2025 (1) TMI 1356 - HC - Income Tax

Petitioner Allowed to Withdraw Writ Applications to Appeal u/s 246A of Income Tax Act, 1961.

Bihar Abhikaran Pvt. Ltd. Versus Union of India, Chairman CBDT, New Delhi, The Principal Chief Commissioner of Income Tax Patna., The Commissioner of Income Tax-I Patna, The Commissioner of Income Tax TDS, The Income Tax Officer ward 2 (I), Assistant Director of Income Tax Income Tax department, CPC, Bangalore.

Bihar Abhikaran Pvt. Ltd. Versus Union of India, Chairman CBDT, New Delhi, The Principal Chief Commissioner of Income Tax Patna., The Commissioner of ... ISSUES PRESENTED and CONSIDEREDThe primary legal issues considered by the Court involved:(i) Whether the orders passed under Section 154 read with Section 143(1) of the Income Tax Act, 1961, as reflected in Annexures '8' and '10', were valid and within jurisdiction.(ii) Whether the petitioner was entitled to a full credit of TDS under Section 199 of the Income Tax Act, 1961, and the implications of Rule 37BA of the Income Tax Rules on such credit.(iii) The availability and appropriateness of the appellate remedy under Section 246A of the Income Tax Act, 1961, for challenging the impugned orders.ISSUE-WISE DETAILED ANALYSISIssue (i): Validity and Jurisdiction of Orders under Section 154 and Section 143(1)The petitioner challenged the orders passed under Section 154 read with Section 143(1) of the Income Tax Act, 1961, arguing that they were without jurisdiction. The Court considered the legal framework under these sections, which allows for rectification of mistakes apparent from the record by the tax authorities. The orders in question involved the determination of TDS credit entitlement, which the Department based on the income not disclosed by the petitioner.The Court noted that the competent authority had exercised its powers under these sections to hold that the TDS deducted and paid to the Central Government should be treated as the income of the assessee, which was not disclosed in the returns. The Court did not delve into the merits of this determination, as the issue was primarily procedural at this stage.Issue (ii): Entitlement to Full TDS Credit and Rule 37BAThe petitioner argued for full credit of TDS under Section 199 of the Income Tax Act, 1961, while the Department restricted this credit based on Rule 37BA of the Income Tax Rules. The petitioners initially sought to challenge the vires of Rule 37BA but later chose not to press this issue. Consequently, the Court did not address the constitutionality of Rule 37BA.The Department's position was that the credit of TDS should be restricted as the petitioner did not disclose the income in question. The Court acknowledged the Department's interpretation but did not provide a substantive ruling on this point due to the procedural posture of the case.Issue (iii): Availability and Appropriateness of Appellate RemedyThe Court considered the availability of an appeal under Section 246A of the Income Tax Act, 1961, as an alternative remedy. The Department's counsel highlighted that the impugned orders were appealable, and the petitioner had an equally efficacious remedy available through the appellate process.The petitioner, upon understanding the availability of this remedy, sought to withdraw the writ applications with the liberty to pursue an appeal. The Court agreed to this request, acknowledging that the appellate process was the appropriate forum for addressing the substantive issues raised.SIGNIFICANT HOLDINGSThe Court did not make substantive legal determinations on the merits of the issues due to the procedural decision to allow the petitioner to withdraw the writ applications and pursue an appeal. However, the Court's decision included the following key procedural holdings:- The Court granted the petitioner's request to withdraw the writ applications with the liberty to file an appeal before the Appellate Authority within thirty days.- The Court recognized that the time spent in pursuing the writ applications would be excluded from the limitation period for filing an appeal, ensuring that the petitioner was not prejudiced by the time spent in the High Court.In conclusion, the Court facilitated the withdrawal of the writ applications to allow the petitioner to pursue an appeal, thereby not making any substantive rulings on the legal issues presented. The procedural posture of the case emphasized the importance of exhausting available appellate remedies before seeking judicial intervention.