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CBDT Bars Coercive Recovery Of TDS From Payee Even If Payer Has Defaulted By Non-Deposit Of TDS With Govt

The CBDT has issued Office Memorandum dated 11.03.2016 by which it has drawn attention to its earlier letter dated 01.06.2015 in which it was stated that in case of an assessee whose tax has been deducted at source but not deposited to the Government’s account by the deductor, the deductee assessee shall not be called upon to pay the demand to the extent tax has been deducted from his income. It was further specified that section 205 of the Income-tax Act, 1961 puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch in such situations cannot be enforced coercively. The CBDT has noted that instances have come to the notice of the Board that these directions are not being strictly followed by the field officers. The CBDT has accordingly reiterated the instructions contained in its letter dated 01.06.2015 and directed the assessing officers not to enforce demands created on account of mismatch of credit due to non-payment of TDS amount to the credit of the Government by the deductor.


F.No. 275/29/2014-IT (B)
Government of India
Ministry of Finance
Central Board of Direct Taxes
(CBDT)

New Delhi, Dated: 11th March, 2016

Office Memorandum

Sub: Non-deposit of tax deducted at source by the deductor- Recovery of demand against the deductee assessee.

Vide letter of even number dated 01.06.2015, the Board had issued directions to the field officers that in case of an assessee whose tax has been deducted at source but not deposited to the Government’s account by the deductor, the deductee assessee shall not be called upon to pay the demand to the extent tax has been deducted from his income. It was further specified that section 205 of the Income-tax Act, 1961 puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch in such situations cannot be enforced coercively.

2. However, instances have come to the notice of the Board that these directions are not being strictly followed by the field officers.

3. In view of the above, the Board hereby reiterates the instructions contained in its letter dated 01.06.2015 and directs the assessing officers not to enforce demands created on account of mismatch of credit due to non-payment of TDS amount to the credit of the Government by the deductor. These instructions may be brought to the notice of all assessing officers in your Region for compliance.

This issues with the approval of Member (Revenue &TPS).

(Sandeep Singh)
Under Secretary (Budget)
Ph: 2309 4182
Email: Sandeep.singh68@nic.in


6 comments on “CBDT Bars Coercive Recovery Of TDS From Payee Even If Payer Has Defaulted By Non-Deposit Of TDS With Govt
  1. In this pasting down below you will see how one needs to learn their work is high lighted. Just read. tks

    Trump is a Tzar like for America! – Never allow any ‘wrong man’ to be the President of the USA even if elected by the people of the USA!

    If ‘wrong man’ sits naturally , Nation suffers!!

    By professor Guru Balakrishnan.

    Indian Community is the USA was used by Mr Trump, being a businessman builder, as most American Indians supported him mostly Indian business men in the USA or self employed professionals who succumbed to his idea of ‘Less taxes on the rich and wealthy’ which invariably had in its fold Lawyers, Medicos,CAs (CPAs) and Marketing professionals mostly earned high remuneration, besides restaurant owners, and those earned cash incomes there in the USA, this I observed when i spent my six months in 2015 at a MA suburb.

    Besides Lions clubs mostly favored Mr .Trump, as Lions clubs are the clubs of self employed or business men combinations.

    In 2015, I felt Mr Trump being a builder in Manhattan NY state, he lived in luxury like any big businessmen builders who throw very lavish parties to attract votes to boost Mr . Trump, besides they boasted Mr Trump only will occupy the glass ceiling of the White house in the Washington D C and their stand was indeed ‘very confidently’, by saying Democrat Lady nominee in Mrs Hillary Clinton is bound to lose as ‘no white American liked the idea of a woman occupying that high office of the President of the United States’.

    In fact , in the USA, labor, middle classes never touted the idea of a woman in the very high influential office of the President, as lobor classes may be from minorities like African American, American Blacks, American Muslims, Latinos, Hispanics, Mexicans who got American citizenship.

    Like Indian Muslims never liked the idea of Muslim women be given equal rights comparable to Muslim man.

