Mumbai: Unfortunately, at times, employees find that while tax has been duly deducted at source (TDS) against their salary income, it has not been deposited by the employer with govt.
A decision by the Mumbai bench of Income-Tax Appellate Tribunal (ITAT) emphasises that the onus of proof of TDS against salary income lies with the employee. To prevent denial of tax already deducted against their salary income, tax experts say employees should keep handy their salary slips and Form 16A—the TDS certificate handed over by the employer at the end of a financial year.
Fortunately, several judicial decisions have favoured the employee (taxpayer), the view being that TDS should be recovered from the employer who has not deposited it. However, the facts of the case decided by the Mumbai ITAT were peculiar.
A Dighe in his income-tax returns for financial year 2017-18 showed a salary income of Rs 41.2 lakh against which he claimed that Rs 10.45 lakh had been deducted at source. However, as the employer, Nirmal Lifestyle, did not deposit the tax so deducted, the TDS claim was denied by the I-T officer. This course of action was upheld by the commissioner (appeals).
Tax experts said a situation like this would lead to not just denial of TDS, which means that the employee has to bear this tax again, but can also lead to penalties for the employee for shortfall in tax dues.
The ITAT bench said: “No doubt, the contention raised by the taxpayer (the employee) seems to be reasonable and logical. However, the taxpayer is required to discharge its primary onus by producing relevant documents…”
It referred to past judicial precedents where the taxpayer had been able to substantiate the tax deducted by producing relevant documents. In this case, the taxpayer had failed to submit any. However, ITAT gave Dighe a second chance by sending the matter back to the commissioner (appeals) to enable him to provide the requisite proof, failing which the TDS deduction would not be allowed.
A decision by the Mumbai bench of Income-Tax Appellate Tribunal (ITAT) emphasises that the onus of proof of TDS against salary income lies with the employee. To prevent denial of tax already deducted against their salary income, tax experts say employees should keep handy their salary slips and Form 16A—the TDS certificate handed over by the employer at the end of a financial year.
Fortunately, several judicial decisions have favoured the employee (taxpayer), the view being that TDS should be recovered from the employer who has not deposited it. However, the facts of the case decided by the Mumbai ITAT were peculiar.
A Dighe in his income-tax returns for financial year 2017-18 showed a salary income of Rs 41.2 lakh against which he claimed that Rs 10.45 lakh had been deducted at source. However, as the employer, Nirmal Lifestyle, did not deposit the tax so deducted, the TDS claim was denied by the I-T officer. This course of action was upheld by the commissioner (appeals).
Tax experts said a situation like this would lead to not just denial of TDS, which means that the employee has to bear this tax again, but can also lead to penalties for the employee for shortfall in tax dues.
The ITAT bench said: “No doubt, the contention raised by the taxpayer (the employee) seems to be reasonable and logical. However, the taxpayer is required to discharge its primary onus by producing relevant documents…”
It referred to past judicial precedents where the taxpayer had been able to substantiate the tax deducted by producing relevant documents. In this case, the taxpayer had failed to submit any. However, ITAT gave Dighe a second chance by sending the matter back to the commissioner (appeals) to enable him to provide the requisite proof, failing which the TDS deduction would not be allowed.
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