2014 (9) TMI 89 - HC - Income Tax

Tax Credit - TDS of salaried employee uploaded in system by not properly accounted in the system - Violation of upteen instructions issued by CBDT Held that - The Instruction No.05/2013 clearly mandates as to how the tax deduction made by the employer, on evidence being produced, is to be dealt with, though not uploaded in the system - assessee had produced Instruction No.05/2013, which is subsequent to Instruction No.05/2013 and which would also further the case of the assessee the AO is directed to consider it in accordance with Instruction No.05/2013 Decided in favour of assessee.

Summary

Issues:
1. Proper accounting of tax deduction at source for a salaried employee.
2. Alleged failure in accounting the tax deduction in the system.
3. Issuance of Section 143(1) intimation under the Income Tax Act, 1961.
4. Rejection of evidence for tax deduction produced by the petitioner.
5. Violation of instructions by the Central Board of Direct Taxes [CBDT].
6. Circular issued by the CBDT regarding tax deduction made by the employer.
7. Instructions on dealing with tax deductions not uploaded in the system.
8. Setting aside of Exhibit P3 and directions to the Assessing Officer.
9. Requirement for the petitioner to approach the Assessing Officer with relevant documents.
10. Timeframe for the settlement of the matter by the Assessing Officer.

Analysis:
1. The petitioner, a salaried employee, raised concerns about the tax deduction at source not being properly accounted for in the system despite being uploaded. This led to the issuance of a Section 143(1) intimation and a subsequent demand. The petitioner presented Form No.16 as evidence of tax deduction, which was declined by the officer, allegedly violating CBDT instructions and binding judgments (Exhibits P5 and P6).

2. The learned Standing Counsel for Government of India [Taxes] referred to a Circular dated 08.07.2013 [Instruction No.05/2013] issued by the CBDT to address issues faced by assessees due to tax not being uploaded. The Circular outlined the procedure for dealing with tax deductions made by the employer when evidence is provided, even if not uploaded in the system.

3. The petitioner's request, supported by Form No.16 and subsequent exhibits, aligned with Instruction No.05/2013. Consequently, Exhibit P3 was set aside, directing the Assessing Officer to consider the evidence in line with the Circular, Exhibit P4, and judgments from various High Courts (Exhibits P5 and P6). The petitioner was instructed to personally meet the Assessing Officer within two weeks, providing necessary documents, with a settlement timeframe of two months.

4. The writ petition was allowed, granting relief to the petitioner regarding the proper consideration of tax deductions and adherence to CBDT instructions and legal precedents. The judgment emphasized the importance of following prescribed procedures and guidelines in tax matters to ensure fairness and compliance with the law.