Counsel Forthe Respondent: Sri J v. Prasad

HIGH COURT FOR THE STATE OF TELANGANAAT HYD€RABAD(Special Original Jurisdiction) TUESDAY, THE TWENTY FIRST DAY OF NOVEMBERTWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUST]CE P.SAM KOSHYANDTHE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 6570 OF 2012 Between: S. Darmaiah, S/o. Late S- Guravaiah, Aged about 65 years, Occ: SpecialMagistrate Cou( No. ['10, ]Metropolitan Criminal Courts, Nampally, Hyderabad,R/o. H.No.22-52, Vivekananda Nagar, Hyderabad-60 ..,PETITIONER 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 thecircumstances stated in the affidavit filed therewith, the High Court may becircumstances stated in the affidavit filed therewith, the High Court may bepleased 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 Respondentdt. 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 unjustand Consequently declaring that the delay in filing the revised income tax returnon 28-04-2009 by the petitioner for the assessment year 2004{5 should becondoned and direct issue of refund of Rs. 77,965/- with interest to the petitioneras per revised return.order or direction setting aside the impugned order passed by the Respondentdt. 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 unjustand Consequently declaring that the delay in filing the revised income tax returnon 28-04-2009 by the petitioner for the assessment year 2004{5 should becondoned and direct issue of refund of Rs. 77,965/- with interest to the petitioneras per revised return. l.A. NO: 1OF 201P. NO: 8342 OF 2012 Petition under Section 151 CPC praying that in the circumstances statedin the affidavit filed in support of the petition, the High Court may be pleased todirect 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 -/ THE HON'BLE SRI JUSTICE P.SAM KOSHYAND 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 impugnedorder passed by the respondent/Commissioner of Income-Tax,Hyderabad-I, (Annexure Pl) dated 09.O2.2OlO, whereby therespondent had rejected the application hied by the petitioner underSection 119(2)(b) of tJle Income Tax Act, 1961, (herein referred to as'the ActJ seeking for condonation of delay in filing of the revisedreturn of income for the assessment year 20O4-05.respondent had rejected the application hied by the petitioner underSection 119(2)(b) of tJle Income Tax Act, 1961, (herein referred to as'the ActJ seeking for condonation of delay in filing of the revisedreturn of income for the assessment year 20O4-05. 2. Heard Sri Y. Ratnakar, learned counsel for the petitioner andSri J.V. Prasad, learned Standing Counsel for Income Tax appearingfor the respondent. 3. The facts in nut shell which led to filing of the present writpetition are that the petitioner Sri S. Darmaiah was a judicial ofhcerunder the unilied State of Andhra Pradesh stood retired from servicew.e.f. 30. 11.2002. Subsequently, he was re-employed again in termsof the [judgment ]of the Hon'ble Supreme Court in the case of All IndiaJudges Assoclatlon as. Union of Indial. The Law Department of the i I 2. Heard Sri Y. Ratnakar, learned counsel for the petitioner andSri J.V. Prasad, learned Standing Counsel for Income Tax appearingfor the respondent. 3. The facts in nut shell which led to filing of the present writpetition are that the petitioner Sri S. Darmaiah was a judicial ofhcerunder the unilied State of Andhra Pradesh stood retired from servicew.e.f. 30. 11.2002. Subsequently, he was re-employed again in termsof the [judgment ]of the Hon'ble Supreme Court in the case of All IndiaJudges Assoclatlon as. Union of Indial. The Law Department of the i I State Government of Andhra Pradesh issued G.O.Ms.No.60 dated07.05.2003. Vide the said G.O., there was a fixation of pay scale donewith 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 TaxDeducted at Source (for short TDS] worked out to be Rs.77,9651-.On receipt of the arrears with TDS, the petitioner fited his income taxreturn for the said assessment year 2OO4-05 on.06.05.2004 declaringthe arrears ol salary as well as the salary as incomo and availed thecredit of the TDS of Rs.77,965/- and other TDS collected. 4. However, subsequently it was detected that there were somearrears that has been crept in the course of the calculation of arrearsis concerned. So lar as the calculation of dearness allowance isconcerned, it already stood merged as per the provisions of AndhraPradesh State Revision Rules, 1993, w.e.f. from 01.07.1992.Thereafter, the matter was again placed before the Hon'ble SupremeCourt for clarification in the AII India &tdges Association (supra)case. The Hon'ble Supreme Court again vide order dated 21.ll.2006in I.A.No. 152 of 2OO4 in W.P.No. 1022 of 7989 clarif ied the order. As aconsequence of the clarification of the Honble Supreme Court, thepayment of arrears was revised and it was found that certain excessarrears of pay was made to the petitioner. The ollice of the AccountantGeneral, (A&,E) A.P. Hyderabad, vide its memo dated 16.05.2008quantified the excess amount to the petitioner at Rs.2,86,932/- out of -7 Rs.7 ,24,440 / - which was ordered to be recovered. Accordingly, theaforesaid amount of Rs.2,86,932/- was recovered from the petitioner.Since the said amount was recovered from the petitioner, the TDS ontfie entire amount collected when the earlier arrears was paid wouldnow have to be accordingly refunded after deducting the TDS amountof only the amount of arrears actually paid to the petitioner and theTDS amount of the recovered amount of Rs.2,86,932/- amounting toRs.77 ,965 / - became refundable to the petitioner. 