My customer deducted TDS on my bills and deposited almost none of it, and I have no Form 16A. Can I still get the credit and stop the demand?
Yes. The Court held that the bar in s.205 operates as soon as it is established that tax was deducted at source, whether or not the deductor deposited it and whether or not a TDS certificate was issued. Form 16A is not the only evidence of deduction; other reliable material — the return disclosures supported by ledger accounts — will do.
Decided by the High Court (Delhi High Court — Rajiv Shakdher and Girish Kathpalia JJ.) on 2023-10-03, reported as [2023] 153 taxmann.com 179 (Delhi), W.P.(C) No. 7797 of 2023, order dated 31 May 2023; review dismissed, [2023] 155 taxmann.com 603 (Delhi), Review Pet. No. 26 of 2023 with CM Appl. No. 50728 of 2023, order dated 3 October 2023. It bears on section 205, section 199, section 237 of the Income Tax Act 1961, in TDS Defaults, Refunds, Interest & Condonation and Demand, Recovery & Stay matters.
Most s.205 authority is about employees and Form 16. This one is about a business payee with no certificate at all, which is the harder case and the one a practitioner actually meets: the deductor has collapsed, no Form 16A was ever issued, and the officer says the claim is unprovable. The department's counter is that without Form 16A there is nothing to show a deduction was made, and the answer here is that the statute speaks of tax having been deducted, not of a certificate having been issued.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For financial year 2010-11, assessment year 2011-12, the assessee provided services worth Rs 8,50,26,199 to Clutch Auto Ltd. Clutch Auto deducted Rs 24,96,199 of tax at source but deposited only Rs 69,897, a deficit of Rs 24,26,302 which the revenue did not dispute. The assessee said the balance of the payment itself was also never remitted to it, a matter it was pursuing before the National Company Law Tribunal. Credit for the undeposited deduction was refused and a demand of Rs 15,24,840 raised instead. The assessee sought a mandamus for the refund of Rs 11,39,870 due for the year. On the writ petition, counsel for the revenue accepted that the issue was covered by Sanjay Sudan and chose not to file a counter-affidavit; the writ was allowed on 31 May 2023. The revenue then applied for review, about 45 days late, on the single ground that no Form 16A had been produced, so it could not be certain that tax had in fact been deducted. The assessee's answer was that Clutch Auto had never issued a Form 16A and it could not obtain one; it had complained to the revenue authorities on 25 January 2017 and, no action having been taken, had sought information under the Right to Information Act on 1 May 2017, receiving on 18 May 2017 an order that gave no substantial information.
The writ petition was allowed on 31 May 2023 and the revenue directed to refund Rs 11,39,870: the revenue cannot recover from the deductee the deficit tax that the deductor deducted and kept, and it cannot refuse credit for it either, because what it cannot do directly it cannot achieve indirectly (paras 13 to 15 of the writ order). The revenue's review application was dismissed on 3 October 2023. On the point taken in review, the Court held that Form 16A is one piece of evidence establishing deduction but not the only one; where the assessee shows reliable material other than Form 16A and prima facie establishes the deduction, the benefit of s.205 cannot be refused, and the assessee cannot be left at the mercy of a deductor who may neither issue the certificate nor deposit the tax (para 8). The bar in s.205 operates as soon as it is established that tax has been deducted, and it is wholly irrelevant whether the deducted tax was deposited or whether a Form 16A was issued (para 12). The assessee had declared the deduction in its return and supported it with its ledger account; the Court noted that a ledger account is not conclusive evidence but found no reason for the revenue's failure to make any inquiry of its own, and held there was no error apparent on the face of the record (paras 9 to 13).
