S. Darmaiah, S/o. Late S. Guravaiah, Aged about 65 years, Occ: Special Magistrate Court No. '10, Metropolitan Criminal Courts, Nampally, Hyderabad V. The Commissioner of Income Tax, Hyderabad - I Aayakar Bhavan, Basheerbagh, Hyderabad

WP/6570/2012

AI Insights

The case revolves around a petition filed by S. Darmaiah, a retired judicial officer, challenging 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 were later found to be erroneously calculated and recovered by the government. The petitioner sought a refund of the TDS amount after the recovery but faced rejection under Section 119(2)(b) of the Income Tax Act, 1961. The High Court found the rejection to be arbitrary and not in accordance with the law, leading to the setting aside of the impugned order and granting the refund.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 797059 (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, 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 Return; Mandamus; TDS refund
• Section: 119(2)(b)

Judgement Text

"[ 3379 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYD€RABAD (Special Original Jurisdiction) PRESENT THE HONOURABLE SRI JUST]CE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI Between: AND The Commissioner of lncome Tax, Hyderabad - I Aayakar Bhavan, Basheerbagh, Hyderabad. ...RESPONDENTS Petition under Article 226 of 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 Mandamus or any other suitable writ, order or direction setting aside the impugned order passed by the Respondent dt. 09-02-20't0 passed u/s. 119(2)(b) of the l.T. Act, vide F.No. CIT/Hyd- 1/1 19(2xby50(05y09-1 0, as arbitrary, unreasonable, discriminatory and unjust and Consequently declaring that the delay in filing the revised income tax return on 28-04-2009 by the petitioner for the assessment year 2004{5 should be condoned and direct issue of refund of Rs. 77,965/- with interest to the petitioner as per revised return. TUESDAY, THE TWENTY FIRST DAY OF NOVEMBER TWO THOUSAND AND TWENTY THREE WRIT PETITION NO: 6570 OF 2012 S. Darmaiah, S/o. Late S- Guravaiah, Aged about 65 years, Occ: Special Magistrate Cou( No. '10, Metropolitan Criminal Courts, Nampally, Hyderabad, R/o. H.No.22-52, Vivekananda Nagar, Hyderabad-60 ..,PETITIONER l.A. NO: 1OF 201 P. NO: 8342 OF 2012 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the posting of hearing of writ petition out of turn. Counsel for the Petitioner: SRI Y. RATNAKAR Counsel forthe Respondent: SRI J. V. PRASAD The Court made the following: ORDER 7/ -/ THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAJUJI WRIT PETITION No.657O of 2012 ORDER: (per Hon'bte Sn Justice P.Sa.M KOSHr/ The present writ petition has been filed against the impugned order passed by the respondent/Commissioner of Income-Tax, Hyderabad-I, (Annexure Pl) dated 09.O2.2OlO, whereby the respondent had rejected the application hied by the petitioner under Section 119(2)(b) of tJle Income Tax Act, 1961, (herein referred to as 'the ActJ seeking for condonation of delay in filing of the revised return of income for the assessment year 20O4-05. 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 petitioner Sri S. Darmaiah was a judicial ofhcer under the unilied State of Andhra Pradesh stood retired from service w.e.f. 30. 11.2002. Subsequently, he was re-employed again in terms of the judgment of the Hon'ble Supreme Court in the case of All India Judges Assoclatlon as. Union of Indial. The Law Department of the ' r99z atR t6s 2 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 scale done with a retrospective effect from O1.O7.1996. In terms of the said G.O., the petitioner was paid an arrears of Rs.2,86,9321- and the Tax Deducted at Source (for short TDS] worked out to be Rs.77,9651-. On receipt of the arrears with TDS, the petitioner fited his income tax return for the said assessment year 2OO4-05 on.06.05.2004 declaring the arrears ol salary as well as the salary as incomo and availed the credit of the TDS of Rs.77,965/- and other TDS 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 lar as the calculation of dearness allowance is concerned, it already stood merged as per the provisions of Andhra Pradesh State Revision Rules, 1993, w.e.f. from 01.07.1992. Thereafter, the matter was again placed before the Hon'ble Supreme Court for clarification in the AII India &tdges Association (supra) case. The Hon'ble Supreme Court again vide order dated 21.ll.2006 in I.A.No. 152 of 2OO4 in W.P.No. 1022 of 7989 clarif ied the order. As a consequence of the clarification of the Honble Supreme Court, the payment of arrears was revised and it was found that certain excess arrears of pay was made to the petitioner. The ollice of the Accountant General, (A&,E) A.P. Hyderabad, vide its memo dated 16.05.2008 quantified the excess amount to the petitioner at Rs.2,86,932/- out of i I I I i -7 3 Rs.7 ,24,440 / - which was ordered to be recovered. Accordingly, the aforesaid amount of Rs.2,86,932/- was recovered from the petitioner. Since the said amount was recovered from the petitioner, the TDS on tfie entire amount collected when the earlier arrears was paid would now have to be accordingly refunded after deducting the TDS amount of only the amount of arrears actually paid to the petitioner and the TDS amount of the recovered amount of Rs.2,86,932/- amounting to Rs.77 ,965 / - 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 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(2)(b) 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 not€ 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 the case of the salaried employees who are to pay higher taxes in the initial year, in case their salaries are revised ald recovery is made in the subsequent years. Some assesses who are drawing only pension and who are below the taxable limited pleaded that they may have to incur personal loss if TDS is not refunded and the same is to be repaid to the State ( I 4 # Governmcnt in the long run, say after lO to '.20 years. However, the provisions o[ law are inadequate to entertain these cla.ims and to consider issual of refund. I l. It is not out of place for me to mention that eren in the case o[ Satyam Computers, similar situation has arisen, wherein the dcpa.rtrnent has held that origina.l income disclosed cannot be brought down through revised return and refund claimed. Notwithstanding this, I have considered the applcaLion of tJle assessee on its own merits. 