Delay in refund claim for exempt disability pension condonable; CBDT circulars cannot deny statutory interest under Sections 10(18), 244A

HC held that delay in claiming refund of TDS deducted from an exempt disability pension could be condoned by HC itself, despite CBDT having statutory power to condone delay. It found the assessee was not negligent but engaged in prolonged litigation to secure disability pension, granted only in 2017 with retrospective effect from 2006. Since the assessee applied for refund promptly thereafter, HC condoned the delay and directed the tax department to process and grant the lawful refund within 60 days. HC further held that CBDT circulars could not bar statutory interest and ordered payment of interest on the refund for AYs 2007-08 to 2015-16.

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Issues:
1. Refund of TDS on exempted disability pension along with interest.

Analysis:
The petitioner, a retired Colonel of the Indian Army, filed a petition against the Income Tax Department's order rejecting his claim for a refund of TDS on exempted disability pension along with interest. The petitioner claimed he suffered a war disability, and the Armed Forces Tribunal and Ministry of Defence confirmed his entitlement to disability pension. The Income Tax Department partially allowed the refund for certain years but rejected it for others beyond a six-year delay limit. The petitioner filed another application requesting the delay be condoned and interest be granted on the refund for all relevant years. The Income Tax Department cited statutory provisions under Section 119(2)(b) of the Income Tax Act, 1961, stating that the delay could only be condoned by the Central Board of Direct Taxes.

The High Court noted the petitioner's decorated service and his struggle to obtain disability pension, first against the Ministry of Defence and now against the Income Tax Department. It acknowledged the undisputed entitlement of the petitioner to disability pension and the technicalities hindering the refund process. The Court examined Section 119 of the Income Tax Act, emphasizing the power of the Central Board of Direct Taxes to condone delays beyond six years. The Court opined that it could also condone the delay in this case, given the circumstances where the petitioner promptly applied for the refund after the disability pension was confirmed.

The Court referenced a previous judgment involving a disabled Army Officer, highlighting the need to prioritize justice over administrative technicalities for armed forces personnel. It expressed concerns about unnecessary hurdles faced by war heroes in obtaining legitimate relief due to administrative procedures. The Court, while upholding the rule of law, emphasized the welfare of armed forces personnel and directed the Income Tax Department to process the petitioner's claim and grant the refund within sixty days. Additionally, the Court ordered the payment of interest on the entire refund amount from 2007-08 to 2015-16, considering the peculiar facts of the case and the petitioner's lack of fault.

In conclusion, the High Court allowed the writ petition, directing the Income Tax Department to process the refund claim and grant the petitioner the entitled refund within sixty days. The Court also mandated the payment of interest on the refund amount for the relevant years, emphasizing the petitioner's rightful entitlement and the need to prioritize justice for armed forces personnel.

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