What if – Employer does not issue a TDS certificate.

Facts:

An issue which is of serious concern for those salaried employees employed by Companies and Corporations, whose Promoters and persons in charge do not bother to issue, to the employees from whose salary, the tax is deducted at source, the certificates.

1. Hence, the petitioner says that Form No. 16 having not been issued in time, the employees are suffering serious consequences and are proceeded against for breaching and violating legal provisions.
2. Some of these employees are senior citizens.

HIGH COURT OF BOMBAY in the case of Ramprakash Biswanath Shroff v.Commissioner of Income-tax (TDS) had held that:

1. We would, therefore, request the respondents, particularly the Commissioner of Income Tax (TDS), Mumbai to file a comprehensive affidavit.
2. We want the Ministry of Finance, Department of Revenue also to be made aware of these serious lapses in Mumbai and around.

We have noticed that there is no transparency, in the sense, no information is ever displayed in relation to such defaulters by the Department. We expect the Department to provide information of such defaulters so that those seeking employment or awaiting either retiral benefits or such other sums from the employers would know in advance as to how they are expected to comply with the law.

In the instant case, the petitioner is a senior citizen of 65 years of age and because he is not in possession of Form No.16, he has suffered at the hands of the Department.

Let, therefore, the necessary steps be taken in law so that such occurrences are avoided in the future.

We would expect the Department of Revenue, particularly, Department of Income Tax to penalize such defaulters and take other strict measures contemplated by law against them.

We post this matter in the hope that this Writ Petition will be taken as a test case by respondent No. 1.

Legal position:

Section 205 – Bar against direct demand on assessee Where tax is deductible at the source under the foregoing provisions of this Chapter], the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income

Section 191  –  Direct payment. : [(1)] In the case of income in respect of which:

1. Provision is not made under this Chapter for deducting income-tax at the time of payment, and
2. In any case where income tax has not been deducted in accordance with the provisions of this Chapter,

income-tax shall be payable by the assessee direct.

¹[Explanation.—For the removal of doubts, it is hereby declared that if any person including the principal officer of a company,—

(a)		who is required to deduct any sum in accordance with the provisions of this Act; or
(b)		referred to in sub-section (1A) of section 192, being an employer,

does not deduct, or after so deducting fails to pay, or does not pay, the whole or any part of the tax, as required by or under this Act, and where the assessee has also failed to pay such tax directly, then, such person shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default within the meaning of sub-section (1) of section 201, in respect of such tax.