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TMI Blog2025 (4) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... . Om Praksh Gattani, (2000) 242 ITR 638, Chintan Bindra v. CIT; 2023 SCC OnLine Del 7539 and the unreported judgment of the Bombay High Court in Aslam Checkar v. Income Tax Officer (Judgment dated 10.09.2024 in Writ Petition (L) No. 2442 of 2024 and connected cases) to contend that the employee should not be mulcted with any liability for the amount of TDS deducted from their salaries by their employer even if such amounts have not been remitted to the Income Tax Department. 3. Sri. Keerthivas Giri, the learned Standing Counsel appearing for the Income Tax Department would submit that credit can be given only to the extent of money received by the Income Tax Department even on the authority of the judgment of the Supreme Court in Eli Lilly (supra). It is submitted that while it may be open to the Income Tax Department to proceed against the entity for not having remitted the amount of TDS (if any) deducted from the salaries paid to employees like the petitioners, that does not mean that the petitioners are straight away entitled to credit of those amounts, without such amounts having been received by the Income Tax Department. 4. Though notices have been issued to the 2nd respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. The plain language of Section 205 of the Act points in this direction. For the sake of convenience, Section 205 is extracted hereafter: "205. Bar against direct demand on assessee. Where tax is deductible at the source under the foregoing provisions of this chapter, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income." 8. The instruction dated 1-6-2015 is aligned with the aforesaid provision of Act inasmuch as it clearly provides in Para 2 that since the Act places a bar on a direct demand qua the deductee assessee, the same cannot be enforced coercively. For the sake of convenience, Para 2 of the said instruction is extracted hereafter: "2. As per Section 199 of the Act credit of tax deducted at source is given to the person only if it is paid to the Central Government account. However, as per Section 205 of the Act the assessee shall not be called upon to pay the tax to the extent tax has been deducted from his income where the tax is deductible at source under the provisions of Chapter XVII. Thus the Act puts a bar on direct demand against the assessee in such cases and the demand on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery proceedings against the assessee from whose income-tax has been deducted at source, but the person responsible to deduct the tax fails to deposit the same in the Government treasury. The statutory scheme evolved to employ this mode of recovery of tax at source also points to the same position and in our view rightly. Otherwise a tax payer from whose income tax is liable to be deducted at source would be exposed to a great vulnerable position, if some unscrupulous persons responsible to deduct the tax at source, after deducting the amount do not deposit the amount in Government treasury, such persons should be saddled with the tax liability. Therefore, under Section 201 of the Income-tax Act it has been aptly provided that person responsible to deduct the tax would be deemed to be an assessee in default so that he can be proceeded against for recovery of the amount instead of the assessee who has already parted with the amount, but due to some commission or omission on the part of the person responsible to deduct the amount at source over whose activity he has no control, may not be subjected to double payment of tax and burnt of arduous recovery proceeding. The provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Division Bench of the Bombay High Court in Aslam Checkar (supra). Here it is the admitted case of the petitioners, that the amounts deducted as TDS have not been remitted by the employer to the Central Government/Income Tax Department. Therefore, the petitioners cannot be granted the relief of a direction to the Income Tax Department to grant credit to the extent of tax deducted from their salaries by the entity in which they were working. They are also not entitled to a writ directing the Income Tax Department to cancel the demands pending against them even though the amounts (TDS) have not been remitted to the Central Government/Income Tax Department. I am in respectful agreement with the view taken by the Division Bench of the Gauhati High Court in Om Praksh Gattani (supra) as also with the view expressed by the Division Bench of the Bombay High Court in Aslam Checkar (supra). This is the only way in which Sections 199 and 205 of the 1961 Act can be harmoniously interpreted. It is interesting to note that the Section heading of Section 205 uses the words 'direct demand on assessee' indicating that the provision only bars recovery from the assessee and does not mandate ..... 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