Excess TDS refund without separate application: tax department must issue refund automatically, with statutory interest ordered

The dominant issue was whether the Revenue could deny refund of excess TDS on the ground that the assessee had not filed a refund application. Relying on the Karnataka HC ruling in S. Thiagarajan, the HC held that the Income-tax Department bears a statutory obligation to grant due refunds suo motu and cannot insist upon a separate claim when the excess is apparent. The Revenue failed to show any binding reversal of that precedent or justify a contrary interpretation of the Act. Consequently, the impugned orders were quashed and the Revenue was directed to refund the TDS amount with admissible statutory interest within eight weeks.

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Issues:
Challenging order under Section 119(2)(b) of the Income-tax Act, 1961 for non-constituted revised return. Condonation of delay in filing revised return for assessment year 1998-99. Refund of TDS amount with interest. Applicability of Karnataka High Court decision in S. Thiagarajan's case.

Analysis:
The judgment dealt with multiple issues arising from challenges to orders under the Income-tax Act, 1961. The petitioner challenged an order dated 26.10.2009 under Section 119(2)(b) of the Act, where the return filed was deemed a non-constituted revised return under Section 139(5). The Commissioner upheld the view that it was an invalid return. Another challenge was against an order rejecting a petition for condonation of delay in filing the revised return for the assessment year 1998-99. These challenges were part of a batch of writ petitions involving employees of Infosys Technology Limited.

In a related case concerning an employee named Mr. S. Vasudevan, the Division Bench dismissed the appeal filed by the revenue, following a previous judgment related to employees covered under the Employees Stock Option Scheme. The issue revolved around the refund of TDS amount with interest, with the employees seeking relief based on the Karnataka High Court decision in S. Thiagarajan's case. The judgment highlighted the obligation of the Revenue to effect the refund without requiring the assessee to apply for it, as per the Karnataka High Court decision.

The learned single Judge allowed the writ petitions, citing the Karnataka High Court decision. The Revenue's contention that the decision was not applicable was not accepted, emphasizing the obligation on the Revenue to refund without the need for the assessee to apply. The judgment directed the respondents to refund the amount to the petitioner/assessee with interest as per the provisions of the Income-tax Act within eight weeks from the date of the order, with no costs imposed. The decision was based on the principles established in the Karnataka High Court case and upheld the right to refund the TDS amount with interest.

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