A. Saraiah V. Commissioner Of Income Tax, Hyderabad -1

WP/31614/2011

AI Insights

The case involves A. Saraiah, a retired judicial officer, who challenged the rejection of his application for condonation of delay in filing a revised income tax return for the assessment year 2004-05. The petitioner had received arrears of salary with TDS deducted, which was later found to be in excess and recovered by the government. Consequently, the petitioner sought a refund of the TDS amount. The Commissioner of Income Tax rejected the application, leading to the present writ petition. The High Court found that the rejection was arbitrary and not in accordance with the law, thus allowing the petition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 819891 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 21-11-2023
• Assessment Year: misc
• Other Referred Cases: All India Judges Association vs. Union of India
• Laws Referred To: Article 226 of the Constitution of India, Section 119(2)(b) of the Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: J V PRASAD
• Assessee Lawyers: Y RATNAKAR
• Keywords: Condonation of delay; Income Tax; TDS refund; Writ petition; Judicial Officer Pay Scale
• Section: 119(2)(b)

Judgement Text

"[ 337e ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY FIRST DAY OF NOVETUBER TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 31614 OF 2011 Between: A. Saraiah, S/o A. Mallaiah, Aged about 69 years, Occ: Special Magistrate, Court No. 2, RR Dist., L.B. Nagar, R/o. H.No. 7-3-18132, Sagar Enclave, Bairamulaguda, Hyderabad - 79. ...PETITIONER AND Commissioner Of lncome Tax, Hyderabad -1, Ayakar Bhavan, Basheerbagh, Hyderabad. ...RESPONDENT Petition under Article 226 ol the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ in the nature of certiorari or any other suitable writ, order or direction quashing the impugned order passed by the Respondent dt. 23.5.2011 passed u/s 119(2Xb) of the I.T. Act, vide F.No. CIT/Hyd-11119(2)(b)l51(3y08-09, as arbitrary, unreasonable, discriminatory and unpst and declaring that the delay in filing the revised income tax return on 28 -4.2009 by the petitioner for the assessment year 20O4-OS should be condoned and direct issue of refund of Rs. 1,56,533/- with interest to the petitioner as per revised return. Counsel for the Petitioner: SRI Y.RATNAKAR Counsel for the Respondent: SRI J.V.PRASAD, SC FOR INCOME TAX The Court made the following: ORDER t; THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAMJI WRIT PETITION No.31614 of 201 1 ORDER: (per Hc;rL'bte Si Justice P.SAM KOSHE) The present writ petition has been hled assailing the impugned order passed by the respondent/Commissioner of Income-Tax, Hyderabad-I, (Annexure p1) dated 23.OS.2Otl, whereby the respondent had rejected the application filed by the petitioner under Section I 19(2)(b) of the Income Tax Act, 196 1, (herein referred to as 'the Act') seeking for condonation of delay in filing of the revised return of income for the assessment vear 2004-05. 2. Heard Sri Y. Ratnakar, learned counsel for the petitioner and Sri J.V. Prasad, learned Standing Counsel for Income Tax appearing for the respondent. 3. The facts in nut shell which led to filing of the present writ petition are that the sole petitioner late Sri A. Saraiah who is since been substituted by his legal heirs who are presently pursuing thc lvrit pctition /as a judicial olficer under the unified State of Andhra Pradesh stood retired Ed[l service w.e.f. 2 30.lt.2OO2. Subsequently, he was re-employed again in terms of the judgment of the Hontrle Supreme Court in the case of AII India Judges Association rts' union of Indiat' The Law Department of the State Government of Andhra Pradesh issued G.O.Ms.No.60 dated 07'05 2003' Vide the said G'O'' there was a fixation of pay sca-le done with retrospective effect from 0l.oT.l996.IntermsofthesaidG.o.,thepetitionerwaspaidan arrears of Rs.5,56,86 9 I - and' the Tax Deducted at Source (for short TDS') worked out to be Rs'1,56,533/-' On receipt of the arrears with TDS, the petitioner filed his income tax return for the said assessment year 2OO4-O5 on 19'05'2004 deciaring the arrears of salary as well as the salary as income and availed the creditof theTDS of Rs'1,56,5331- andotherTDS collected' 4. However, subsequentlY it was detected that there were some arrears that has been crept in the course of the calculation of arrears is concerned' So far as the calculation of dearness a]lowanceisconcerned,italreadystoodmergedasperthe provisions of Andhra Pradesh State Revision Ruies' 1993' w'e'f' from O 1.07.1 992' Therealter' the matter was again placed before ' 1992 atR t65 --=--E._-z .,,/ ./ the Honble Supreme Court for clarification in the All India Judges Association (supra) case. The Honble Supreme Court again vide order dated 21.11.2006 in I.A.No.152 of 2OO4 in W.P.No.lO22 of 1989 clarified the order. As a consequence of the clarification of the Hontrle Supreme Court, the payment of arrears was revised and it was found that certain excess arrears of pay was made to the petitioner. The office of the Accountant General, (A&E) A.P. Hyderabad, vide its memo dated 16.05.2008 quantified the excess €unount to the petitioner at Rs.5,72,9OS l - which was ordered to be recovered. Accordingly, the aforesaid amount of Rs.5,72,905/- was recovered from the petitioner. Since the said amoun t was recovered from the petitioner, the TDS on the entire amount collected when the earlier arrears was paid would now have to be accordingly refunded after deducting the TDS amollnt of only the amount of arrears actually paid to the petitioner and the TDS amount of the recovered amount of Rs.5,72,905/- amounting to Rs. 1,56,533/- became refundable to the petitioner. 