2018 (11) TMI 328 - HC - Income Tax

Non issue of Form No.16 to salaried employees employed by Companies and Corporations - petitioner says that the Form No.16 having not been issued in time, the employees are suffering serious consequences and are proceeded against for breaching and violating legal provisions - Held that - We want the Ministry of Finance, Department of Revenue also to be made aware of these serious lapses in Mumbai and around. We have noticed that there is no transparency, in the sense, no information is ever displayed in relation to such defaulters by the Department. We expect the Department to provide information of such defaulters so that those seeking employment or awaiting either retiral benefits or such other sums from the employers would know in advance as to how they are expected to comply with law. The petitioner says that he is a senior citizen of 65 years of age and because he is not in possession of Form No.16, he has suffered at the hands of the Department. Let, therefore, the necessary steps be taken in law so that such occurrences are avoided in future. We would expect the Department of Revenue, particularly, Department of Income Tax to penalise such defaulters and take other strict measures contemplated by law against them. We post this matter in the hope that this Writ Petition will be taken as test case by respondent No.1.

Summary

Issues:
1. Failure to issue Form No.16 to salaried employees on time by Companies and Corporations.
2. Concerns regarding the consequences faced by employees due to the delayed issuance of Form No.16.
3. Lack of transparency and information display by the Department of Revenue in relation to defaulters.
4. Request for the Department of Revenue to penalize defaulters and take strict measures as per the law.

Analysis:

Issue 1: Failure to issue Form No.16
The Writ Petition highlighted the issue of Companies and Corporations failing to issue Form No.16 to salaried employees on time. This failure resulted in serious consequences for employees, including legal actions for breaching tax provisions. The petitioner emphasized that the delayed issuance of Form No.16 particularly affected senior citizens among the employees.

Issue 2: Concerns for employees
The High Court expressed serious concern for the salaried employees facing consequences due to the non-issuance of Form No.16. It directed the Commissioner of Income Tax (TDS), Mumbai, to file a comprehensive affidavit regarding the matter. The court also urged the Ministry of Finance, Department of Revenue, to address the lapses in issuing certificates and ensure transparency in dealing with defaulters.

Issue 3: Lack of transparency
The court noted the lack of transparency in the Department of Revenue's actions, especially in displaying information about defaulters. It emphasized the importance of providing information about defaulters to individuals seeking employment or awaiting benefits from employers. The court highlighted the petitioner's case as an example of the adverse impact caused by the absence of Form No.16.

Issue 4: Request for strict measures
In response to the concerns raised, the court called for necessary steps to prevent such occurrences in the future. It urged the Department of Revenue, particularly the Department of Income Tax, to penalize defaulters and enforce strict measures as per the law. The court emphasized the need for the Writ Petition to serve as a test case to address the issues raised regarding the delayed issuance of Form No.16.

Additionally, during the proceedings, the court referred to Section 405 of the Indian Penal Code, 1860, indicating the possibility of applying its provisions to individuals responsible for the non-issuance of Form No.16. The court highlighted the need for the Department of Revenue to take appropriate actions, including prosecution, against defaulters to ensure compliance with legal provisions.