Reassessment / TDS Credit Denial for Un-deposited Salary Tax Deductions Is Unjustified and Credit Must Be Granted to Employee
Reassessment / TDS Credit Denial for Un-deposited Salary Tax Deductions Is Unjustified and Credit Must Be Granted to Employee
Issue
Whether an employee can be denied credit for Tax Deducted at Source (TDS) and issued a demand under Section 143(1) on account of the employer’s failure to deposit the deducted tax into the Central Government account.
Facts
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Employment and Deduction: The assessee was a salaried employee of Kingfisher Airlines (erstwhile employer) during Assessment Year 2011-12.
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TDS Amount: The employer deducted TDS of approximately ₹14.66 lakhs from the assessee’s salary for the relevant assessment year.
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Default by Employer: Kingfisher Airlines failed to deposit the deducted TDS amount into the credit of the Central Government.
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Tax Demand Raised: An intimation under Section 143(1) was issued to the assessee raising a tax demand by denying credit for the un-deposited TDS amount.
Decision
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The assessee cannot be blamed or held responsible for the employer’s default in depositing the tax deducted from his salary.
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The assessee cannot be deprived of his legitimate right to claim TDS credit when the deduction has already been made from his salary.
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The assessee is entitled to full credit for the TDS of ₹14.66 lakhs (In favour of assessee).
Key Takeaways
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No Recovery from Employee for Employer’s Default: Under the Income-tax Act, once TDS is deducted from an employee’s salary, the Revenue cannot recover that tax amount from the employee, even if the employer defaults in remitting it to the government.
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Protection of Legitimate Statutory Right: A taxpayer cannot be penalized or denied statutory tax credit due to non-compliance or failure on the part of the deductor.
HIGH COURT OF DELHI
Avni Dogra
v.
Assistant Commissioner of Income -tax
Dinesh Mehta and Rajneesh Kumar Gupta, JJ.
W.P.(C)No. 5630 OF 2026
SEPTEMBER 16, 2026
Paras Jindal, Adv. for the Petitioner. Puneet Rai, SSC, Ashvini Kr. and Rishabh Nangia, JSCs for the Respondent.
ORDER
1. Learned counsel for the petitioner contended that for the Assessment Year 2011- 12 demand with Reference No. 2012201110020608113T has been raised by way of intimation dated 15.02.2013 under Sections 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’) against the petitioner because the credit of TDS which Kingfisher Airlines (erstwhile employer) had deducted from the salary of the petitioner amounting to Rs. 14,65,787/- for AY 2011-12 was not given.
2. It is contended that the issue involved in the present writ petition is squarely covered by a judgment dated 01.10.2024 of this Court rendered in W.P.(C) 13765/2024 Satwant Singh Sanghera v. Asstt. CIT (Delhi)/2024 SCC OnLine Del 7163.
3. Mr. Puneet Rai, learned Senior Standing Counsel for the Respondent, was not in a position to dispute the position of facts and law as stated by the learned counsel for the Petitioner.
4. Heard learned Counsel for the Parties.
5. Adverting to the merits of the case, we are of the view that the Respondent could perhaps have 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, as has been held by this Court in its judgement Satwant Singh Sanghera (supra).
6. We therefore allow the writ petition and quash and set aside the intimation dated 15.02.2013 for AY 2011-12 to the extent it relates to the non-grant of credit of Tax Deducted at Source by the Kingfisher Airlines.
7. Needless to observe that our order shall confine to the amounts which have been deducted by the Kingfisher Airlines and in case there is any other demand raised by the Assessing Officer, the same shall not be effected.
8. The instant petition, along with pending applications, stands disposed of in the aforesaid terms.