2011 (5) TMI 497 - AT - Income Tax

Tax deducted at source from salary income - TDS certificate not furnished- assessee not entitled to avail tax credit - Held that - Once it is established that tax has been deducted at source from the salary of the employee then bar under section 205 of the Act comes into operation barring Revenue from recovering the TDS amount once again from the employee from whose income, the TDS amount has been deducted . Therefore, there has to be some evidence showing that tax has been really deducted. Thus, the matter is remitted back to the file of the A.O. Appeals of the Revenue are allowed for statistical purposes

Summary

Issues:
Appeal against CIT (A)'s orders in multiple assessment years regarding the credit for tax deducted at source without all certificates submitted.

Analysis:
In this case, the Revenue filed appeals against the CIT (A)'s orders concerning the credit for tax deducted at source where all certificates were not submitted by the assessee. The CIT (A) allowed credit where certificates were filed but not where they were missing, leading to a dispute. The Revenue argued that credit should only be given if certificates were filed as per section 199 and 203 of the Income Tax Act. The CIT (A) relied on the decision of the Bombay High Court in a similar case to direct the AO not to recover the amount in the absence of certificates. However, the Revenue contended that the case law cited was not applicable to the current scenario as no evidence was provided that tax had actually been deducted.

The counsel for the assessee referred to section 205, highlighting that once tax is deducted, credit may not be given without evidence, and demand cannot be enforced as per the section. Citing the Bombay High Court's decision in a related case, it was emphasized that recovery of tax deducted at source from the person against whom it was deducted is barred under section 205. The judgment in the cited case clarified that the bar under section 205 operates once tax deduction is established, regardless of TDS certificate issuance. Thus, the liability to pay income tax if deducted at source lies with the employer, and the employee should not be called to pay the tax again.

The Tribunal analyzed the arguments presented and set aside the CIT (A)'s order, directing the AO to request the assessee to provide evidence that tax was indeed deducted by the other party. While credit for tax deducted at source may not be given until certificates are filed, the demand should be kept in abeyance if satisfactory evidence is presented to the AO. The Tribunal allowed the Revenue's appeals for statistical purposes, emphasizing the need for evidence of tax deduction even in the absence of TDS certificates to prevent double taxation.