse, not a substantive one. Consequently, the High Court quashed the demand notices and directed the Income Tax Department to give credit for the said amounts forthwith.
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TDS not reflected in Form 26AS:
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