5. The whole issue in the present writ petition is the refund of thesaid TDS which lies with the respondent. After the recovery was madeby the Department, the petitioner moved an application under Section119(2)(b) of the Act seeking for condonation of delay in filing of therevised return of income and claiming refund of tax. It is thisapplication under Section 119(2)(b) of the Act which stood rejectedand is under challenge in the present writ petition. 6. It would be relevant at this [juncture ]to take not€ of the relevantportion of the impugned order passed by the respondent whilerejecting the application under Section 119(2)(b) of the Act, which forready reference is reproduced herein under: "10. There is a genuine problem that arises in the case of thesalaried employees who are to pay higher taxes in the initialsalaried employees who are to pay higher taxes in the initialyear, in case their salaries are revised ald recovery is madein the subsequent years. Some assesses who are drawingonly pension and who are below the taxable limited pleadedthat they may have to incur personal loss if TDS is notrefunded and the same is to be repaid to the State(in the subsequent years. Some assesses who are drawingonly pension and who are below the taxable limited pleadedthat they may have to incur personal loss if TDS is notrefunded and the same is to be repaid to the State( I "10. There is a genuine problem that arises in the case of thesalaried employees who are to pay higher taxes in the initialsalaried employees who are to pay higher taxes in the initialyear, in case their salaries are revised ald recovery is madein the subsequent years. Some assesses who are drawingonly pension and who are below the taxable limited pleadedthat they may have to incur personal loss if TDS is notrefunded and the same is to be repaid to the State(in the subsequent years. Some assesses who are drawingonly pension and who are below the taxable limited pleadedthat they may have to incur personal loss if TDS is notrefunded and the same is to be repaid to the State( I Governmcnt in the long run, say after lO to ['.20 ]years.However, the provisions o[ law are inadequate to entertainthese cla.ims and to consider issual of refund. I l. It is not out of place for me to mention that eren in thecase o[ Satyam Computers, similar situation has arisen,wherein the dcpa.rtrnent has held that origina.l incomedisclosed cannot be brought down through revised returnand refund claimed. Notwithstanding this, I have consideredthe applcaLion of tJle assessee on its own merits. 12. Somc assessees pointed out that one or twoCommissioners in the State have entertained their claimu/s. 119(2)(b) favourably. My enquiries revealed thatdecisions have been taken both for and against assessees inthis type o[ cases. it may not be out of place here to mentionthat in some cases where the delay was condoned arld refundissued, the Audit has raised an objection. After verifying thecorrect position of law, it is my considered opinion that theclaim of the assessee is not correct aIId hence, the]' are notentitled for condonation of delay a;rd the claim of refund. 13. Without prejudice to the above, there are several otherissues that arise in this case for consideration. Under whathead of income, the sum, if reduced from the salary. is to betreated for the purposes of income-tax arises forconsideration. If it were to be treated as loan, theconsequence would be that section 17(2[viii) & Rule 3 comeinto operation and in all the subsequent years assessee is topay tax on the value of the perquisites on interest free loan.Assessee may stand to lose in this regard. As per the recordsit is nothing but salary i.e., paid and since there is nocorrespondence that it was treated as interest free loa-n, thereis diffrculty in excluding it from the portion of the salary forthe earlier years. If it is to be treated as excess salary paidthen as per section 15, it is liable to tax ald the petitionu/s.I I9(2)(b) cannot be entertained. 13.1 Further, assessee claims refund, stating that moneyincluding TDS belongs to State Government or the Employerand it should be reduced from his salary. It is assessee's pleatJlat the TDS be refunded to them now and over a [period ]ofyears in the long run, they may pay the same to the StateGovernment. Before taking a final decision and during thestage of discussions, the Law Secretary of State Governmentwas also addressed for a clarification and even a reminderwas sent. The stipulation that recovery should not exceed1O% of salary applies only to recovery being made f;:om theindil'idua-l ofhcer and not with respect to other recoveries ifany. However, there is no response from the StateGovernment on this letter. Copy of the letter is enclosed aspage nos.8 & 9.- \ 14. However, irrespective of these considerations theposition of law is already clarified by me in para nos. 7 & 8.Since as per the provisions of law the claim is not correct thepetition u/s. 1 19(2)(b) is hereby rejected. \ 14. However, irrespective of these considerations theposition of law is already clarified by me in para nos. 7 & 8.Since as per the provisions of law the claim is not correct thepetition u/s. 1 19(2)(b) is hereby rejected. If we read the aforesaid contents of the impugned order, the contentsof paragraph No.lO would make it evident that the respondentaccepts the fact that there is some force on the submission made bythe petitioner while moving an application under Section 119(2)(b) ofthe Act. However, thereafter while deciding the same, the respondentappears to have gone tangent and have decided the same on entirelyextraneous considerations without properly appreciating the verygrievance of the petitioner. 