2021 (1) TMI 98 - HC - Income Tax

Petition challenging refund rejection under Income Tax Act dismissed. Importance of procedure emphasized.

The court dismissed the petition challenging the rejection of a refund application under Section 119 (2) (b) of the Income Tax Act, 1961 for Assessment ... Refund claim of excess deposit of advance tax - while preparing challan mistake occurred and in place of ₹ 4,50,000/- - application filed by the petitioner under Section 119 (2) (b) for refund has been rejected - application rejected on the ground that the claim of the petitioner pertains to Assessment Year 2021- 22 which can be claimed in normal course of time as prescribed under the provisions of the Act of 1961 - HELD THAT:- The petitioner is an assessee. It is also not in dispute that income earned by the petitioner is assessable to income tax and is under an obligation under Section 139 of 1961 Act to furnish a return of income during the previous year which in the present case would be 2020-21. Provisions contained under Section 239 of 1961 Act read with Rule 41 (2) of 1962 Rules that the claim for refund can be only on completion of previous year which in the present case would be after 31.3.2021. We are not commended to any independent provision conferring jurisdiction in the PCCIT to order for refund before the completion of previous years, i.e., 2020-21 (31.3.2021). It is not the case of the petitioner that the excess amount deposited by the petitioner towards advance tax is illegally collected by the department as would entitle her for the refund of the same without following the due procedure prescribed under Chapter XIX of the Act of 1961 read with Rule 41 of the Rules of 1962. Issues:Challenge to rejection of refund application under Section 119 (2) (b) of Income Tax Act, 1961 for Assessment Year 2021-22.Detailed Analysis:1. The petitioner sold a hall and claimed a refund for excess advance tax deposited due to a mistake in the challan amounting to Rs. 45,00,000 instead of Rs. 4,50,000. The application for refund was rejected under Section 119 (2) (b) of the Income Tax Act, 1961, stating that the claim pertains to the current assessment year and should be made in the normal course as prescribed by the Act.2. The petitioner argued that the High Court under Article 226 of the Constitution of India has the jurisdiction to issue a mandamus for refund, citing the case of State of Madhya Pradesh v. Bhailal Bhai (AIR 1964 SC 1006) to support the contention. The respondents contended that the refund can only be claimed after the completion of the previous year, i.e., after 31.3.2021, and the cited case does not apply to the current situation.3. The court considered the provisions of Section 239 and Rule 41 (2) of the Income Tax Rules, 1962, which specify the procedure for claiming a refund. It was noted that the claim for refund can only be made after the completion of the previous year, as per the Act. The court emphasized that there is no provision allowing the Principal Chief Commissioner of Income Tax to order a refund before the completion of the previous year.4. Referring to previous judgments, the court highlighted that a petition solely seeking a refund of money collected as tax is not ordinarily maintainable under Article 226 of the Constitution. The court emphasized that the petitioner did not establish that the excess amount deposited was illegally collected, which would entitle her to a refund without following the due procedure prescribed under the Act and Rules.5. Ultimately, the court concluded that since no relief can be granted in the current situation, the petition was dismissed. The judgment underscored the importance of following the prescribed procedures for claiming refunds under the Income Tax Act and Rules.By analyzing the issues raised in the case and the arguments presented by both parties, the court's decision was based on the legal provisions governing refund claims and the lack of grounds for granting relief in the absence of illegal collection of the excess amount deposited.