    You may see today how Muslim religious Boards do not want Muslim women to assert their equal rights; and in fact the Muslim men vehemently oppose Muslim women to be on par with Muslim men, who may be following any occupation, profession, why labor too.

    You might have seen the Haji Ali Darga entry how Muslim men trustees vehmently oppose the Bombay high court verdict which was upheld by the honorable Supreme Court of India recently;

    Now you see one ‘Rizvi college of Mumbai is filing with the Haji Ali Darga Trustees board before the Honorable Supreme court to review the SC judgement which upheld the women entry in the Darga, besides on ‘Triple ‘Talaq’ issue, under their ‘curative petitions.

    Again, one can see today Art 44 of Part IV A of the Indian Constitution for Uniform Civil Code (UCC) is opposed when the new Law Commission calling for the ‘public opinion’ on the ‘issue’, obviously vehemently opposed by very Muslim community, by citing their fundamental rights granted under Art 25 – 28, being invoked;

    When Art 13 itself is questioned and modified by the very first Constitutional Amendment is indeed questioned in Golaknath v/s union of India but in Kesavananda Bharathi v state of Kerala, 13 member bench resurrected the Art 13 to made it work under Art 13(1); then in Minerva Mills v UOI, and Indira Gandhi v UOI, then in Menaka Gandhi v UOI matter too.

    Obviously, Art 25-28 could get abridged like in the case of Art 13 the Union of India (government of India could pass a constitutional amendment to abridge the Art 25- 28 to accommodate the UCC in the case Muslims,Parsis etc) to ensure the Law Commission to recommend the necessarily amendments to stifle the ‘triple talaq’ and other questionable issues of the various religions ;

    Or in the alternative, the very Law commission may recommend a Constitutional Amendment to circumscribe the relevant Art 25to 28 of the Part III of the Indian Constitution to accommodate the Art 44 of the Part IV of the Constitution (directive principles) when Art 13 is taken for a toss by the first Constitutional Amendment to accommodate the most controvertial Schedule IX, though it is now declared ‘ultra vires’ in the case LR Coelho v St of TN by the constitutional bench headed by CJI Mr Y K Sabharwal in 2007, though it disabled the sch IX, but just allowed only about 13 Acts, as CJI K Subba Rao allowed certain Acts in the Golaknath case.

    What I say is, In the US elections in 2016 on November 8th , to finalize to the office of the US President by the American public ; in that election of controversial Mr . Donald Trump got elected to the office of the US Presidency, thanks to a large majority of illiterate or uneducated labor forces of the USA labor; or the under graduate major middle class workers, besides vested interests of businessmen or self employed Americans, Indian Americans, besides many immigrant workers as stated in a para above;

    Obviously , Mr .Trump is not well versed in Governance in the office of President of the USA, like Mrs. Hillary Clinton, as she held the office of Secretary of State, beside being a Lawyer herself.

    In fact Mr Trump doesn’t hold any such relevant exposure to the office of presidency;

    His poor exposure to the relevant governance capabilities, he might take the office for a toss too , if he ‘mindlessly’ indulges in tinkering already laid patterns of working for the USA, the very office of Presidency of the USA;

    One needs to note, if the republican majority in the congress or in the senate fails to control Mr Trump he might really take the office of presidency for a toss is obvious fact;

    Besides, one might note, Mr .Trump for several years, not paid federal income taxes per his own statement in the presidential primaries and he did not even gave the copies of his incomes and expenditures, besides he simply some miss administered ‘charities of others’ as if his own ‘Trump Charities’ obviously very serious felonies that could be accrued of under U S Charities Laws, besides, the IRS could investigate his ‘non filings’ of ROI (return of income for different Assesment Years) ; besides how the CPAs worked for his trusts, lawyers, and other servant of his company could be investigated by the very IRS, to retrieve the losses to government treasury ; if proved in the court of appropriate jurisdiction, he might be ‘impeached’ by the very Congress or Senate for ‘Tax Gate’ ‘Charity Gate’ if he fails to resign like EX President Richard Nixon did in Watergate scandal.

