2024 (9) TMI 651 - HC - Income Tax

Taxpayer wins revised return case for TDS credit on land compensation despite 6-year limitation challenge

Delhi HC allowed writ petition challenging rejection of revised tax return application for TDS credit on enhanced land acquisition compensation. Revenue ... Condonation for filing revised return - Power of High Court under Article 226 - Validity of CBDT Circular limiting condonation - Credit for TDS and amendment under Section 155(14) - Entitlement to refund under Section 237 - Form of claim for refund and limitation under Section 239 - Bar against direct demand where tax deducted under Section 205 - Interest on delayed refund under Section 227Validity of CBDT Circular limiting condonation - Power of High Court under Article 226 - Condonation for filing revised return - Legality of rejecting the petitioner's application to file a revised return for AY 2010-11 by relying on CBDT Circular No.09/2015 and a six-year cut-off - HELD THAT: - The Court held that the authority erred in treating the CBDT Circular as creating a period of limitation which would preclude the petitioner from approaching the Court under Article 226. A Circular cannot fetter the constitutional jurisdiction of the High Court and cannot prescribe a bar on the exercise of extraordinary jurisdiction. It was also impermissible to enforce the Circular's time-frame in a case where relief was ultimately granted by the Court many years after the dispute arose; applying the Circular in that manner would produce inequitable results. The authority's view that the writ petition itself lay barred by an external six-year cut-off was therefore rejected. [Paras 10, 11, 20, 22, 23]Impugned order rejecting the application on the basis of the CBDT Circular and the supposed six-year bar is quashed.Credit for TDS and amendment under Section 155(14) - Entitlement to refund under Section 237 - Bar against direct demand where tax deducted under Section 205 - Whether the petitioner is entitled to TDS credit and assessment/review steps required to enable refund following issuance of the revised tax certificate - HELD THAT: - The Court noted the undisputed fact that tax had been deducted by the Land Acquisition Collector but the credit was not reflected in Form 26AS. Section 155(14) contemplates amendment of an assessment or intimation by the Assessing Officer where a tax certificate is produced within the statutory period; the statutory scheme also recognises the assessee's entitlement to refund where tax paid or treated as paid exceeds proper charge under Section 237. Further, Section 205 bars making a direct demand on the assessee to the extent tax has been deducted. Applying these provisions and the factual finding that a fresh certificate was issued after the Court's earlier direction, the petitioner cannot be penalised for the discrepancy in Form 26AS and is entitled to have the credit and refund processed. [Paras 14, 15, 16, 17, 21]The petitioner is entitled to have the revised return and supporting certificate taken on record and for the Assessing Officer to amend/process assessment and consider refund in accordance with Sections 155(14), 237 and the statutory bar in Section 205.Form of claim for refund and limitation under Section 239 - Interest on delayed refund under Section 227 - Applicability of statutory limitation in Section 239 and entitlement to interest on delayed refund in the facts of this case - HELD THAT: - The Court observed the pre-amendment limitation rules in Section 239 but held that the respondents had overlooked the fact that a fresh certificate was issued only after this Court's earlier direction. In the exercise of prerogative writ jurisdiction the respondents could not rely on the limitation to deny relief in the circumstances of this case. The Court further directed that while framing the order for refund, the respondents must apply the statutory regime relating to interest for delayed disbursal and credit under Section 227. [Paras 18, 19, 20, 25]Statutory limitation under Section 239 cannot be invoked to deny relief in the present circumstances; respondents must process refund and apply interest rules as applicable.Condonation for filing revised return - Power of High Court under Article 226 - Relief to be granted and directions to the respondents for submission and processing of a revised return - HELD THAT: - Concluding that the impugned order is unsustainable, the Court allowed the writ petition, quashed the order dated 23 October 2018 and directed the respondents to accept the revised return which the petitioner may submit within four weeks. The return is to be placed before the concerned Assessing Officer for processing the refund claim, and the respondents are to bear in mind the statutory provisions governing interest on delayed refund and credit while framing the refund order. [Paras 22, 23, 24, 25]Writ petition allowed; impugned order quashed; respondents directed to accept revised return within four weeks and process refund with applicable interest.Final Conclusion: Writ petition allowed; order dated 23 October 2018 quashed. Respondents to accept the petitioner's revised return for AY 2010-11 within four weeks, place it before the Assessing Officer for processing the refund claim, and frame the refund order while applying the statutory provisions governing amendment, refund and interest. Issues:Challenge to rejection of application for revised tax return and delay condonation.Analysis:The petitioner filed a writ petition seeking relief after the rejection of the application to submit a revised return for AY 2010-11 and condone the delay under Section 119(2)(b) of the Income Tax Act, 1961. The principal challenge was against the order dated 23 October 2018, which denied the petitioner's request (Para. 2).The petitioner had filed the original return for AY 2010-11 on 24 June 2010, but the TDS credit was not reflected in Form 26AS due to compensation received under the Land Acquisition Act, leading to discrepancies (Para. 3-4). The petitioner approached the court seeking direction for TDS credit, which was granted, and a revised Form 16A was issued by the Land Acquisition Collector (South) (Para. 5-6).The respondents rejected the application based on Circular No. 09/2015, citing a limitation of 6 years for such claims, which the court found untenable as it imposed a restriction on the court's jurisdiction under Article 226 of the Constitution (Para. 7-9). The court also criticized the reliance on the circular, emphasizing that no limitation applies to the court's extraordinary jurisdiction (Para. 10-11).The court highlighted the statutory provisions under Section 199 and Section 155(14), stating that a revised return need not be filed if the tax certificate is produced within two years from the end of the AY, and the AO must amend the assessment accordingly (Para. 13-15). Additionally, Section 237 allows for refunds if the tax paid exceeds the proper chargeable amount, emphasizing the right of the assessee to claim a refund (Para. 16-17).The respondents' reliance on Section 239 was countered by the court, noting the amendments and the respondents' oversight of the fresh certificate issued post-court direction (Para. 18-20). The court also pointed out the responsibilities of the person deducting tax under Sections 204 and 205, holding that the assessee cannot be directly demanded to pay the tax (Para. 21-22).Consequently, the court allowed the writ petition, quashed the impugned order, directed the acceptance of the revised return, and instructed the respondents to process the refund request within four weeks, considering the relevant provisions of the Act (Para. 23-25).