In the return of income, the petitioner duly offered the income on account of sale an Immoveable Property under the head capital gains. The Petitioner also claimed credit of the tax deducted at source by the Purchaser u/s 194-IA of the Act.

Thereafter, in the intimation, u/s 143(1) of the Act, no credit of TDS was given to the Petitioner as the purchaser had failed to deposit the same in Government Treasury.

Consequently, demand u/s 156 of the Act was raised which subsequently let to the issuance of recovery notice. The bank account of the Petitioner was also attached.

In a Writ Petition under Article 226 of the Constitution of India, the Hon’ble Bombay High Court quashed the recovery notice as well as the attachment order and granted the refund due. The Hon’ble Court held that as per Section 205, once the tax is deducted at source, the same cannot be recovered once again from the assessee who has suffered the deduction.

Relying on its earlier decision in the case of Yashpal Sahani v. Rekha Hajarnvis (2007) 293 ITR 539, it was further observed that the department may and had the power to take coercive action against the deductor for recovery of such unpaid tax but that the same could not be recovered from the Petitioner.

For a deeper discussion of how this issue might affect your business, please revert.

*Pushkar Prabhat Chand Jain v. UOI (WP No. 90 of 2019 dt 30-1-2019)