Law:

Section:

Section 205, read with section 194-I, of the Income-tax Act, 1961 - Deduction of tax at source - Bar against direct demand on assessee - Assessment years 1999-2000 to 2001-02 - Whether where tenant-lessee of assessee statutorily deducted tax under section 194-I from monthly rent payable to assessee but failed to remit same to Central Government, revenue could not enforce recovery of that amount from assessee for such failure on part of her tenant, in view of embargo/prohibition provided under section 205 - Held, yes FACTS The assessee was served with a demand notice for making payment of some income-tax arrears within certain period failing which coercive recovery proceedings were also contemplated to be initiated against her. The assessee's case was that the demands raised against her were not justified since the same included even the amounts that were regularly deducted by her tenant at the rate of 20 per cent, in terms of section 194-I, from the monthly rent remitted to her by said tenant without issuing the corresponding deduction certificate and though said aspect had also been brought to the notice of department, no action as such had been taken. The assessee filed writ praying for quashing of the demand notice to the extent of the amount mentioned therein being the amount which had already been deducted by the tenant of the assessee whether remitted or not to the department. On writ petition: HELD On a plain reading of the provision of section 205, it is very clear that in a situation where the tax is deductible at source under section 194-I, as in the instant case, and to the extent to which the tax has been deducted from the income, the assessee shall not be called upon to pay the tax himself/herself to such extent. That means what the section provides for is to put an embargo or prohibition from raising a demand on the assessee in respect of the amount, which was deductible and actually deducted to the extent it had been deducted. The section by itself does not say that the amount should also be paid to the Central Government. There is no doubt that such an obligation is cast on the person responsible, namely, the person who has deducted the amount…

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