Non-issue of Form 16: Court Orders Strict Measures Against Defaulters

Caselaw Name

Rampakash Biswanath Shroff vs Commissioner of Income Tax (TDS)

Writ Petition No. 2537 of 2018

Key Takeaways

- The non-issuance of Form 16 to employees whose TDS was deducted is a serious issue.

- The court expects the Department of Income Tax to penalize defaulters and take strict measures.

- Transparency is crucial; the Department should display information about defaulters.

- The petitioner's grievance was resolved, but the court emphasized the need for future vigilance.

Issue

Did the employer violate the law by not issuing Form 16 to the petitioner after deducting TDS from his salary?

Facts

- The petitioner, a senior citizen, did not receive Form 16 from his employer despite TDS being deducted from his salary.

- This non-issuance caused difficulties for the petitioner in filing his Income Tax Return.

- The petitioner filed a writ petition seeking the court's intervention to ensure the issuance of Form 16 and penalize the employer.

Arguments

Petitioner's Arguments:

- The employer's failure to issue Form 16 after deducting TDS is a violation of the Income Tax Act

- The petitioner requested the court to direct the Department of Income Tax to collect information and ensure the issuance of Form 16.

- The petitioner also sought action against the employer under Section 276B of the Income Tax Act and Section 405 of the Indian Penal Code for misappropriation of public funds.

Respondent's Arguments:

- The Department of Income Tax acknowledged the issue and assured the court of taking appropriate measures.

Key Legal Precedents

Section 133A and 133C of the Income Tax Act:

These sections empower the tax authorities to collect information and conduct surveys.

-Section 276B of the Income Tax Act:

This section deals with the prosecution for failure to pay tax to the credit of the Central Government.

-Section 405 of the Indian Penal Code:

This section pertains to criminal breach of trust.

Judgement

- The court acknowledged the petitioner's grievance and noted that he had received Form 16 from his employer.

- The court emphasized the need for the Department of Income Tax to take strict measures against defaulters to prevent future occurrences.

- The court dismissed the petition, stating that the petitioner's main grievance was resolved, but highlighted the importance of transparency and penalizing defaulters.

FAQs

Q1.What was the main issue in this case?

A1:The main issue was the non-issuance of Form 16 to the petitioner despite TDS being deducted from his salary.

Q2.What did the petitioner seek from the court?

A2:The petitioner sought the court's intervention to ensure the issuance of Form 16 and penalize the employer for non-compliance.

Q3.What was the court's decision?

A3:The court acknowledged the issue, emphasized the need for strict measures against defaulters, and dismissed the petition as the petitioner's main grievance was resolved.

Q4.What sections of the law were referenced in the case?

A4:Sections 133A, 133C, and 276B of the Income Tax Act, and Section 405 of the Indian Penal Code were referenced.

Q5.What is the significance of this case?

A5:The case highlights the importance of transparency and strict measures against employers who fail to issue Form 16 after deducting TDS, ensuring compliance with the law.

1. The petitioner appears in person. In the present petition, he has made following prayers.

“(a) This Hon'ble Court may be pleased to issue the writ of mandamus or writ in the nature of mandamus or any other appropriate writ, thereby directing the respondent no.1 to collect all the information relating to Tax Deducted at Source from salary for the financial year 1st April, 2017 to 31st March, 2018 relevant to assessment year 2018­19 from respondent no.2 by exercising its power under sections 133A, 133C and recover the Tax Deducted as per the provision of Income Tax Act read with the Income tax Rules and arrange or cause to arrange issue of Form 16 to the petitioner so that petitioner can file its Income Tax Return in time without any penalty.

(b) This Hon'ble Court may be pleased to issue the writ of mandamus or writ in the nature of mandamus or any other appropriate writ, thereby directing the respondent no.1 to consider and initiate proceedings under section 276B of Income Tax Act against respondent no.2 to 5.

(c) That this Hon'ble Court be pleased to pass general directions, directing respondent nos. 1 to be vigilant in respect of respondent no.2 in future and ensure compliance of Income Tax Act and Rules by respondent no.2 in future.

(d) Any other and further reliefs as this Hon'ble Court deems fit and proper in the interest of justice.”

2. At the outset, the petitioner stated that he has now received TDS Certificate and Form 16 from the employer. His main grievance which was the reason for him to file the present petition thus stands resolved.

He however, submitted that Income Tax Department should initiate action against the employer under Section 276B of the Income Tax Act, 1961 and should take appropriate steps so that the employer does not repeat such behavior of not issuing TDS Certificate after deducting TDS from the employees. He submitted that the Department has not taken appropriate steps against the employer as a result, large amount of tax recoveries are outstanding, which are not being effectively made. He also argued that not depositing the tax deducted at source from the employee in the Government revenues, would amount to misappropriation of public funds. He submitted that prosecution under Section 405 of the Indian Penal Code should also be initiated.

3. In view of the fact that the petitioner's principal grievance stands resolved, in the facts of the present case, we are not inclined to examine the petition further. Any of the submissions made by the petitioner and the reliefs claimed pursuant to such submissions, would be in the realm of public interest litigation, in which form this petition as admitted, is not filed.

4. Our attention was drawn to an order dated 18th October, 2018 passed by the Division Bench of this Court in which certain observations have been made. The Department is aware about the said order and we are sure that the Department will take appropriate view in connection with such observations. With respect to the initiation of proceedings under Section 276B of the Act also, we find that the same is within the purview of the Department's consideration and we expect that the department will take appropriate view on the basis of facts on record.

5. With these observations, the petition is dismissed.

(M.S. SANKLECHA, J.) (AKIL KURESHI, J.)