The Delhi High Court observed that the Income Tax Department can proceed against employer for recovery of deducted tax from the employee. The factual position pleaded by the petitioner, Chintan Bindra and admitted by the respondents is that the respondents raised multiple demands of outstanding income tax and interest pertaining to Assessment Years 2009-10, 2011-12 and 2012-13.
It is also not in dispute that as reflected from records, the petitioner was being paid salary after deduction of income tax at source but his employer namely Kingfisher Airlines Limited did not deposit the same with the revenue. Despite repeated communications from petitioner, the said demands were not withdrawn by the respondents, so the petitioner approached the Court by way of writ action.
That being so, the core issue to be considered by us is as to whether any recovery towards the said outstanding tax demand can be effected against the petitioner in view of the admitted position that the tax payable on salary of the petitioner was being regularly deducted at source by his employer namely Kingfisher Airlines Ltd. who did not deposit the deducted tax with the revenue. On behalf of revenue, it was contended that no credit for tax can be given to the petitioner, since in view of the provisions under Section 199 of the Income Tax Act the credit can be given only when the tax which was deducted at source is paid to the Central Government and in the present case, admittedly the tax deducted from salary of the petitioner has not been deposited by his employer.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “The petition as well as the interim relief application (CM APPL 6192/2022) are allowed, thereby setting aside the intimations/communications dated 21.03.2011 pertaining to Assessment Year 2009-10; dated 23.10.2012 pertaining to Assessment Year 2011-12; and dated 16.01.2014 pertaining to Assessment Year 2012-13, all intimations/communications issued by respondent no. 3 under Section 143 of the Act raising demands of tax and interest against the petitioner and consequently, restraining the respondents from carrying out any recovery proceedings pertaining to the said intimations/communications; and also directing the respondents to refund to the petitioner within four weeks from receipt of this order a sum of Rs.3,88,209/- which was wrongly adjusted by the respondents against the impugned demands pertaining to the above mentioned Assessment Years.”
“However, it is clarified that in case the W.P.(C) 2164/2022 Page 10 of 10 pages petitioner is able to obtain any amount of money towards tax deducted from his income at source for the Assessment Years 2009-10, 2011-12 and 2012- 13 from his employer, the same shall be deposited by him with the revenue forthwith” the Court noted.