Sujeev Gandhi and Vinai Gandhi V. Union of India & Ors.

W.P.(C)/7972/2021

AI Insights

The writ petitions filed by Sujeev Gandhi and Vinai Gandhi sought directions for the allowance of TDS credit for the Assessment Year 2009-10, cancellation of demand under section 143(1)(a) and penalty notice under section 221 of the Income Tax Act, 1961, and a refund of Rs. 2,50,000 each with interest. The petitioners, non-resident Indians deriving income from house property and bank interest, claimed that their TDS credits were not considered, leading to unjust demands and penalties. The court, referencing a similar case, directed the AO to take necessary actions to rectify the situation and ensure the petitioners receive their due credits.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 820075 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 09-08-2021
• Assessment Year: misc
• Other Referred Cases: Court On its Own Motion vs. Commissioner of Income Tax, 2013 SCC OnLine Del 1060 : [2013] 352 ITR 273 (Del)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SUNIL AGARWAL; TUSHAR GUPTA; VIRENDER SINGH CHARAK; SHUBHRA PARASHAR
• Assessee Lawyers: R K G U P T A; AMIT GOEL
• Keywords: Bank interest; Income from house property; Non-resident Indians; Rectification Application; TDS credit
• Section: 143(3); 154; 143(1)(a); 221

