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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of order: January 24, 2019.
+ W.P.(C) 8436/2018
G.V.INFOSUTIONS PVT. LTD. ..... Petitioner
Through: Mr. Salil Kapoor, Ms. Soumya Singh,
Mr. Sumit Lalchandani, Advocates
versus
DEPUTY COMMISSIONER OF INCOME TAX,
CIRCLE 10(2), & ANR. ..... Respondents
Through: Mr. Sanat Kapoor, Advocate
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN
ORDER
%
S. RAVINDRA BHAT, J. (ORAL)
1. The petitioner is aggrieved by an order of the Commissioner of
Income Tax, rejecting its application under Section 119(2)(b). It had
applied for condoning the delay in filing a refund application.
2. Facts for the purpose of deciding this writ petition are that the
petitioner/assessee filed its Income Tax Return on 20.09.2013,
covering Assessment Year 2013-2014. Its return reflected the tax
deducted at source (TDS) as Rs.15,62,500/-. It appears, however, that
a larger amount Rs.31,25,000/- had escaped the attention of the
Assessee; so it could not be claimed. As an adjustment or for the
purpose of consequent refund, the assessee paid the amounts due in
terms of its calculation and assessment was framed under Section
143(1). The period for revising the demands ended on 31.03.2015
W.P. (C) No.8436/2018 Page 1 of 8
(Assessment year 2013-2014), however the error that had crept in
while furnishing the returns was not rectified through an application
or a refund undertaken. The petitioner claims that when it did discern
the error or claim, it had applied on 12.09.2016 to the Chief
Commissioner, for condoning the delay for filing the application for
refund. The application was rejected by the Commissioner on
28.03.2018. In its application, the assessee had claimed that its
Chartered Accountant had inadvertently overlooked the TDS
amounts, as a consequence it could not have sought appropriate
refund at the first instance or even claimed it before the period of
seeking refund had expired.
3. The Chief Commissioner rejected the application, giving
reasons as follows:
"5. Explaining reasons/causes for not claiming the
TDS of Rs.31,25,000/- while filing return of income for
AY 2013-14 it was submitted that due to the mistake of
the Chartered Accountant of the assessee Company the
claim of the TDS was omitted to be made while filing
return of income for the year under consideration.
However, on being specifically questioned to furnish
evidence that the credit of TDS was not available in form
26AS at the time of filing of ITR on 29.09.2013, the AR
for the assessee failed to produce any evidence to prove
that credit of TDS was not available in form 26AS at the
time of filing of ITR on 29.09.2013, the AR for the
assessee failed to produce any evidence to prove that
credit of TDS was not actually available in form 26AS at
the time of filing ITR on 29.09.2013. It is amply clear
from the facts of the case that the claim of the assessee
that information of TDS of Rs.31,25,000/- was actually
available to it at the time of filing ITR has not been
proved during the course of proceedings before me. In
absence of any such relevant evidence, the claim of the
W.P. (C) No.8436/2018 Page 2 of 8
assessee that due to the mistake of the CA, claim of TDS
was not made has remained unproved.
6. In this case, return for the AY 2013-14 was filed
on 29.09.2013 and the assessee could have revised the
return by 31.03.2015. However, the assessee had not
filed the revised ITR to claim refund of Rs.31,25,000/-.
Considering no action by the assessee to claim
substantial amount of refund of Rs.31,25,000/- during
available period of more than one and a half year from
the date of filing of ITR, the assessee was asked to
explain reason for such inaction when the company had
incurred substantial expenditure in seeking professional
help of Chartered Accountants. IN response to the query,
it was as submitted by the AR for the assessee that
revised return could not be filed due to lack of knowledge
about claim of credit of TDS of Rs.31,25,000/-. It is
pertinent to mention here that as per audited account the
assessee had disclosed a net profit of Rs.24,78,142/- for
the year and the claim of the assessee was that due to the
lack of information about non-credit of TDS of
Rs.31,25,000/- (the amount of TDS was more than the
income) revised return could not be filed. However, the
claim of the assessee was not substantiated with any
evidence and it is difficult to believe that the assessee
would be so careless that it was not aware about the
pending TDS credit which was more than the profit for
the year under consideration.
7. The assessee is a company which has availed
services of independent auditor, inhouse finance
professional and Chartered Accountant engaged for the
purpose of filing ITRs and other compliance issues for
the year under consideration and for subsequent years.
Both, under the Company Act as well as under the
Income Tax Act, the assessee company was liable to
record each transaction i.e. gross receipt, net receipt, tax
deducted at source and expenses etc. and get its accounts
audited. The claim of the assessee company that even
after having gone through the process of audit, credit of
TDS of Rs.31,25,000/- could not be made at the time of
W.P. (C) No.8436/2018 Page 3 of 8
filing of return of income or during time available to file
the revised return of income for bonafide reason cannot
be accepted in absence of any verifiable credible
material evidence in support of the claim."
4. It is pointed out on behalf of the assessee by Mr. Kapoor, that
the TDS portal maintained by the Revenue in fact reflected at the
relevant time that for Assessment Year 2013-2014, additional TDS
credit to the extent of Rs.31,25,000/- was payable which in turn
implied that the amounts were paid. Counsel relied on statements
made in the application to say that inadvertence or omission in
claiming appropriate adjustment and consequent refund was on
account of its auditor/chartered accountant's lack of diligence. The
petitioner relied upon a Division Bench ruling of this court in
Indglonal Investment & Finance Ltd. vs. Income Tax Officer, [2012
343 ITR 44(Delhi)].
5. The learned counsel for the revenue relied upon the impugned
order and submitted that the petitioner's claim for condonation of
delay was justifiably rejected. Counsel submitted that as pointed out
by the Chief Commissioner there was no material to substantiate the
plea urged, i.e. that the concerned auditor or chartered accountant had
inadvertently omitted to claim the refund amount. It is further pointed
out that in fact the period provided by law for claiming the refund
ended on 31.03.2015 and only much later did the assessee claim
refund, and move to application under Section 119(2)(b) on
12.09.2016.