The writ order rests entirely on the earlier Delhi decision in Sanjay Sudan, which it sets out at length and follows: s.205 bars a direct demand on the deductee, the CBDT instruction of 1 June 2015 is aligned with it, and adjustment or refusal of credit is an indirect route to the same recovery. The review order turns on evidence rather than on the construction of s.205. The revenue's only ground was that Sanjay Sudan was distinguishable because the assessee there had produced a Form 16A. The Court rejected the distinction as unsustainable: the section speaks of tax having been deducted, so what has to be established is the deduction, and the certificate is one way of establishing it among others. It weighed the assessee's return, its ledger account, its complaint of 25 January 2017 and its Right to Information application against the revenue's failure to make any inquiry of its own, and noted that before the Public Information Officer the deductor had said only that it had approached the National Company Law Tribunal for insolvency and had not disputed the deduction. Being the State, the revenue could not put the citizen to the task of somehow procuring a Form 16A to secure the benefit of s.205 (paras 8 to 12). The Bombay decision in Yashpal Sahni was followed.
The assessee cannot be left at mercy of the tax deductor, who for multiple reasons may not issue Form No. 16A and/or may not deposit the deducted tax.
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Handle my notice → Ask a CA on WhatsAppYes. The Court held that the bar in s.205 operates as soon as it is established that tax was deducted at source, whether or not the deductor deposited it and whether or not a TDS certificate was issued. Form 16A is not the only evidence of deduction; other reliable material — the return disclosures supported by ledger accounts — will do. This was decided by the High Court (Delhi High Court — Rajiv Shakdher and Girish Kathpalia JJ.) and bears on section 205, section 199, section 237 of the Income Tax Act 1961. It is reported as [2023] 153 taxmann.com 179 (Delhi), W.P.(C) No. 7797 of 2023, order dated 31 May 2023; review dismissed, [2023] 155 taxmann.com 603 (Delhi), Review Pet. No. 26 of 2023 with CM Appl. No. 50728 of 2023, order dated 3 October 2023. Most s.205 authority is about employees and Form 16. This one is about a business payee with no certificate at all, which is the harder case and the one a practitioner actually meets: the deductor has collapsed, no Form 16A was ever issued, and the officer says the claim is unprovable. The department's counter is that without Form 16A there is nothing to show a deduction was made, and the answer here is that the statute speaks of tax having been deducted, not of a certificate having been issued. If it applies to you, the first step is this: Build the deduction from your own records — invoices, the customer's ledger account in your books, the net receipts and the corresponding TDS entries.
For financial year 2010-11, assessment year 2011-12, the assessee provided services worth Rs 8,50,26,199 to Clutch Auto Ltd. Clutch Auto deducted Rs 24,96,199 of tax at source but deposited only Rs 69,897, a deficit of Rs 24,26,302 which the revenue did not dispute. The assessee said the balance of the payment itself was also never remitted to it, a matter it was pursuing before the National Company Law Tribunal. Credit for the undeposited deduction was refused and a demand of Rs 15,24,840 raised instead. The assessee sought a mandamus for the refund of Rs 11,39,870 due for the year. On the writ petition, counsel for the revenue accepted that the issue was covered by Sanjay Sudan and chose not to file a counter-affidavit; the writ was allowed on 31 May 2023. The revenue then applied for review, about 45 days late, on the single ground that no Form 16A had been produced, so it could not be certain that tax had in fact been deducted. The assessee's answer was that Clutch Auto had never issued a Form 16A and it could not obtain one; it had complained to the revenue authorities on 25 January 2017 and, no action having been taken, had sought information under the Right to Information Act on 1 May 2017, receiving on 18 May 2017 an order that gave no substantial information. The matter was decided on 2023-10-03 by the High Court (Delhi High Court — Rajiv Shakdher and Girish Kathpalia JJ.). On those facts the High Court held as follows. The writ petition was allowed on 31 May 2023 and the revenue directed to refund Rs 11,39,870: the revenue cannot recover from the deductee the deficit tax that the deductor deducted and kept, and it cannot refuse credit for it either, because what it cannot do directly it cannot achieve indirectly (paras 13 to 15 of the writ order). The revenue's review application was dismissed on 3 October 2023. On the point taken in review, the Court held that Form 16A is one piece of evidence establishing deduction but not the only one; where the assessee shows reliable material other than Form 16A and prima facie establishes the deduction, the benefit of s.205 cannot be refused, and the assessee cannot be left at the mercy of a deductor who may neither issue the certificate nor deposit the tax (para 8). The bar in s.205 operates as soon as it is established that tax has been deducted, and it is wholly irrelevant whether the deducted tax was deposited or whether a Form 16A was issued (para 12). The assessee had declared the deduction in its return and supported it with its ledger account; the Court noted that a ledger account is not conclusive evidence but found no reason for the revenue's failure to make any inquiry of its own, and held there was no error apparent on the face of the record (paras 9 to 13).