5. The whole issue in the present writ petition is the refund of the said TDS which lies with the respondent. After the recovery was made by the Department, the petitioner moved an 4 .i- -,4 application under Section 119(2)(b) of the Act seeking for condonation of delay in filing of the revised return of income and claiming refund of tax' It is this application under Section 119(2Xb) of the Act which stood rejected and is under challenge in the Present writ Petition' 6. It would be relevant at this juncture to take note of the relevant portion of the impugned order passed by the respondent while rejecting the application under Section 119(2)(b) of the Act' which for ready reference is reproduced herein under: \"10' There is a genuine problem that arises.in tht:i:: ofthesalariedemployeeswhoare.to.payhighertaxesrn the initial y\"\"t, ;;';;J their salaries are revised and recovery i\" t^a\" in the subsequent years' Some assesses*t'o\"tedrawingonly.pensionandwhoare below the taxabte limited fleaded that they may have to Lr-\"r. p\".\"ot'tl loss if TDS is-not refunded and the same i\" ,. t\" repaid to the State Government in the long run' say after fO to ZO V\"\"t\" However'-the provisions of law are inadequat\" tJ\"\"t*t^in these claims and to consider issual of refund. 1 1. It is not out of place for me to mention that even in ,h\" ;;\"; .f s\"qy\"t Computers' similar situation has ;;i\";-;;;.\"i.,'tr'\" atptttrnent has held that original income disclosed cannot be brought down through Hisei i\",\".\" \"\"a refund claimed' Notwithstanding irti\"lin\"t\" \"\"nsidered the application of the assessee on its own merits' 12. Some assessees pointed out that one or two ;#;;;;\";is in the s-tate have entertained their claim ;;.li;A;Gi f\"uou\"utv Mv enquiries revealed that ;a;\"i;;;\"ilu\" b\"\"t' -ttt'\"\" bo[h ror and against assessees in this type of cases lt may not be out of ;i;:\"--;'\"i.\";\"'^t\"\"iil\" that in some cases where the 5 delay was condoned and refund issued, the Audit has raised an objection. After verifying the correct position of law, it is my considered opinion that the claim of the assessee is not correct and hence, they are not entitled for condonation of delay and the claim o[ refund. 13. Without prejudice to the above, there are several other issues that arise in this case for consideration. Under what head of income, the sum, if reduced from the salary, is to be treated for the purposes of income- tax arises for consideration. tf it were to be treated as loan, the consequence would be that section 17(2)(viii) & Rule 3 come into operation and in all the subsequent years assessee is to pay tax on the value of the perquisites on interest free loan. Assessee may stand to lose in this regard. As per the records it is nothing but salary i.e., paid and since there is no correspondence that it was treated as interest free loan, there is difhculty in excluding it from the portion of the salary for the earlier years. If it is to be treated as excess salary paid then as per section 15, it is liable to tax and the petition u/s.1 19(2)(b) cannot be entertained. 13.1 Further, assessee claims refund, stating that money including TDS belongs to State Government or the Employer and it should be reduced from his salary. It is assessee's plea that the TDS be refunded co them now and over a period of years in the long run, they may pay the same to the State Government. Before taking a hnal decision and during the stage of discussions, the Law Secretary of State Government was also addressed for a clarification and even a reminder was sent. The stipulation that recovery should not exceed 1O%o of saiary applies only to recovery being made from the individual officer and not with respect to other recoveries if any. However, there is no response from the State Government on this letter. Copy of the letter is enclosed as page nos.S & 9. 14. However, irrespective of these considerations tJ:e position of iaw is already clarihed by me in para nos. 7 & 8. Since as per the provisions of law the claim is not correct the petition u/s. 119(2)(b) is hereby rejected. I I 6 Ifwereadtheaforesaidcontentsoftheimpugnedorder,the contents of paragraph No ' 1O would make it evident that the respondent accepts the fact that there is some force on the submission made by the petitioner while moving an application under Section 119(2)(b) of the Act' However' therea-fter while deciding the same, the respondent appears to have gone tangent and have decided the same on entirely extraneous considerations without properly appreciating the very grievance of the petitioner. 