6. Concededly the facts disclose; firstly, that according to the
petitioner a sum of Rs.31,25,000/- was inadvertently left out by its
W.P. (C) No.8436/2018 Page 4 of 8
auditor/chartered accountant in the calculation while filing the return;
secondly, the court notices that the amount in fact reflected on the
web portal maintained by the Income Tax Department itself at the
relevant time. It is also a fact that the petitioner does not seem to have
noticed its omission, at least before September 2016. In the
meanwhile, the period of limitation to claim refund ended on
31.03.2015.
7. In Indglonal Investment & Finance Ltd. (supra) a Division
Bench of this court, while dealing with the claim for refund, which
was made belatedly but rejected by the Revenue, considered the
relevant judgments of the Supreme Court including Commissioner of
Income Tax Vs. Shelly Products and Anr., (2003) 261 ITR 367, and
held as follows :
"11. Provisions of assessment are independent of
provisions of refund, but the provisions relating to refund
may be dependent on the assessment. (See Commissioner
of Income Tax, West Bengal vs. Central India Industries
Ltd. (1971) 82 ITR 555). An assessment order or an
order quantifying the income/net wealth can be rectified
or modified in the proceedings as contemplated by the
enactment. The assessment order or the order
quantifying the income or taxable wealth cannot be
challenged on merits while the authorities examine the
question of refund. The authorities cannot go behind the
assessment order or the order quantifying net
wealth/income. Section 242 of the 1961 Act is apposite
and is reproduced below:-
"242. Correctness of assessment not to be
questioned.--In a claim under this Chapter, it shall
not be open to the assessee to question the
correctness of any assessment or other matter
decided which has become final and conclusive or
W.P. (C) No.8436/2018 Page 5 of 8
ask for a review of the same, and the assessee
shall not be entitled to any relief on such claim
except refund of tax wrongly paid or paid in
excess.
12. Another principle is that the refund provisions should
be interpreted in a reasonable and practical manner and
when warranted liberally in favour of the assessee. If
there is substantial compliance of the provisions for
refund, it may not be denied because it is not made
strictly in the form or the prescribed manner. The forms
prescribed may be merely intended to facilitate payment
of refund. The tax authorities have to act judiciously
when they exercise their power under an enactment. The
power given to the tax authorities under the enactments
are mandated with the duty to exercise them when the
statutory provisions so warrant. It is imperative upon
them to exercise their authority in an appropriate
manner. In case the Assessing Officer or tax authority
comes to know that an assessee is entitled to deduction,
relief or refund on the facts of the case and the assessee
has omitted to make the claim, he should draw the
attention of the assessee. The tax authorities should act
as facilitators and not occlude and obstruct. The role of
tax authorities has been aptly described in CIT versus
Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2008) 14 SCC
208 as :-
"19............ The function of the assessing officer
is to administer the statute with solicitude for the
public exchequer with an inbuilt idea of fairness to
taxpayers."
8. The rejection of the petitioner's application under Section
119(2)(b) is only on the ground that according to the Chief
Commissioner's opinion the plea of omission by the auditor was not
substantiated. This court has difficulty to understand what more plea
or proof any assessee could have brought on record, to substantiate
the inadvertence of its advisor. The net result of the impugned order is
W.P. (C) No.8436/2018 Page 6 of 8
in effect that the petitioner's claim of inadvertent mistake is sought to
be characterised as not bonafide. The court is of the opinion that an
assessee has to take leave of its senses if it deliberately wishes to
forego a substantial amount as the assessee is ascribed to have in the
circumstances of this case. "Bonafide" is to be understood in the
context of the circumstance of any case. Beyond a plea of the sort the
petitioner raises (concededly belatedly), there can not necessarily be
independent proof or material to establish that the auditor in fact acted
without diligence. The petitioner did not urge any other grounds such
as illness of someone etc., which could reasonably have been
substantiated by independent material. In the circumstances of the
case, the petitioner, in our opinion, was able to show bonafide reasons
why the refund claim could not be made in time.
9. The statute or period of limitation prescribed in provisions of
law meant to attach finality, and in that sense are statutes of repose;
however, wherever the legislature intends relief against hardship in
cases where such statutes lead to hardships, the concerned authorities
including Revenue Authorities have to construe them in a
reasonable manner. That was the effect and purport of this court's
decision in Indglonal Investment & Finance Ltd. (supra). This court is
of the opinion that a similar approach is to be adopted in the
circumstances of the case.
10. For the above reasons, the impugned order dated 28.03.2018
rejecting the petitioner's application under Section 119(2)(b) is hereby
set aside and quashed. The application for condonation of delay is
hereby allowed for these reasons. The petitioner is permitted to prefer
W.P. (C) No.8436/2018 Page 7 of 8
its refund claim within two weeks from today. In such event, the
concerned Assessing Officer shall verify the concerned claim and
pass the order in accordance with law within six weeks thereafter.
Any amount due to the petitioner shall also be remitted to it within
three weeks thereafter.
11. The writ petition is disposed of in the aforesaid terms.
S. RAVINDRA BHAT, J
PRATEEK JALAN, J
JANUARY 24, 2019
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