The writ order rests entirely on the earlier Delhi decision in Sanjay Sudan, which it sets out at length and follows: s.205 bars a direct demand on the deductee, the CBDT instruction of 1 June 2015 is aligned with it, and adjustment or refusal of credit is an indirect route to the same recovery. The review order turns on evidence rather than on the construction of s.205. The revenue's only ground was that Sanjay Sudan was distinguishable because the assessee there had produced a Form 16A. The Court rejected the distinction as unsustainable: the section speaks of tax having been deducted, so what has to be established is the deduction, and the certificate is one way of establishing it among others. It weighed the assessee's return, its ledger account, its complaint of 25 January 2017 and its Right to Information application against the revenue's failure to make any inquiry of its own, and noted that before the Public Information Officer the deductor had said only that it had approached the National Company Law Tribunal for insolvency and had not disputed the deduction. Being the State, the revenue could not put the citizen to the task of somehow procuring a Form 16A to secure the benefit of s.205 (paras 8 to 12). The Bombay decision in Yashpal Sahni was followed. In the words reproduced by the source cited on this page: "The assessee cannot be left at mercy of the tax deductor, who for multiple reasons may not issue Form No. 16A and/or may not deposit the deducted tax." The decision followed or applied Sanjay Sudan v. Asstt. CIT (2023) 452 ITR 107 (Delhi); Yashpal Sahni v. Rekha Hajarnavis, Asstt. CIT (2007) 293 ITR 539 (Bom).
It was decided by the High Court on 2023-10-03 and is reported as [2023] 153 taxmann.com 179 (Delhi), W.P.(C) No. 7797 of 2023, order dated 31 May 2023; review dismissed, [2023] 155 taxmann.com 603 (Delhi), Review Pet. No. 26 of 2023 with CM Appl. No. 50728 of 2023, order dated 3 October 2023. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 205, section 199, section 237, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was allowed on 31 May 2023 and the revenue directed to refund Rs 11,39,870: the revenue cannot recover from the deductee the deficit tax that the deductor deducted and kept, and it cannot refuse credit for it either, because what it cannot do directly it cannot achieve indirectly (paras 13 to 15 of the writ order). The revenue's review application was dismissed on 3 October 2023. On the point taken in review, the Court held that Form 16A is one piece of evidence establishing deduction but not the only one; where the assessee shows reliable material other than Form 16A and prima facie establishes the deduction, the benefit of s.205 cannot be refused, and the assessee cannot be left at the mercy of a deductor who may neither issue the certificate nor deposit the tax (para 8). The bar in s.205 operates as soon as it is established that tax has been deducted, and it is wholly irrelevant whether the deducted tax was deposited or whether a Form 16A was issued (para 12). The assessee had declared the deduction in its return and supported it with its ledger account; the Court noted that a ledger account is not conclusive evidence but found no reason for the revenue's failure to make any inquiry of its own, and held there was no error apparent on the face of the record (paras 9 to 13). It arises in TDS Defaults, Refunds, Interest & Condonation and Demand, Recovery & Stay matters, on section 205, section 199, section 237 of the Income Tax Act 1961, and was decided by Delhi High Court — Rajiv Shakdher and Girish Kathpalia JJ.. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show that the gross receipt including the deducted amount was offered in your return; that is what tied the two together here. Say expressly that s.205 turns on deduction, not on deposit and not on Form 16A, and quote the section. Where the officer will not act, remember this relief was obtained in writ jurisdiction and survived a review application by the revenue.
