M/S J L TAPADIYA V. INCOME TAX OFFICER AND ORS

WP/226864/2020

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The case involves M/s. J.L. Tapadiya, the petitioner, who is engaged in the business of financing and is an income tax assessee. The petitioner had advanced loans to various companies and received interest, which was subject to TDS. The petitioner was issued certificates for lower TDS rates, but these were not accepted in the online system due to incorrect formatting (four-digit numbers instead of the required ten-digit numbers). Despite receiving new certificates, the online system still did not accept them, leading to demands for outstanding TDS by the authorities. The petitioner sought a writ of mandamus to validate the certificates or issue new ones. The court found that the respondents failed in their duty to provide valid TDS certificates, which led to the issuance of the writ directing the issuance of valid digital certificates.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 771636 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 02-12-2021
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AMEET DESHPANDE
• Assessee Lawyers: SHREEHARI KUSTA; MANJUNATH SHETTY
• Keywords: Income Tax; Mandamus; Tax deduction at source; TDS; Digital Certificate
• Section: 197(1)

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE 2ND DAY OF DECEMBER, 2021 BEFORE THE HON’BLE MR. JUSTICE M.I.ARUN WRIT PETITION NO.226864/2020 (T-RES) Between: M/s. J.L.Tapadiya, A-2 & 3, Shivasharan Sankiran, Khuba Plots, S.B.Temple Road, Kalaburagi - 585 102. … Petitioner (Sri Shreehari Kusta and Sri Manjunath Mallayya Shetty, Advocates) And: 1. Income Tax Officer, TDS Ward, Kalaburagi, Aaykar Bhavan, Sedam Road, Kalaburagi- 585 102. 2. Joint Commissioner of Income Tax (TDS), Navanagar, P.B.Road, Hubballi - 580 025. 3. Commissioner of Income Tax (TDS), Ground Floor, Pundalik Niwas Building, Rua De Ourem, Panaji, Goa - 400 300. 4. Commissioner of Income Tax - TDS (CPC), Aayakar Bhavan, Sector 3, Vaishali, Ghaziabad, Uttar Pradesh - 201 010. … Respondents (By Sri Ameet Kumar Deshpande, Advocate) 2 This Writ Petition is filed under Article 226 of the Constitution of India, praying to issue a writ of mandamus, directing the respondent No.1 to forthwith validate the certificates issued by him in Annexures-A1, A2 and A3 or issue fresh digitized certificates for the said manual certificates and etc. This petition coming on for Preliminary Haring in ‘B’ Group this day, the Court made the following: O R D E R Petitioner is an income tax assessee and it is involved in the business of financing. In the course of its business, it had advanced money to M/s. Mangal Trading Company, M/s. Radhakrishna Agro Industries and M/s. Shri Maheshwari Trading Company. As against the loans, petitioner had received interest, towards which it is required to pay income tax. The interest received by the petitioner is subjected to Tax Deduction at Source (‘TDS’ for short). The rate of Tax Deduction at Source normally is 10% on the amount received. However, the petitioner was issued with the certificates under Section 197(1) of the Income Tax Act, 1961 permitting a lower deduction of tax 3 at source at the rate of 3%. The said certificates are issued by respondent No.1 and reproduced as Annexures-A1, A2 and A3 to the writ petition which are dated 27.03.2014 and are for the assessment year 2013-14. However, when the deductors filed their on-line returns, the TDS of 3% made in favour of the petitioner herein and the certificates issued in this regard were not accepted on the ground that the TDS certificates requires to have 10 digit numbers and the TDS certificates produced herein as Annexures-A1, A2 and A3 have four digit numbers bearing No.0263, 0264 and 0265. Hence, the petitioner requested the respondent authorities for issuance of TDS certificates having 10 digit numbers. It is submitted that revised new certificate numbers were also issued as under: 0414DZ081F 0414DZ082G 0414DZ083H In spite of the same, the on-line portal of respondents is not accepting the revised new certificate 4 numbers also. Hence, the petitioner got issued a letter dated 21.06.2017 to the respondent authorities requesting them to consider the case of the petitioner and accept the ten digits lower deduction certificates on the Traces portal at an early date, so as to enable the parties to file their rectified returns and the TDS demand reduced to Rs. Nil. In spite of the said request, there was no positive action on the part of the respondents and on the contra, recovery regarding outstanding TDS were demanded by the authorities. It is the contention of the petitioner that TDS has already been deducted and remitted at the approved rate. Further, respondent No.1 had recommend the case of the petitioner to respondent No.4 by his letter dated 14.11.2019 (Annexure-N). The confusion has happened because the respondents have failed to provide the necessary digital certificate under Section 197(1) of the Income Tax Act or have not validated the certificates issued by them in this regard. Hence, the instant writ petition is filed with the following prayers: 5 “a. Issue a Writ of Mandamus or direction in the nature of writ of mandamus or any other suitable writ directing the Respondent No.1 to forthwith validate the Certificates issued by him in Annexures-A1, A2 and A3 or issue fresh digitized certificates for the said manual certificates in the interest of justice. b. Issue a Writ of Mandamus or direction in the nature of writ of mandamus or any other suitable writ directing the Respondent No.2 to grant administrative sanction to Respondent No.1 and not initiate a fresh and prolonged enquiry on the mere validation of the earlier issued certificates in Annexure-A1, A2 and A3.” 2. Sri Ameet Kumar Deshpande, learned counsel appearing on behalf of the respondents admits the factual position. However, he justifies as to the demands made by the respondents. 3. Heard the learned counsel for the petitioner and the learned counsel for the respondents. 6 4. Admittedly, respondent No.1 has issued the lower deduction certificates in favour of the petitioner herein in respect of TDS. The said certificates have been issued with numbers also. The tax also has been deducted at source and remitted to the department. It is the responsibility of the respondents to issue a valid TDS certificate to the petitioner. If, for any reason the certificate issued by them cannot be uploaded on-line, it is their responsibility to see to it that appropriate corrections are carried out and proper TDS certificate or numbers are issued to the petitioner or its deductors, so as to enable them to file the returns. Not doing so, shall not entitle them to make demands in respect of amounts already deducted. Hence, the following: ORDER Respondent No.4 is hereby directed to issue valid digital certificate to the petitioner, thereby validating the lower Tax Deduction at Source certificates issued under 7 Section 197(1) of the Income Tax Act, copies of which are produced as Anneuxres-A1, A2 and A3 to the writ petition. Writ petition stands disposed of accordingly. SD/- JUDGE LG "