Judgement Text

" W.Ps.(C) 7971/2021 & 7972/2021 Page 1 of 6 $~86 & 87 * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 09.08.2021 + W.P.(C) 7971/2021 & CM APPL. 24802/2021 SUJEEV GANDHI ..... Petitioner Through: Mr.R.K. Gupta, Advocate versus UNION OF INDIA & ORS. ..... Respondents Through: Mr.Sunil Agarwal, Sr. Standing Counsel with Mr.Tushar Gupta, Jr. Standing Counsel for the Department. Mr.Virender Singh Charak & Ms.Shubhra Parashar, Advs. for UOI. + W.P.(C) 7972/2021 & CM APPL. 24803/2021 VINAI GANDHI ..... Petitioner Through: Mr.Amit Goel, Advocate versus UNION OF INDIA & ORS. ..... Respondents Through: Mr.Sunil Agarwal, Sr. Standing Counsel with Mr.Tushar Gupta, Jr. Standing Counsel for the Department. Mr.Virender Singh Charak & Ms.Shubhra Parashar, Advs. for UOI. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE NAVIN CHAWLA 2. Present writ petitions have been filed seeking direction to the respondents to allow the TDS credit on the basis of the TDS MANMOHAN, J. (Oral) 1. The petitions have been heard by way of video conferencing. Digitally Signed By:KRISHNA BHOJ Signing Date:10.08.2021 22:12:37 Signature Not Verified W.Ps.(C) 7971/2021 & 7972/2021 Page 2 of 6 certificates issued by the tenants in the name of the Petitioners for the Assessment Year 2009-10. Petitioners also seek cancellation of demand arising from order u/s 143(l)(a) and penalty notice u/s 221 of the Income Tax Act, 1961 [the Act] and a refund of Rs. 2,50,000/- each along with interest. 3. Learned counsel for the petitioners state that the petitioners are cousin brothers as well as Non-Resident Indians and are deriving income from house property and bank interest. They state that the petitioners filed their returns of income tax claiming refund of Rs.2,50,000/- each that became due as the petitioners paid the full tax without considering the advance tax payment of the same amount. 4. They further state that the refund was not granted to the petitioners under the assessment orders dated 18th 5. Learned counsel for the petitioners state that the petitioners moved rectification applications dated 22 November, 2011 issued by the Assessing Officer [for short ‘AO’] under Section 143(3) of the Act. nd April, 2013 under Section 154 of the Act giving details of the TDS amounts that had also not been considered as prepaid taxes. They state that no order under Section 154 of the Act has been passed by the AO and a demand was raised upon the petitioner in W.P.(C) 7971/2021 and the petitioner in W.P.(C) 7972/2021 vide notices dated 7th August, 2018 and 14th August, 2018 respectively under Section 221(1) of the Act. They state that the petitioners sent letters dated 17th August, 2018 to the AO however no action was taken on the same and notices dated 18th Digitally Signed By:KRISHNA BHOJ Signing Date:10.08.2021 22:12:37 Signature Not Verified W.Ps.(C) 7971/2021 & 7972/2021 Page 3 of 6 February, 2019 under Section 221(1) of the Act were sent to the petitioners. 6. Learned counsel for the petitioners state that no steps have been taken by the respondents to rectify the assessment orders despite many letters and requests of the petitioners. 7. Issue notice. Mr.Sunil Agarwal, learned senior standing counsel accepts notice on behalf of respondents. He states that he has no objection if the present Writ Petitions are disposed of with a direction to the AO to decide the rectification applications filed by the petitioners within a strict time frame. Mr. Agarwal fairly brings to the notice of this Court the direction given by learned predecessor Division Bench in similar circumstances in Court On its Own Motion vs. Commissioner of Income Tax, 2013 SCC OnLine Del 1060 : [2013] 352 ITR 273 (Del) wherein it is held as under:- “48. The Finance Minister in his recent speech while inaugurating the new Central Processing Cell for Tax Deducted at Source at Aayakar Bhawan in Ghaziabad, U.P. had emphasised the need for ‘technology driven tax administration’ and had stated as under: “This system will serve two people. As a deductee, I know how much the taxpayer suffers if the TDS is not credited to his or her account.” 49. The statement reflects the true and correct position of a pique assessee as a deductee, who has suffered tax deduction at source, but is not given due credit in spite of the fact that the deductor has paid the said tax. The respondents have received their due or money but credit is not given to the person from whose income tax has been Digitally Signed By:KRISHNA BHOJ Signing Date:10.08.2021 22:12:37 Signature Not Verified W.Ps.(C) 7971/2021 & 7972/2021 Page 4 of 6 deducted. Denying benefit of TDS to a taxpayer because of the fault of the deductor, which is not attributable to the deductee, causes unwarranted harassment and inconvenience. The deductee feels cheated. The Revenue cannot be a silence spectator, wash their hands and pretend helplessness. The problems highlighted here are normally faced by small or middle class taxpayers, including senior citizens as they do not have Chartered Accountants or Advocates on their pay rolls. The marginal amount involved in several cases and inconvenience/harassment involved makes it unviable and futile exercise to first approach the deductor and then the Assessing Officer. Rectification and getting corrections made by the deductor and to get them uploaded is not an easy task. The second phase of filing a revised return or an application under Section 154 is equally daunting and “expensive”. Invariably the assessees will write letters or even visit the office of the deductors, but when there is no response or desired result, they get frustrated and suffer. This causes distrust and feeling that the assessee has not been treated justly, fairly and in an honest manner. In our earlier orders, we had emphasised this aspect and asked the Board to take appropriate steps to ameliorate and help the small taxpayers. 50. It is unfortunate that the Board did not take immediate steps after even noticing lacuna and waited till Finance Act, 2012, when Section 234E was enacted. Mere writing of a letter by the Assessing Officer to the deductor by no stretch can be treated as sufficient action on the part of the respondents. Even this, it appears, was done in a few cases as the respondents in the counter affidavit have stated that they have written 20119 communications to the tax deductors, where TDS credit claimed by the taxpayers did not match with the details loaded by the deductors. The Act empowers and authorises the Assessing Officer to verify the contents of the return and notices can be issued to a third party, i.e. the deductor, to furnish information and details. The deductor, the principal officer or person responsible for making deduction, once issued notice to appear, in most Digitally Signed By:KRISHNA BHOJ Signing Date:10.08.2021 22:12:37 Signature Not Verified W.Ps.(C) 7971/2021 & 7972/2021 Page 5 of 6 cases, would like to comply with the statutory requirements and also furnish details with regard to TDS deducted from the income of the assessee. The statutory powers given to the Assessing Officer are sufficient and should be resorted to and the assessee cannot be left to the mercy or the sweet will of the deductors. Therefore, we direct that when an assessee approaches the Assessing Officer with requisite details and particulars, the said Assessing Officer will verify whether or not the deductor has made payment of the TDS and if the payment has been made, credit of the same should be given to the assessee. These details or the TDS certificate should be starting point for the Assessing Officer to ascertain and verify the true and correct position. The Assessing Officer will be at liberty to get in touch with the TDS circle in case he requires clarification or confirmation. He is also at liberty to get in touch with deductor by issuing a notice and compelling him to upload the correct particulars/details. The said exercise must be and should be undertaken by the Revenue, i.e. the Assessing Officer as an assessee who suffers in such cases is not due to his fault and can justifiably feel deceived and defrauded. We do not accept the stand of the Revenue that they can only write a letter to the deductor to persuade him to correct the uploaded entries or to upload the details. Power and authority of the Assessing Officer, cannot match and are not a substitute to the beseeching or imploring of an assessee to the deductor. The directions given above, are in accord with the provisions of the Act, namely, Section 133 and TDS provisions of the Act. If required and necessary, the income tax authorities can obtain prior approval from the Director or the Commissioner. The authorities can also examine whether general approval can be given. The said exercise is undertaken by the Assessing Officer while verifying or examining the return. Section 234E will also require similar verification by the Assessing Officer. In such cases, if required, order under Section 154 of the Act may also be passed. Circular No. 4 of 2012 will be equally applicable. This is the seventh mandamus which we have issued. Digitally Signed By:KRISHNA BHOJ Signing Date:10.08.2021 22:12:37 Signature Not Verified W.Ps.(C) 7971/2021 & 7972/2021 Page 6 of 6 51. The problem mentioned above will generally arise in cases prior to financial year 2011-12 as the TDS certificate forms had undergone a change and is now required to be down loaded from the Income Tax Portal.” 8. Keeping in view the fact that the rectification applications filed by the petitioners have not been decided till date and the TDS certificates issued by the tenants in the name of the petitioners have allegedly not been credited to the accounts of the petitioners on account of wrong PAN numbers mentioned by the tenants, this Court in compliance with the directions given by the learned predecessor Bench in Court On its Own Motion vs. Commissioner of Income Tax (supra) directs the AO to take remedial measures as mentioned in the said judgment as well as to decide the rectification applications filed by the petitioners in accordance with law within twelve weeks. 9. With the aforesaid directions, the present writ petitions and applications stand disposed of. In the event the order is not complied within the aforesaid time frame, the petitioners are given liberty to approach this Court by filing appropriate applications. 10. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail. MANMOHAN, J NAVIN CHAWLA, J AUGUST 9, 2021/rv Digitally Signed By:KRISHNA BHOJ Signing Date:10.08.2021 22:12:37 Signature Not Verified "