Employee can’t be penalised for employer’s fault : The Tribune India

Join Whatsapp Channel

tax tips

Employee can’t be penalised for employer’s fault

Q. Q. I was employed with M/s Arshiya Northern FTWZ Ltd. from 01.03.2012 to 07.01.2013. During the year 2012-13, the TDS was deducted from my salary every month but the company did not deposit the tax regularly.

Employee can’t be penalised for employer’s fault


SC Vasudeva

Q. I was employed with M/s Arshiya Northern FTWZ Ltd. from 01.03.2012 to 07.01.2013. During the year 2012-13, the TDS was deducted from my salary every month but the company did not deposit the tax regularly. The tax for the month of July 2012, December 2012 and January 2013 (Rs 36,506, Rs 34,533 and Rs 51,606, respectively) has not been deposited as of today despite my repeated requests to the company. I reported the matter to the ITO/TDS and Commissioner/TDS. Accordingly, the I-T authorities also took up the matter with the company. The ITO/TDS, Mumbai, had issued a notice to M/s Arshiya Northern FTWZ Ltd in this regard.

The company has shown its inability to deposit the tax deducted from the salary as they are passing through a turbulent phase which has resulted in severe financial crunch and the TDS payments with interest will be made and Form 16 will be issued accordingly. The statement of earning & deductions supplied by the company is too not matching.

I filed the I-T return during March 2013 on the basis of monthly salary slips to avoid default. Recently, I have been asked u/s 143(1) of the I-T Act by the Assistant Commissioner (CPC) Bengaluru, to deposit Rs 1,32,114 (including Rs 34,574 towards interest). I have submitted the detailed position to Bengaluru and other I-T officers.

Kindly advise my responsibility in this regard for non-filing of Form 16 and depositing TDS in the government account by the company for no fault of mine.

Secondly, how can the demand raised u/s 143(1) be scrapped?

— Sachin Garg

A. You are not liable to pay any interest or penalty for not depositing TDS by your employer. You should, however, be allowed the due credit for the TDS by the employer even though the same has not been deposited by the employer in the government account.

The Bombay High Court in the case of Yashpal Sahni vs. Assistant Commissioner of Income-tax (165 Taxman 144) (Bombay) (2007) has on the similar facts held that once tax is deducted at source, the same cannot be levied once again on the assessee who has suffered a deduction. In the above referred case, the assessee had furnished monthly pay slips and bank statement to show that from his salary, tax was deducted at source by the employer. The court held that once it is established that the tax has been deducted at source, the bar under Section 205 comes into operation and the revenue is barred from recovering the TDS amount once again from the employee from whose income TDS amount has been deducted. The Income-tax Appellate Tribunal Bombay Bench has also held on the similar lines in the case of Capt JG Joseph vs. CIT (92 ITD 358) (Mumbai).

It would, therefore, be advisable to file an appeal with CIT (A) and also approach the jurisdictional Assessing Officer and the administrative Commissioner of Income-tax and explain the circumstances in which you are placed giving reference to the aforesaid decisions. You have a fair chance of getting due relief at the level of appellate authorities.

Q. I am filing I-T return for my company set up with family and friend’s support. I want to know if in any case my future earnings depreciate (the company fails or no more remains in activity), will my return rate also depreciate or shall I have to pay the same return always?

— Raj Sidhu

A. Income tax is chargeable on the total income of an assessee. Therefore, in case the total income of an assessee is less than that declared in the preceding year, tax will be chargeable on the lesser income provided the assessee is able to conclusively prove the reasons for the decline in income. Therefore, in case the income of the company declines in the succeeding year, income tax will be chargeable on such reduced income provided you are able to prove the reasons for the decline.

Q. I had two FDs — one for Rs 3 lakh and another for Rs 3.5 lakh. The FDs got matured in January and the bank deducted TDS @20%. Now I have applied for PAN card. Is it possible to get refund of TDS now?

— Deep Chahal

A. It would not be possible for the bank to refund the tax which has been deducted @20% because of non-availability of Permanent Account Number. You will have to file the tax return for the relevant assessment year to seek the refund of Income-tax deducted at source, if the same is in excess of the amount payable on the basis of your total income.

Top News

Chief Judicial Magistrate's court in UP's Banda orders judicial inquiry into death of gangster-politician Mukhtar Ansari

UP court orders judicial probe into gangster-politician Mukhtar Ansari’s death, seeks report in a month

Ghazipur MP Afzal Ansari on Tuesday alleged that his brother...

‘Heart attack or poisoning’: The life and times of Mukhtar Ansari—crime and politics

‘Heart attack or poisoning’: The life and times of Mukhtar Ansari—crime and politics

Eastern parts of Uttar Pradesh are among the poorest regions...

CBI files chargesheet against 20 institutes, 105 individuals in Himachal Pradesh multi-crore scholarship scam

CBI files chargesheet against 20 institutes, 105 individuals in Himachal Pradesh multi-crore scholarship scam

22 educational institutions were on CBI radar in the scholar...

Mahagathbandhan announces LS seat-sharing for Bihar; RJD to contest 26, Congress 9

Mahagathbandhan announces Lok Sabha seat-sharing for Bihar; RJD to contest 26, Congress 9

High-decibel contest seems on the cards in Hajipur, where RJ...


Cities

View All