ALSTOM RAIL TRANSPORTATION INDIA PRIVATE LIMITED V. DEPUTY COMMISSIONER OF INCOME-TAX (TDS)

SCA/12646/2019

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The case involves M/S. Bombardier Transportation India Pvt Ltd challenging the non-issuance of a tax refund by the Deputy Commissioner of Income-Tax (TDS). The petitioner had previously paid a sum of Rs.90,46,000 as TDS, which was later found to be due for a refund following the dismissal of a tax appeal by the revenue. Despite multiple complaints and communications, the refund was not issued, leading the petitioner to approach the High Court. The court found that the delay in issuing the refund was unjustified and directed the respondent to process the refund promptly, with interest as applicable under Section 244A of the Income Tax Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 739869 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 23-01-2023
• Assessment Year: misc
• Other Referred Cases: Nima Specific Family Trust V/s Assistant Commissioner of Income-tax Circle 5(2), Gujarat Flourochemicals Ltd.V/s CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: POOJA ASHAR; VARUN PATEL
• Assessee Lawyers: B S SOPARKAR
• Keywords: Assessment Year; Interest on Refund; Penalty; TDS refund; Provisional accounting entries
• Section: 195; 201(1); 244A; 40(A)

Judgement Text

"C/SCA/12646/2019 ORDER DATED: 23/01/2023 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 12646 of 2019 ========================================================== M/S. BOMBARDIER TRANSPORTATION INDIA PVT LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX (TDS) ========================================================== Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1 MS POOJA ASHAR, AGP for the Respondent(s) No. 1 MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MR. JUSTICE SANDEEP N. BHATT Date : 23/01/2023 ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. Draft amendment is permitted to be carried out forthwith, on hearing learned counsels for both the sides. 2. The petitioner is before this Court seeking to challenge the action of the respondent for non-grant of the refund which has been withheld with interest and additional interest under Section 244A of the Income Tax Act. 3. Certain accounting entries were passed by the Page 1 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 petitioner for the financial year 2004-05 - assessment year 2005-06 to the tune of Rs.6,50,62,085/- for provision of expenses to be made to Bombardier INC Canada and Bombardier INC UK. No actual remittance was there in the financial year 2004-05 and such provision, according to the petitioner, was disallowed in return of income as inadmissible under Section 40(a). 4. The petitioner since, later on in October, 2005, received the invoices of Rs.5,17,23,484/-, deducted the tax of Rs.77,58,523/- and deposited the same on 22.10.2005. During the assessment year 2005-06, there were provisional accounting entries and the petitioner has not defaulted, according to its averments, under Section 195 or 201. According to the respondent, there was an obligation for deduction of tax at source on the provision of Rs.6.50 crores (rounded off). Hence, considering that to be the default under Section 201(1) of the petitioner for the TDS to be deducted with interest and penalty, the orders came to be passed on 28.2.2006, 2.3.2006 and 31.3.2006 respectively. 5. The appeal came to be filed and CIT (appeals) Page 2 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 partly in favour of the petitioner on 23.11.2006 confirming the penalty of Rs.97,59,312/-. The petitioner also paid in the year 2006-07 a sum of Rs.90,46,000/- against the demand raised by 11 different challans. It is also the say of the petitioner that the two challans were erroneously placed for assessment year 2006-07 and 2007- 08 being the sum of Rs.26,40,000/- and Rs.6,00,000/- respectively. In absence of any demand pending, this demand could not have been raised. 6. The appeal before ITAT against such dismissal order was preferred which allowed the assessee’s appeal and deleted the penalty on 17.4.2009. 7. The tax appeal was preferred by the revenue being 1952 of 2009 which is heard and dismissed on 4.8.2016. 8. The department had not been issuing the refund. The petitioner had deposited sum of Rs.90,46,000/-. It is averred that the said amount deposited by the petitioner is due for refund. The communications on different dates are also reflected, however, no heed is paid. Page 3 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 9. The complaint was preferred before CPGRAM of CBDT on 19.6.2017 for not giving effect to the order of the ITAT and the High Court and for non-issuance of the refund. 10. The complaint came lodged for the assessment year 2013-14 as well. The CPGRAM provided the reply on 11.78.2017 and 2.8.2017, however, there is no whisper on the refund of 2005-06. 