High Courts differ on this point. The point has survived a departmental attack in this Court: the review application was dismissed on 3 October 2023 and no further challenge was traced. Nothing overruling or doubting the orders was found, and no Supreme Court treatment was located. There is, however, a contrary view in another High Court on the credit limb. In Mridul Raj Kunnon v. CIT [2025] 174 taxmann.com 164 (Kerala), 3 April 2025, Gopinath P. J. recorded disagreement with Sanjay Sudan, the decision this writ order follows, to the extent it holds that credit becomes available on deduction where the deductor has not paid the amount over, holding instead that s.199 permits credit only to the extent of receipt while s.205 bars only recovery. That Court refused a direction to cancel the demands and left the revenue to proceed against the deductor under s.201, credit to follow any recovery. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This entry covers two orders of the same bench in the same writ petition: the order of 31 May 2023 allowing the petition, which does no more than follow Sanjay Sudan, and the order of 3 October 2023 dismissing the revenue's review, which is where the reasoning of independent value sits. The review was taken on one ground only, that no Form 16A had been produced, and the Court answered it on the evidence: the deduction, not the certificate, is what s.205 requires to be established, and a ledger account together with the return, an unanswered complaint of 25 January 2017 and an RTI application sufficed where the revenue itself had made no inquiry. The Court noted expressly that a ledger account is not conclusive evidence, so this is not authority that a ledger entry alone will always do. At the writ stage counsel for the revenue accepted that the issue was covered and filed no counter-affidavit; the Court remarked on the later change of mind. The judges are Rajiv Shakdher and Girish Kathpalia JJ, the review order delivered by Kathpalia J. Both orders have now been read. They do not say what the department may do against Clutch Auto Ltd beyond the s.201 route, and they do not decide whether credit must be given in the year of deduction or the year of assessability. On evidence, the Court held a ledger account is not conclusive, so where a deductee's books are unreliable or the deduction is asserted only from a bank credit the position is open. The wider question the Kerala High Court has since answered the other way — whether s.205 mandates the grant of credit at all where nothing has reached the Government — is not addressed in these orders except by adoption of Sanjay Sudan. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was allowed on 31 May 2023 and the revenue directed to refund Rs 11,39,870: the revenue cannot recover from the deductee the deficit tax that the deductor deducted and kept, and it cannot refuse credit for it either, because what it cannot do directly it cannot achieve indirectly (paras 13 to 15 of the writ order). The revenue's review application was dismissed on 3 October 2023. On the point taken in review, the Court held that Form 16A is one piece of evidence establishing deduction but not the only one; where the assessee shows reliable material other than Form 16A and prima facie establishes the deduction, the benefit of s.205 cannot be refused, and the assessee cannot be left at the mercy of a deductor who may neither issue the certificate nor deposit the tax (para 8). The bar in s.205 operates as soon as it is established that tax has been deducted, and it is wholly irrelevant whether the deducted tax was deposited or whether a Form 16A was issued (para 12). The assessee had declared the deduction in its return and supported it with its ledger account; the Court noted that a ledger account is not conclusive evidence but found no reason for the revenue's failure to make any inquiry of its own, and held there was no error apparent on the face of the record (paras 9 to 13).
TaxSphere, “Incredible Unique Buildcon P Ltd v ITO”, https://taxnotice.vittsphere.com/caselaw/case/incredible-unique-buildcon-v-ito-205-tds-not-deposited/ (validity last checked 2026-08-20)
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