Tds deducted as per form 16 but not in 26 as

This query is : Resolved

Prashant (Querist)
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15 September 2014 Govt Employer issue Form 16 (Manual-Q4 return yet to submit) for AY 2013-14.

Employee submitted return for AY 2013-14 within due date as per Form 16 with showing Refund.

Employee received Demand u/s 143(1) for demand as no such amount credited in 26AS

Please guide me :
1. Employee need to pay as per demand?
2. Any Penalty for this?
3. What action can employee take against employer for Tax not deposited or not in correct account?

CA. Brijesh Baranwal

CA. Brijesh Baranwal (Expert)
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16 September 2014 DEMAND U/S 143(1)

At times, income tax payers get intimation of demand from the Department u/s 143(1).
Most of such cases are generated due to discrepancy in income tax return and the documents on the basis of which such return is prepared including TDS certificates, Form 16/Form 16A or Form 26AS etc.

RECTIFICATION U/S 154

Income Tax Act provides for the rectification u/s 154 for the cases where demand has been intimated under above said section 143(1).
Taxpayer should collect all relevant documents including Form 16 (in case of salaried employees), Form 16A, TDS Certificates, Form 26AS and Computation of total income etc.
On the basis of the above documents, a proper rectification request should be prepared and submitted to the income tax department.

PROVISION OF THE ACT WHERE TDS IS NOT DEPOSITED/WRONGLY DEPOSITED

The Income Tax Department may deny credit of TDS in cases where TDS is available in Form 16/Form 16A/TDS Certificates but not available in Form 26AS. Also in some cases employer/deductor may not have deposited the said TDS or deposited in wrong PAN number. In such cases, provision u/s 5 of the Income Tax Act, 1961 shall be helpful to the taxpayer/professional.

SOME IMPORTANT CASE LAWS WHERE TDS IS NOT DEPOSITED/WRONGLY DEPOSITED

There are various judgments of the different Hon’ble High Courts where it has been decided that if the TDS is reflecting in Form 16/Form 16A or TDS certificates or the fact of TDS deduction is established, then the Department must provide the credit of the same to the concerned assessee and he/she shall not be called upon to pay the tax again to the extent to which tax has been deducted.
Taxpayers/Professionals may take help of following case laws in above mentioned situations;

1. Sumit Devendra Rajani Versus Assistant Commissioner Of Income Tax
2. ACIT vs. Om Prakash Gattani (2000) 242 ITR 638.
3. Yashpal Sahni vs. ACIT (2007) 293 ITR 539.
4. Smt. Anusuya Alva vs. Deputy Commissioner of Income Tax and Others (2005) 278 ITR 206 (Karn).
5. Commissioner of Income Tax vs. Ranoli Investment P. Ltd. and Others (1999) 235 ITR 433(Guj).

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Prashant

Prashant (Querist)
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07 October 2014 Thanks for your reply.

Please guide me what I have to do practically in above situation.

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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27 July 2025 Here’s a practical step-by-step guide for you in this situation where TDS is shown in Form 16 but not in Form 26AS, leading to a demand notice under section 143(1):

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### 1. Should you pay the demand?

* **Legally, yes**, you should pay the demand to avoid further interest and penalty because from the Income Tax Department’s point of view, tax is not credited to your account.
* However, if the TDS was actually deducted by the employer, you have a right to get credit for that tax once the employer deposits it.

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### 2. Is there any penalty?

* If you do not pay the demanded amount on time, you may attract interest and penalty under Sections 234A, 234B, 234C.
* Since the TDS was deducted by your employer but not deposited, **penalty/interest liability primarily lies with the employer**.
* You can avoid penalty if the TDS is deposited by the employer and reflected in Form 26AS before the demand is finalized.

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### 3. Practical steps to take against the employer:

**Step 1: Communicate with Employer**

* Inform your employer in writing (email or letter) about the issue — that TDS deducted is not credited in Form 26AS because the TDS return for Q4 has not been filed.
* Request them to immediately file the pending TDS return and deposit the TDS amount.

**Step 2: Follow Up**

* Keep records of all communications.
* Follow up regularly with the employer’s accounts or HR department until the correction is made.

**Step 3: Escalate if no response**

* If employer does not cooperate, file a **complaint with the Assessing Officer (AO) of TDS** or the jurisdictional Income Tax Officer responsible for TDS matters.
* You can also lodge complaint on the NSDL TDS grievance portal: [https://www.tdscpc.gov.in/app/tpcomplaint.xhtml](https://www.tdscpc.gov.in/app/tpcomplaint.xhtml)

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### 4. After employer files correction:

* Once employer files the correction and the TDS credit appears in your Form 26AS, you can file a **rectification application u/s 154** to reduce the demand or claim refund.
* Keep an eye on your Form 26AS for the update.

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### Summary:

| Step | Action |
| ------------------------- | ------------------------------------------------------ |
| Demand received | Pay demand to avoid interest/penalty |
| Communicate with Employer | Request immediate filing of TDS return and payment |
| Follow up | Regular reminders & keep proof |
| Escalate | Complaint to AO or NSDL TDS grievance portal |
| After correction | File rectification application to adjust demand/refund |

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If you want, I can help you draft the email/letter to your employer to raise this issue. Would that help?

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