11. Yet another complaint was preferred before CPGRAM for assessment year 2005-06 on 16.10.2017. The petitioner supplied the details to the respondent for it to process the claim of refund. However, due to mismatch of the challan against the system, according to the respondent, it was not possible to grant the refund but to rectify the same with the bank. For the alleged inaction on the part of the respondent, the petitioner has chosen to approach this Court with the following prayers: “6(a) Direct the Respondent to give effect to the order of ITAT dated 17.04.2009. Further direct the Respondent to give the refund due to the Petitioner and the interest and Page 4 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 additional interest u/s 244A and the additional compensation due to the petitioner. (b) any other and further relief deemed just and proper be granted in the interest of justice. (c) to provide for the cost of this petition.” 11. Affidavit-in-reply is filed denying all allegations. According to the respondent, for the refund of the assessment year 2005-06, it had written on 3.12.2019 to Centralized Processing Cell-TDS, Ghanizbad, U.P. (CIT) requesting him for the guidance/directions regarding verification of the challan for payment of Rs.90.46 lacs, the challans since were not TDC Reconciliation Analysis and Correction Enabling System (TRACES) portal for verification. Reply from CIT(CPC-TDS) is received. However, he showed his inability to process it on account of non-availablity of data. Therefore the TDS-AO has not issued any challan pertaining the assessment year 2005- 06 manually. The office had written a letter to the State Bank of India, Vadodara requesting for verification of challans amounting to Rs.90.46 lacs. SBI also furnished the reply on 5.2.2020 and 7.2.2020, wherein, it has been Page 5 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 confirmed that the challans amounting to Rs.90.46 lacs had been received by the bank. In Tax Appeal No.1952 of 2009, request is made by the assessee company for issuance of the refund. It is also stated to adjust the refund along with consequential interest subject to written confirmation from the assessing officer of making adjustment of refund along with the interest on outstanding demand of particular assessment year. The jurisdictional AO (DCIT, Circle-5(1), New Delhi) has stated that demands for various years adjusted to Rs.70,83,92,180/- were outstanding in case of the assessee company. The refund claimed and its adjustments is not possible to be processed on portal. The outstanding demand, according to the respondent, as per the TRACES portal is Rs.2,74,28,930/- and the other outstanding demand for other years has been Rs.70.83 crores (rounded off) as on 18.11.2019. The officers had been intimated through e-mail on 6.1.2023 and 11.1.2023 and however, no response has been made available so far. The demand, according to the respondent outstanding against the respective TAN/PAN and there are two separate portals for day-to-day functioning of the department ITBA (Income Tax Business Application) looks Page 6 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 after the processing of Income Tax returns and TRACES takes care of processing of TDS returns/statements. TRACES portal and ITBA portal, being independent systems of the department having independent officers in charge and the officer having territorial jurisdiction over the same assessee. Hence, automatic inter departmental adjustment of refund of TDS proceedings and the department of refund TDS proceedings over outstanding demand of income tax proceedings and vice-a-versa has not been made functional till date. Therefore, the adjustment of outstanding demand of TDS/income tax will be consuming quite some time. 12. We have the heard learned advocates on both the sides. Reliance is placed on the decision of this Court in the case of Nima Specific Family Trust V/s Assistant Commissioner of Income-tax Circle 5(2), reported in [2018] 100 taxmann.com 262 (Gujarat) to urge that not only the interest will be necessary to be given but the compensation has been given by the Court earlier for the delay in making payment of interest as it is an exceptional circumstance which shall need to be borne in mind. Page 7 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 13. Learned senior standing counsel Mr.Patel submits that there is a huge outstanding dues of the past years and the adjustment will take a while as the payment which was made by the assessee was at the time when the software was not available and it was deposited physically because of which its record is not available and hence this has caused the delay over and above the reasons which have been given in paragraph 4 of the affidavit-in-reply. At the outset, it needs to be specifically mentioned that after the revenue’s appeal was dismissed