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Delhi HC Shields Employee from Employer’s Tax Errors in Landmark Verdict

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Published on: December 03, 2023 at 13:03 IST

In a recent verdict the Delhi High Court ruled in favor of Shri Chintan Bindra, a petitioner who sought relief against tax demands imposed by the income tax authorities.

Approaching the court under Articles 226 and 227 of the Constitution of India, Shri Chintan Bindra sought declarations and directions regarding tax demands and interest displayed on the income tax portal for specific Assessment Years (AYs).

The court, presided over by Justice Girish Kathpalia and Justice Rajiv Shakdher, extensively referenced Section 205 of the Income Tax Act, emphasizing that it prohibits direct demands on the assessee if tax has been deducted at the source.

The judgment highlighted that the assessee should not be obliged to pay the tax themselves if it has already been deducted from their income.

Referring to an instruction from June 1, 2015, in alignment with Section 205, the judgment emphasized that demanding tax credit mismatches directly from the assessee is prohibited by the Act.

The court explicitly stated that any indirect tax recovery, such as adjusting it against future refunds, violates Section 205 of the Act.

Based on these legal provisions and arguments, the court allowed the petition, overturning demands for specific Assessment Years.

The judgment instructed the respondents to refund the wrongfully adjusted amount within four weeks.