    If done either way, fresh elections for the office of presidency or in the alternative the vice president electee Mr Pense can take over the office of President, after all, Republicans need not run for another election round, for the American Constitution never allows ‘wrong man’ to be allowed to function as the president of the United States of America, as American Constitution is Supreme law of the USA, like the Indian Constitution in India.

    Problem is he cannot work successfully as President if he fails to compromise with democrats some of their ideas, as they worked with republican ideas of the past to maintain some continuity, else i wonder whether his term will really work all four years from now on, as civil riots are taking place in the states in the USA.

    ‘Never allow ‘wrong men’ to steer the ship of state, without duly monitored by the very party that nominated him or her.’

  2. Fact is Modi surgical attack on black money hoarders is half baked idea; though indeed needed shock; naturally it may not get what results expected on the one side, so the RBI need to monitor the banks ATMs, as also deposits by jitters, so also so many factors, IT dept cannot overdo is another warning that way CBDT rightly issued circular on TDS related issues, i would add ROIs also may be filled bu jitters so care is to see that unnecessary Notices by AOs also need be avoided;
    in fact many IT dept officials too have unaccounted cash in their own kitty too thanks the liaison CAs initiatives; so IT, central excise men need to shed corrupt income, else they might lose jobs by just dismissals by the Ministry as Art 311 cannot help them under the Indian constitution.

    Another fact is ‘ in fact we are going to touch ‘stagflation’ if uncontrolled unrealistic prices of real estates have greatly contributed thanks to UPA govt lakadicical policies in their 10 years ‘rule’, for they too contributed to a lot of black moneys and Swiss bank numbered accounts; that way besides even then opposition parties to involved in black moneys though they may talk like ‘ideal men’ ; besides trade and business too contributed a lot , besides the real estate too black cash say about 40% of the cost of flats.

    Bank loans and bridge loans also helped the growth of black moneys just because banks too transacted or involved bribes;

    so too BCCI activities like IPLs also contributed a lot of black moneys that way stagflation spurt is there.

    Anyway you have to take out of circulation high denomination currency besides the new re.2000 currency sooner like 1000s and 500s though 1000s and 500s are going may be after 14 November (Nehru birth day incidentally).

    You should not be happy with just rs.100 currency notes, and other lower denominations ,besides you need to issue re.1 currency signed by the finance secretary of the govt of india and also introduce all denominations of coins from re 1/- down to save the sliding economy as fast as possible. Besides you need to properly plan indeed , more carefully on the idea of slashing the black money in a steady mode and not by great ‘surgical attacks theory’ but need to maintain high secrecy is my view.

  3. Satish Raval says:

    CBDT Bars Coercive Recovery Of TDS From Payee Even If Payer Has Defaulted By Non-Deposit Of TDS With Govt – is useful. thanks . I have received demands of more than Rs.2 lacs + interest for Ass Year 2011-12. My previous employer did not deposit TDS deducted from my salary and he even did not issue TDS certificate ( as he defaulted and as such form 16A containing date of payments would not be complied with, he denied to give 16A certificate ) He has issued Salary Certificate in Form 16A form stating that Rs….. has been deducted from salary. Will this Certificate suffice for stay of demand or such recovery is prevented only against TDS certificates issued but not deposited??

    with regards

  4. Radhey Shyam PAN ANKPS4891G LUCKNOW says:

    Really it is a good step from CBDT.I was a Central government employee and retired in January 2012.During the assessment years 2009-10 and 2012-13 TDS was deducted by Deductor.I submitted Form 16 as a proof of deduction.After prolonged communication demand for 2012-13 is settled by CPC Bangalore.Demand for 2009-10 is still shown on website.It is pending settlement at Assessing Officer level.I have submitted necessary documents in proof of deductions.

    • Pankaj says:

      Hello Radhey Shyam ji, I am facing the same issue with my father’s return who is also a retired central govt employee (railways). Could you please share with me the steps you took to get the demand rectified. My contact no. is 9871090707. Please send me a whatsapp if you feel comfortable. Thanks.

  5. bobjee kurien says:

    Why should the CBDT REITERATE IT’S INSTRUCTIONS.TAKE ACTIONAGAINST THE OFFICERS WHO CROSSED THE LINE

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