Kingfisher Airlines Employee Cannot Be Denied TDS Credit For Employer's Default: Delhi High Court
The Delhi High Court has held that an employee can't be penalised for the failure of its employer to deposit tax deducted at source (TDS) with the Revenue.
The bench of Justices Dinesh Mehta and Vinod Kumar was dealing with a writ petition filed by a former employee of Kingfisher Airlines, whose salary had suffered TDS deductions, but the employer failed to deposit the deducted amount with the Income Tax Department.
As a result, the department denied TDS credit to the petitioner and raised a tax demand of Rs.12,28,508, which was subsequently recovered.
Rejecting the Revenue's stand, the High Court reiterated that once tax has been deducted from the income of an assessee, the latter can't be blamed for the deductor's default.
“We are of the view that the respondent could perhaps been justified in disallowing the amount of TDS which was collected by Kingfisher Airlines from the petitioner's salary, as the same was not deposited by said deductor but the petitioner cannot be blamed for that and deprived of his legitimate right,” it said.
Reliance was placed on Satwant Singh Sanghera v. The Assistant Commissioner of Income Tax & Anr (2024) where it was held that TDS deducted by the employer can't be adjusted against assessee's future refund. The said case also pertained to a former employee of Kingfisher Airlines, who had challenged a tax demand of over Rs 11 lakh.
Accordingly, the High Court quashed the tax demand and directed the Department to refund the amount recovered from the petitioner.
For Petitioner: Rano Jain and Mr. Venketesh Chaurasia, Advocates.
For Respondent: Sunil Agarwal, SSC with Ms. Priya Sarkar, JSC.