The Delhi High Court recently granted relief to Satwant Singh Sanghera, a pilot formerly employed by the now bankrupt Kingfisher Airlines, against a tax demand of over Rs 11 lakh.

Singh contended that he had duly filed his income tax returns for the assessment years in question and the company had deducted TDS from his salary. The same was reflected in Form 16A issued by the company.

He claimed that the amount was not deposited with the government due to the company’s failure and that he was not liable for the tax already deducted from his remuneration.

Singh relied on Section 205 of the Income Tax Act, 1961, which prohibits any direct claim against an assessee to the extent that tax has been deducted from his income .

The Deputy Commissioner of Income Tax, on the other hand, had issued a notice to the petitioner under Section 245 of the Income Tax Act.

The provision authorizes the Income Tax Department to adjust any pending claim of a previous assessment year against the refund of the current year. This adjustment occurs when the taxpayer has unpaid tax from a previous year and a refund available in the current year.

The seat of the High Court of Justices Vibhu Bakru and Swarna Kanta Sharma observed that the issue before it is covered by an earlier decision of the Coordination Court in the case of Sanjay Soudan v. The Deputy Commissioner of Income Tax and Others (2023).

It was held therein that neither the claim as tax withheld by the deductor/employer can be recovered from him nor the same can be adjusted against future refund, if any, payable to him .

The High Court also cited a direction dated 01.06.2015 issued by CBDT, clarifying that the assessee cannot be called upon to pay tax, which was deducted at source from his income.

As a result, the High Court quashed the notices and ordered the Finance Ministry to refund the amounts owed to Singh.

Appearance: Advocate Archit Arora for the petitioner; Senior Standing Advocate Shlok Chandra with Junior Standing Advocates Naincy Jain and Madhavi Shukla, and Advocate Sushant Pandey for Revenue

Case title: Satwant Singh Sanghera v. Deputy Commissioner of Income Tax

Case number: WP(C) 13765/2024

Click here to read/download the order