Belated filing of return can be no ground for denying Income Tax refund. Where revenue authorities rejected assessee’s claim for refund of TDS merely on the ground that return raising said claim was filed after expiry of prescribed time period, view taken by authorities below was hyper technical and, thus, matter was to be remanded back for disposal in accordance with law. In the instant case, assessee a recognized trust invested its funds as per instructions of Government of India in various financial institutions and those institutions deducted tax at source from interest earned on fixed deposits. In order to claim refund of TDS erroneously deducted by the financial institutions, the assessee filed returns for relevant assessment years. The AO held that since said returns had been filed beyond the prescribed time-limit, they were to be treated as invalid returns and, thus, application for the TDS refunds was to be rejected. The CIT, however, refused to condone the delay in filing the returns on the ground that it was not a case of genuine hardship as envisaged under section 119(2)(b). Contending that the stance taken by the respondent authorities is contrary to law, the petitioner-trust filed this instant writ petition for appropriate relief. As all income generated by a recognised employees provident fund, was not chargeable to income-tax, it was not required to submit or file any return of income-tax, however, in order to claim refund of TDS erroneously deducted by financial institutions in which funds were invested, petitioner-Trust filed returns; belated filing of return can be no ground for denying refund The Gauhati High Court held that the petitioner-Trust, in this case, was being deprived of a sum of Rs. 9 lakh which it could not be blamed at all. It had no liability whatsoever to pay this amount to the Revenue. Yet, the revenue had refused to refund the same by taking some hyper-technical view of the matter. If the petitioner-Trust was being deprived of a sum of Rs. 9 lakh which legitimately belonged to it due to perverse view taken by the revenue, there was no rational to say that no genuine hardship is being caused to the assessee. The revenue was acting like a small- time trader, and was in danger of being accused as interested in enriching itself unjustly at the expense of a citizen. This was another form of State extortion from a helpless taxpayer. The revenue also did not dispute that the petitioner-Trust had no liability whatsoever to it to pay the aforesaid amount. Therefore, it was to be concluded that the revenue had not properly applied its mind to the facts of the case and had in the process completely overlooked the provisions of section 119(1)(b). The attitude of the revenue, to say the least, was in defiance of logic or of accepted moral standards that no sensible person could have arrived at. True, no specific or express provision is engrafted in this section to deal with refund of TDS erroneously deducted when there is no due from the assessee. But then, this is precisely the reason, for enacting section 119(1)(b). This is in the nature of an inherent power granted to the Central Board of Direct Taxes to entrust any income-tax authority other than a Commissioner (Appeals) to admit an application or claim for exemption, refund even belatedly and dispose of the same in accordance with law. The Parliament was obviously not unmindful of the possibility of future occurrence of innumerable situations which are likely to cause genuine hardships to citizens in course of collection of revenue such as the one herein but which could not be foreseen by it at the time of enacting the legislation, and it is apparently with view to meet such exigencies that section 119(1)(b) was engrafted. Section 119(1)(b) is the appropriate provision to deal with case of this nature. The petitioner was entitled to condonation of the delay in filing the claim for refund. Resultantly, the respondent authorities should refund the amount along with interest. HIGH COURT OF GAUHATI North Eastern Electric Power Corpn. Employees Provident Fund Trust v. Union of India T. Vaiphei, J. W.P. (C) NO. 85 (SH) OF 2011 DECEMBER 16, 2011
Posted on: Sat, 13 Jul 2013 15:46:11 +0000