Court upholds Supreme Court directive on income tax refund procedure under Income-tax Act, 1961

The court upheld the law laid down by the Supreme Court, directing the petitioner to approach the assessing authority for the refund of excess income tax deducted under section 89 of the Income-tax Act, 1961. The court allowed for condonation of delay in filing the claim if done within two months, emphasizing the need to follow the correct legal procedure for refunds. Oil India Ltd. was instructed to assist the petitioner in the process, and the petition was disposed of without costs.

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Issues:
Claim for refund of excess income tax deducted from salary under section 89 of the Income-tax Act, 1961.

Analysis:
The petitioner filed a petition under article 226 of the Constitution seeking a writ to command the respondents to refund the amount of Rs. 1,08,489 deducted in excess of the income-tax payable under the head "Salary" from April 18, 1969, till superannuation on January 1, 1994. The petitioner, an employee of Oil India Limited, was reinstated with back wages as per the order of the Calcutta High Court. The income tax was deducted at source during the lump sum payment, leading to the excess deduction. The petitioner contended that he should have been allowed to spread his income over the years, resulting in a lower tax liability. The petitioner sought a refund based on section 89 of the Income-tax Act, 1961. The petitioner approached the court for the refund of the excess amount.

The petitioner's counsel argued that the excess amount deducted should be refunded by the company itself. However, the respondent's counsel relied on Supreme Court judgments, stating that the assessing authority is responsible for refunding excess tax deducted. The Supreme Court decisions emphasized that the assessee must approach the assessing authority for a refund based on the provisions of the Income-tax Act, 1961. The employer, in this case, Oil India Limited, is obligated to deduct taxes at source but is not required to make the refund if the excess amount is already deposited with the income-tax authorities.

The court upheld the law laid down by the Supreme Court, stating that the petitioner should approach the assessing authority for the refund in accordance with the law. The court also considered the petitioner's mistake in pursuing the remedy before the wrong forum and the limitation period for claiming a refund. The court, in the interest of justice, ordered the assessing authority to condone the delay in filing the claim if made within two months and not treat the claim as time-barred. The assessing authority was directed to expedite the refund process, and Oil India Ltd. was asked to assist the petitioner if needed. The petition was disposed of without any costs.

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