High Court of Gujarat in case of Devarsh Pravinbhai Patel v/s Asst Commissioner Of Income Tax vide it’s R/Special Civil Application No. 12965/66 dated 24th September 2018 has held that TDS Credit cannot be denied even if TDS is not deposited by the deductor.

Devarsh Pravinbhai Patel (Assessee) was an individual employed as a pilot. During the relevant period, the employer deducted tax at source on salary payments made to the assessee. However, the employer did not deposit such tax with the Government revenue. In this regard the short question under consideration was can the Department seek to recover such amount from the assessee or whether the assessee was correct in contending that he had already suffered the deduction of tax, the mere fact that the deductee did not deposit such tax with the Government revenue could not permit the Income Tax Department to recover such amount from assessee.

High Court held that under the circumstances, by allowing these petitions we hold that the Department cannot deny the benefit of tax deducted at source by the employer of the petitioner during the relevant financial years. The credit of such tax would be given to the petitioner for the respective years. If there has been any recovery or adjustment out of the refunds of the later years, the same shall be returned to the petitioner with statutory interest.