TDS credit refund cannot be denied when tax appears in Form 26AS under Section 155(14)

Delhi HC allowed writ petition challenging denial of TDS credit refund. Commissioner erroneously held petitioner must revise return before claiming refund. Court ruled Section 155(14) places statutory obligation on AO to amend assessment order when TDS credit appears in Form 26AS, without requiring return revision. Provision addresses contingencies where TDS reflects with time lag due to unforeseeable reasons. Since tax was properly deducted and reflected in Form 26AS, and income was not taxable, respondents' refusal to refund was illegal and arbitrary. Section 264 order quashed.

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Issues:
1. Correctness of order framed by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961.
2. Denial of credit of tax deducted at source by Bajaj Allianz Life Insurance Company Limited in Assessment Year 2015-16.

Analysis:
1. The petitioner, a non-resident assessee, filed a Return of Income for AY 2015-16 claiming a refund of TDS amounting to INR 1,90,84,170/- based on Form 26AS, including TDS of INR 5,95,549/- by BALIC. The petitioner claimed the TDS amount increased to INR 1,54,11,843/- as per the TDS credited by BALIC on 21 January 2016.

2. The return for AY 2015-16 was accepted by the AO under Section 143 (3) without suggesting any additions. However, the subsequent return for AY 2016-17 was denied TDS credit of INR 1,48,16,294/- despite being reflected in Form 26AS. The petitioner filed rectification applications, but the matter remained unresolved.

3. The High Court found that the Commissioner erred in holding that the petitioner must offer the income received from BALIC to tax before claiming TDS credit. The Court noted that the petitioner consistently asserted that the income was not taxable in India under Section 90 of the Act, and the AO had accepted the return for AY 2015-16 without additions.

4. Section 155(14) of the Act mandates the AO to amend the assessment order if credit for TDS, not initially given due to certificate non-filing, is subsequently produced. The provision does not require the original return to be revised. The Court emphasized that the essence of Section 155(14) is to allow for amendments based on updated information like TDS reflected in Form 26AS after the return filing.

5. As the TDS by BALIC was reflected in Form 26AS and the income was not held taxable under the Act, the Court deemed the refusal to refund the TDS amount as illegal and arbitrary. The Court allowed the writ petition, quashed the impugned order, and directed the respondents to refund INR 1,48,16,294/- with statutory interest.

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