on 4.8.2016 confirming the order of the ITAT, which had allowed the appeal of the petitioner quashing the penalty, the refund had become due. It appears that the first communication thereafter was on 31.10.2017. Before that, on 19.6.2017, the petitioner filed a complaint before CPGRM, however, the same was closed vide reply dated 11.7.2017 and 2.8.2017. Yet another complaint was filed before CPGRAM on 16.10.2017, 28.2.2018, 7.3.2018, 12.3.2018, 16.3.2018, 10.4.2018 and 11.4.2018. When nothing worked, the present petition being preferred. Page 8 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 14. In such circumstances, the petitioner obviously is waiting for the refund after the challenge has been turned down by this Court in the Tax Appeal No.1952 of 2009. The reason of there being two separate portals available for day-to-day functions of ITBA (Income Tax Business Application) looking after the processing of Income Tax returns and TRACES taking care of processing of TDS returns/statements hardly is the reason for the Court to overlook the period of five years that has been taken after once the tax appeal has been decided and there had been no further challenge by other side. In the affidavit filed by the respondent on 12.1.2023, it is not sure as to what exactly is the outstanding demand in the instant case. Paragraph 4 makes it unequivocally clear that the respondent is still groping in dark with regard to the demand. Even if there had been a manual deposit and it is prior to the regime when everything went online, there is a sufficient time taken by the respondent authority of five years. With regard to the refund to be returned with the interest, sub-section (1A) inserted in Section 244A by the Finance Act of 1.6.2016 needs to be applied prospectively as per the decision of Nima Specific Family Trust Page 9 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 (supra) for the period of delay after introduction of the relevant statutory provision and the assessee would be entitled to the compensation by way of interest. However, the assessee was held not to be entitled to the interest on interest which was awarded as compensation. In the instant case, the High Court has finalized the tax appeal on 4.8.2016. Considering the fact that both the provisions of Section 244 and 244A will be given effect to what the assessee is presently seeking is the compensation for the delay that has been caused in making the refund. It is not disputed that sub-section (1) of Section 244A requires the revenue to grant interest at the statutory rate if the refund becomes due to the assesee. The department since is not in a position to take shelter of pendency of the appeal, before this Court also, it is not necessary for this Court to give any directions with regard to the applicability of both the provisions and the requirement of the revenue to grant the refund bearing in mind the existing provisions. 15. With regard to the compensation which is being sought for non-payment of the statutory interest from the time, this Court decided the appeal. much is Page 10 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 insisted upon. This Court in Nima Specific Family Trust (supra) had noted various provisions and also the decision of the Apex Court rendered in case of Gujarat Flourochemicals Ltd.V/s CIT [2015] 377 ITR 207 to hold that there cannot be any direction for payment of interest on interest. The statute provided for interest on delayed refund under sub-section (1) of Section 244A, then newly inserted sub-section (1A) provides for additional interest. Therefore, there cannot be any further directions for payment of interest over and above such statutory prescriptions and hence it had direction the cost of Rs.1 lac to the petitioner by way of compensation on the amount of interest which remained unpaid for long time. 16. On this issue, we notice that the respondent is not yet clear on the outstanding amount, however, it is volunteered that within three months, it shall be in a position to complete the same noticing the fact that the company has changed its name with all its past and future liabilities. Of course, it has been given e-pan number and it is the same pan number which was with M/s Bombardier Transportation, however, necessary Page 11 of 12 C/SCA/12646/2019 ORDER DATED: 23/01/2023 procedure shall need to be completed by the petitioner and name change with supporting documents shall go to the concerned officer-ACIT Income Tax Vadodara both e- copies and physical copies through registered letter within one week from the date of receipt of this order. Let process be completed in a three months’ period, after receipt of such copies. If not done within three months, the amount of compensation to be paid shall be Rs.1 lacs. 17. This petition stands disposed off in above terms. (SONIA GOKANI, J) (SANDEEP N. BHATT,J) SRILATHA Page 12 of 12 "