Court sets aside respondent's decision, remands for fresh determination on section 197 certificate application

The court set aside the decision of respondent No.2 dated 08.06.2020 and remanded the matter back for a fresh decision on the petitioner's application for a certificate under section 197 for the assessment year 2020-21. The decision was to be made on merit and in accordance with the law within six weeks from the date of receipt of the court's order. The writ petition was allowed with no order as to costs.

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Issues Involved:
1. Legality and validity of the order dated 03.04.2020 issued by the first respondent under section 119 of the Income Tax Act, 1961.
2. Quashing of the decision of respondent No.2 dated 08.06.2020 rejecting the application for a certificate under section 197 of the Income Tax Act, 1961.
3. Compliance with procedural requirements and opportunity of hearing in the rejection process.
4. Impact of the COVID-19 lockdown and related government ordinances on the procedural timelines and obligations.

Detailed Analysis:

1. Legality and Validity of the Order Dated 03.04.2020:
The petitioner challenged the legality of the order dated 03.04.2020 issued by the Central Board of Direct Taxes (CBDT) under section 119 of the Income Tax Act, 1961. The order mandated that pending applications for lower or nil rate of TDS should be disposed of by 27.04.2020, provided the applicants informed the assessing officer about the pendency of their applications via email. The petitioner argued that this order disregarded the 'Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020' issued by the Ministry of Law and Justice, which extended all procedural timelines to 30.06.2020 due to the COVID-19 pandemic.

2. Quashing of the Decision Dated 08.06.2020:
The petitioner sought to quash the decision of respondent No.2 dated 08.06.2020, which rejected his application for a certificate under section 197. The rejection was based on the petitioner's failure to respond to a notice dated 10.04.2020, calling for additional details during the lockdown period. The petitioner contended that the rejection was made without providing adequate reasons and without granting a proper opportunity for a hearing.

3. Compliance with Procedural Requirements and Opportunity of Hearing:
The petitioner argued that the rejection of his application was done without proper adjudication and without considering the materials on record. The petitioner also highlighted that the rejection occurred after the extended deadline of 27.04.2020, specifically on 08.06.2020, which was illegal. The petitioner emphasized that due to the lockdown, he could not access the necessary documents from his office or his Chartered Accountant to respond to the notice.

4. Impact of the COVID-19 Lockdown and Related Government Ordinances:
The court noted the unprecedented situation caused by the COVID-19 pandemic and the resulting lockdowns imposed by the Government of India and the Government of Maharashtra. The 'Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020' extended various procedural timelines to 30.06.2020. The court found that the CBDT's order dated 03.04.2020, which required applicants to inform the assessing officer about the pendency of their applications by 27.04.2020, placed an additional burden on the applicants during the lockdown. The court held that the Ordinance, having the effect of an Act of Parliament, should override the CBDT's order.

Conclusion:
The court concluded that the rejection of the petitioner's application as infructuous either on 31.03.2020 or on 27.04.2020 was unjustified and unsustainable in law and facts. The court set aside the decision of respondent No.2 dated 08.06.2020 and remanded the matter back to respondent No.2 for a fresh decision on the petitioner's application for a certificate under section 197 for the assessment year 2020-21. The decision was to be made on merit and in accordance with the law within six weeks from the date of receipt of the court's order. The writ petition was allowed with no order as to costs.

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