12. Somc assessees pointed out that one or two Commissioners in the State have entertained their claim u/s. 119(2)(b) favourably. My enquiries revealed that decisions have been taken both for and against assessees in this type o[ cases. it may not be out of place here to mention that in some cases where the delay was condoned arld 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 aIId hence, the]' are not entitled for condonation of delay a;rd the claim of 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. If 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 loa-n, there is diffrculty 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 ald the petition u/s.I I9(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 tJlat the TDS be refunded to them now and over a period of years in the long run, they may pay the same to the State Government. Before taking a final 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% of salary applies only to recovery being made f;:om the indil'idua-l ofhcer 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.8 & 9.- I I 5 14. However, irrespective of these considerations the position of law is already clarified by me in para nos. 7 & 8. Since as per the provisions of law the claim is not correct the petition u/s. 1 19(2)(b) is hereby rejected. If we read the aforesaid contents of the impugned order, the contents of paragraph No.lO 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, thereafter 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 119(2Xb) of the Act, which again for ready reference is reproduced herein under: \"Section 1 19(2lpl- The Board may, if considers it desirable or expedient so to do for avoiding genuine hardship. In any case or class of cases, by general or special order ,authorise any income-tax authority, to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specilied under this Act for making such application or claim and deal with the same on merits in accordarrce 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 Parliament was ensuring that the genuine hardship that an assessee faces can be redressed exercising the powers under Section 119(2Xb) in case if b :7 6 some delay has occurred on the part of the assessee and whereby the delay has occurred because of bonafide genuine and plausible explalation and cause. 8. In the instant case, the facts are undisputed. The petitioner being a judicial officer and in terms of the judgment the Honble Supreme Court in the case of All India Judges Associatlen (supra), he became entitled for some revised pay scale with a retrospective effect from 01.O7 .1996. In the course of implementation of the revised pay scale, the Government calculated the arrears of pay and found that the petitioner was entitled for Rs.2,86,932/- and the said amount was paid to the petitioner with a deduction of Rs.77,965/- 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. 2,86,9321-. The said amount was deducted without adjustment of the tax already deducted. Therefore, the petitioner became entitled for refund of an amount of Rs.77,965/- deducted towards TDS on the eadier occasion. 9. There is no dispute so far as the aforesaid factual matrix is concerned. Under the said circumstances, it cannot be said that the claim for refund of TDS by the petitioner to be in aly 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. a4 I 7 What the authority concerned ought to have seen was whether from o the date of recovery of the excess arrears paid to the petitioner in the year 20O8, whether there has been any reasonable delay on the part , of the petitioner in approaching the authorities for submission of his revibed 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 Iiled by the petitioner seems to be too harsh a decision. Further, the same appears to have been decided on hyper technical grounds. The same also appears to be arbitrary for the reason that the petitioner himself had specilically pleaded that in respect of other judicial officers 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 under Section 119(2Xb) of the Act and have ordered for refund of the excess TDS amount. 1 1. 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. I 1 ,/ 1 I I I I 8 a 12. The impugned order dated 09.O2.2O1O 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 2004-05 and appropriate order for refund of the amount payable to the petitioner is ordered forthwith without any further delay within an outer limit of sixty (60) days from the date of receipt of a copy of this order. 13. With the above observations, the writ petition strlnds allowed. No order as to costs. Miscellaneous petitions, pending if any, shall stand closed //TRUE COPY// SD/- K. AMMAJI ASSIST,qNT REGISTRAR ql SECTION OFFICER To, TJ GJP d 1. The Commissioner of lncome Tax, Hyderabad - I Aayakar Bhavan, Basheerbagh, Hyderabad. 2. One CC to Sri Y. Ratnakar, Advocate tOpUCl 3. One CC to Sri J. V. Prasad, Advocate tOpUCi 4. Two CD Copies *, I HIGH COURT DATED:21 11112023 ORDER WP.No.6570 of 2012 ALLOWING THE WRIT PETITION WITHOUT COSTS. @ crci$ sE STA I4: 1 q 3 [5JAl,i 2024 a <. + : r-.'s:Lf ' aj;r^ *r1 ,...-- {,Y "