High Court grants relief, allows TDS refund claim, permits revised returns within 3 months

The High Court allowed the petition, quashed the order rejecting the application for condonation of delay in claiming a TDS refund, and granted permission to carry forward the TDS amount to future assessment years. The court found a bonafide error in not claiming the TDS benefit and allowed the petitioner to file revised returns within three months. The respondents were permitted to initiate proceedings under Section 143(2) of the IT Act, with the petitioner precluded from raising a limitation defense.

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Issues:
The judgment involves the rejection of an application for condonation of delay in claiming a refund based on Tax Deducted at Source (TDS) and the permission to carry forward the same to future assessment years under Section 119(2)(b) of the Income Tax Act, 1961.

Summary:

Issue 1: Application for Condonation of Delay in Claiming Refund based on TDS
The petitioner challenged the first respondent's order rejecting the application for condonation of delay in claiming a refund based on TDS. The petitioner sought permission to carry forward the TDS amount of Rs. 18,54,000/- from the financial year 2017-18 to future assessment years. The first respondent rejected the application on the basis that the petitioner did not file a revised Return of Income (ROI) for the assessment year 2018-19, which is a prerequisite for claiming the refund. The court found that the petitioner did not explicitly request condonation of delay in filing the revised ROI, which is permissible under Section 139(5) of the IT Act. The court quashed the impugned order, condoned the delay, and allowed the petitioner to file revised returns within three months.

Issue 2: Bonafide Error in Not Claiming TDS Benefit
The petitioner entered into a Joint Development Agreement with a developer for residential properties and had TDS deducted. Although the TDS amount was reflected in Form 26AS for the assessment year 2018-19, it was not claimed in the ROI for that year. The court noted that there was a bonafide error in not claiming the TDS benefit, as the petitioner believed it was not required since the deduction was towards an advance and the income would be realized only upon the sale of apartments in a later assessment year. The court found a strong case of bonafide error and allowed the petitioner to claim the TDS benefit by filing revised returns within the specified timeframe.

Conclusion:
The High Court allowed the petition, quashed the impugned order, and granted the petitioner permission to file revised returns within three months. The respondents were given liberty to initiate proceedings under Section 143(2) of the IT Act, and the petitioner was precluded from raising the defense of limitation in case such proceedings were initiated.

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