7. At this juncture, it would also be relevant to take note of theprovision of Section 119(2Xb) of the Act, which again for readyreference is reproduced herein under: "Section 1 19(2lpl- The Board may, if considers it desirableor expedient so to do for avoiding genuine hardship. In anycase or class of cases, by general or special order ,authoriseany income-tax authority, to admit an application or claimfor any exemption, deduction, refund or any other reliefunder this Act after the expiry of the period specilied underthis Act for making such application or claim and deal withthe same on merits in accordarrce with law." A perusal of the aforesaid provision of law would make it evident thatthe very purpose of enacting the said provision by the Parliament wasensuring that the genuine hardship that an assessee faces can beredressed exercising the powers under Section 119(2Xb) in case if some delay has occurred on the part of the assessee and whereby thedelay has occurred because of bonafide genuine and plausibleexplalation and cause. 8. In the instant case, the facts are undisputed. The petitionerbeing a [judicial ]officer and in terms of the [judgment ]the HonbleSupreme Court in the case of All India Judges Associatlen (supra),he became entitled for some revised pay scale with a retrospectiveeffect from 01.O7 .1996. In the course of implementation of the revisedpay scale, the Government calculated the arrears of pay and foundthat the petitioner was entitled for Rs.2,86,932/- and the said amountwas paid to the petitioner with a deduction of Rs.77,965/- towardsTDS. Subsequently, the arrears of amount paid was found to havebeen erroneously calculated and paid and it was ordered to berecovered. Accordingly, the Department recovered an amount of Rs.2,86,9321-. The said amount was deducted without adjustment of thetax already deducted. Therefore, the petitioner became entitled forrefund of an amount of Rs.77,965/- deducted towards TDS on theeadier occasion. 9. There is no dispute so far as the aforesaid factual matrix isconcerned. Under the said circumstances, it cannot be said that theclaim for refund of TDS by the petitioner to be in aly manner illegal oruncalled for, nor can it be said that the petitioner was at any point oftime blamed for raising of the claim of refund after so long [period.] ,/ What the authority concerned ought to have seen was whether fromo [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 partof the petitioner in approaching the authorities for submission of his, revibed return of income. 9. There is no dispute so far as the aforesaid factual matrix isconcerned. Under the said circumstances, it cannot be said that theclaim for refund of TDS by the petitioner to be in aly manner illegal oruncalled for, nor can it be said that the petitioner was at any point oftime blamed for raising of the claim of refund after so long [period.] ,/ What the authority concerned ought to have seen was whether fromo [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 partof 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 caseand considering the provisions of Section 119(2)(b) of the Act, we areof the considered opinion that the manner in which the respondenthas rejected the application Iiled by the petitioner seems to be tooharsh a decision. Further, the same appears to have been decided onhyper technical grounds. The same also appears to be arbitrary forthe reason that the petitioner himself had specilically pleaded that inrespect of other judicial officers who are posted under the othercommissionerate in the State of Andhra Pradesh itself like CIT(Vijayawada) and CIT (Tirupati) have allowed the said applicationunder Section 119(2Xb) of the Act and have ordered for refund of theexcess TDS amount. 1 1. An income tax payee whose TDS has been deducted by theGovernment at the time of making payment and the said paymentsubsequently being recovered, the TDS deducted earlier also has to berefunded. The respondent while passing the impugned order has nottouched upon any of these issues.subsequently being recovered, the TDS deducted earlier also has to berefunded. The respondent while passing the impugned order has nottouched upon any of these issues. II I I \ *, a 12. The impugned order dated 09.O2.2O1O therefore is notsustainable. As a consequence, the same is set aside/quashed andthe application under Section 119(2)(b) of the Act is ordered to beallowed condoning the delay in making the revised return of incomeand at this stage, the matter stands remitted back to the respondentfor passing appropriate orders on merits so far as the revised return ofincome being filed on behalf of the petitioner for the assessment year2004-05 and appropriate order for refund of the amount [payable ]tothe petitioner is ordered forthwith without any further delay within anouter limit of sixty (60) days from the date of receipt of a copy of thisorder. 13. With the above observations, the writ petition strlnds allowed.No order as to costs. Miscellaneous petitions, pending if any, shall stand closed SD/- K. AMMAJIASSIST,qNT REGISTRARql //TRUE COPY// SECTION OFFICER To,1. The Commissioner of lncome Tax, Hyderabad - I Aayakar Bhavan,Basheerbagh, Hyderabad. 2. One CC to Sri Y. Ratnakar, Advocate tOpUCl Ratnakar, tOpUCl3. One CC to Sri J. V. Prasad, Advocate tOpUCi 4. Two CD Copies TJGJP d I HIGH COURT DATED:21 11112023 ORDER1sE I4:WP.No.6570 of 2012q3 a[5JAl,i [2024]<.+: r-.'s:Lf [']aj;r^ ALLOWING THE WITHOUT COSTS. crci$@{,Y*r1 ,...--