7. At this juncture, it would also be relevant to take note of the provision of Section 1 19(2)(b) of the Act' which again for ready reference is reproduced herein under: \"section f 19(2Ibl- The Board may' if considers it desirable o. e*pldi\"t't so to do for avoiding genuine hardship. ln any case or class of cases' by general or special trder ,authorise any income-tax authority' to .-a-it .\" apptication or claim for any exemption' deduction, r\"fut'J ot any other relief under this Act after it \" \"*pl.y of the period specified under this Act for makin! such application oi claim and deal with the \".-. o'n merits in accordance with law \" A perusal of the aforesaid provision of law would make it evident that the very purpose of enacting the said provision bY the hardshiP that an Parliament was ensuring that the genurne faces can be redressed exercising the powers under ASSESSCC 7 7 I Section 119(2Xb) in case if some delay has occurred on the part of the assessee and whereby the delay has occurred because of bonafide, genuine and plausible explanation and cause. 8. In the instant case, the facts are undisputed. The petitioner being a judicial officer and in terms of the judgment the Hon'ble Supreme Court in the case of All India Jud.ges Associqtlon (supra), he becar.ne entitted for some revised pay scale with retrospective effect from or.oz.1996.In the course of implementation of the revised pay sca1e, the Government calculated the arrears of pay ard found that the petitioner was entitled for Rs.5,56,869 /- and the said amount was paid to the petitioner with a deduction of Rs. 1,56,563/_ towards TDS. Subsequently, the arrears of amount paid was found to have been erroneously calculated and paid and it was ordered to be recovered. Accordingly, the Department recovered an amount of Rs.5,72,905/-. The said amount was deducted without adjustment of the tax already deducted. Therefore, the petitioner became entitled for refund of an amount of Rs. I ,56,563 / _ deducted towards TDS on the earlier occasion. 9' There is no dispute so far as the aforesaid factuar matrix is concerned. Under the said circumstances, it cannot-trE said that I j ! I I I i I 8 the claim for refund of TDS by the petitioner to be in any manner illegal or uncalled for' nor can it be said that the petitioner was at any point of time blamed for raising of the claim of refund after so long period' What the authority concerned ought to have seen was whether from the date of recovery of the excess arrears paid to the petitioner in the year 2008, whether there has been any reasonable delay on the part of the petitioner in approaching the authorities for submission of his revised return of income 10. In the teeth of the aforesaid admitted factual matrix of the case and considering the provisions of Section 119(2)(b) of the Act, we are of the considered opinion that the manner in which the resPondent has rejected the application filed by the to be too harsh a decision' Further' the same petitioner seems appears to have been decided on hyper technical grounds' The be arbitrary for the reason that the specifically pleaded that in respect of who are Posted under the other commissionerate in the State of Andhra Pradesh itself like CIT (Vijayawada) and CIT (Tirupati) have allowed the said application same also petitioner appears to himself had other judicial officers t '?; 9 under Section 119(2Xb) of the Act and have ordered for refund of the excess TDS amount. 11. An income tax payee whose TDS has been deducted by the Government at the time of making payment and the said payment subsequently being recovered, the TDS deducted earlier also has to be refunded. The respondent while passing the impugned order has not touched upon any of these issues. 12. The impugned order dated 23.05.20 I I therefore is not sustainable. As a consequence, the same is set aside/quashed and the application under Section 119(2)(b) of the Act is ordered to be allowed condoning the delay in making the revised return of income and at this stage, the matter stands remitted back to the respondent for passing appropriate orders on merits so far as the revised return of income being .filed on behalf of the petitioner for the assessment year 2OO4-O5 and appropriate order for refund of the amount payable to the petitioner is ordered forthwith without any further delay r,r,ithin an outer limit of sixfy (60) days from the date of receipt of a copy of this order. I I I 10 13. With the above observations, the writ petition stands allowed. No order as to costs. Miscellaneous petitions, pending if any, shall stand closed SD/. P. PADMANABHA REDDY ASSISTANT REGISTRAR //TRUE COPY// SECTION OFFICER 1. Commissioner Of lncome Tax, Hyderabad -1, Ayakar Bhavan, Basheerbagh, Hyderabad. 2. One CC to SRI Y.RATNAKAR, Advocate [OPUC] 3. One CC to SRI J.V.PRASAD, SC FOR INCOME TAX [OPUC] 4. Two CD Copies To PSK. GJP 6' I V HIGH COURT DATED:21 11112023 ORDER WP.No.31614 of 2011 ALLOWING THE WRIT PETITION WITHOUT COSTS. aq'b e J 1t 6 5T416, [ 3 Jr ?[2{ rl Olior.:'t(-. tC :;' o * * p 5 ? ttz' 'l,b "