If your company deducted TDS (Tax Deducted at Source) from your salary but did not deposit it with the government, will you get full credit for that TDS? Recently, a similar case came to light with an IT professional from Mumbai, who instead of getting full credit of TDS, got a tax notice worth lakhs of rupees.
What was the whole matter?
Mumbai-based IT professional Sophia Rick declared income of Rs 18.41 lakh and claimed TDS of Rs 3.91 lakh while filing ITR for assessment year 2019-20. But the Income Tax Department gave him TDS credit of only Rs 79,030. After this, a tax demand of Rs 3.36 lakh was made on him. This happened because his company had deducted TDS from the salary, but had not deposited it in the government account.
The matter reached ITAT
Sophia first sought rectification from the Central Processing Center (CPC) several times, but no solution was found. After this he made his first appeal, but it was rejected because the time limit had passed. Ultimately he approached the Income Tax Appellate Tribunal (ITAT).
ITAT ruled in favor of the employee
ITAT Mumbai accepted that the employee was not at fault. The company had deducted TDS from the salary, but did not deposit it with the government, hence the amount was not reflected in Form 26AS. Sophia presented Form-16, salary slip, bank statement and other documents in support of her claim.
Citing these documents and old decisions of the Supreme Court and High Court, ITAT said that if the employer has deducted TDS from the employee’s salary, but has not deposited it with the government, then the responsibility for the same cannot be put on the employee. Now the Assessing Officer, after examining the documents, will give full TDS credit of Rs 3.91 lakh to Sophia and the tax demand of Rs 3.36 lakh will be cancelled.
Why is this decision important?
Tax experts say that this decision is a relief for lakhs of employees whose employers do not deposit TDS in the government account on time after deducting it. If the employee proves that TDS was deducted from his salary, then under Section 205 of the Income Tax Act, 1961, the department cannot recover that tax from the employee.
Do this check before filling ITR
To avoid such problems, do these things before filing ITR.
- Match Form-16, Form 26AS, AIS and bank statement.
- If you notice any discrepancy in TDS, contact your employer immediately.
- Keep Form-16, salary slip and bank statement safe, so that they can be presented as evidence if needed.
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