CBDT on Coercive Recovery of TDS

CBDT Bars Coercive Recovery Of TDS From Payee Even If Payer Has Defaulted By Non-Deposit Of TDS With Govt
The CBDT has issued Office Memorandum dated 11.03.2016 by which it has drawn attention to its earlier letter dated 01.06.2015 in which it was stated that in case of an assessee whose tax has been deducted at source but not deposited to the Government’s account by the deductor, the deductee assessee shall not be called upon to pay the demand to the extent tax has been deducted from his income. It was further specified that section 205 of the Income-tax Act, 1961 puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch in such situations cannot be enforced coercively. The CBDT has noted that instances have come to the notice of the Board that these directions are not being strictly followed by the field officers. The CBDT has accordingly reiterated the instructions contained in its letter dated 01.06.2015 and directed the assessing officers not to enforce demands created on account of mismatch of credit due to non-payment of TDS amount to the credit of the Government by the deductor.