M/S Kjp And Associates v. Deputy. Asstt. Commissioner Of Income Tax

$~6 *IN THE HIGH COURT OF DELHI AT NEW DELHI %Date of Decision: 09.05.2025 +W.P.(C) 11727/2023 M/S KJP AND ASSOCIATES .....Petitioner Through:Mr Santanu Kanungo, Mr SanjayRohilla and Mr Sayantani, Advocates.versus DEPUTY. ASSTT. COMMISSIONER OFINCOME TAX.....RespondentThrough:Mr Siddhartha Sinha, senior standingcounsel. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIA VIBHU BAKHRU, J. (ORAL) 1.The petitioner has filed the present petition, inter alia, praying that theincome tax demand raised in respect of Assessment Year 2007-08 bedeleted after taking into account the tax deducted at source certificate(in Form 16A) which was furnished by the petitioner. The petitioner furtherprays that the directions be issued to the respondent to pass an order grantingrefund of tax due, after adjusting the TDS which was deducted in respect ofpayments received or accrued during financial year 2006-07, alongwith up to date interest. 2.The petitioner is a registered partnership firm and had filed its returnof income for AY 2007-08 declaring a total income of ₹2,21,43,820/-. The said return was processed under Section 143(1) of the Income Tax Act, 1961[the Act] and an intimation dated 18.03.2009 was issued, whereby the TDSwhich was covered in the TDS certificate issued by Freudenberg Nok Pvt.Ltd. (formerly known as Sigma Freudenberg NOK Pvt. Ltd.) was rejected.The details of the same, which were to be attached with the intimationissued under Section 143(1) of the Act, were furnished to the petitioner on09.06.2016. Thereafter, the petitioner, filed an application under Section 154of the Act on 22.06.2016, for rectification of the error on record inasmuch asthe credit for the TDS by Sigma Freudenberg NOK Pvt. Ltd. had not beenaccounted for. The petitioner’s request was not processed. Consequently, thepetitioner sent a reminder dated 14.01.2018 requesting the Assessing Officer to pass an appropriate order. The petitioner did not receive anyresponse to the said reminder as well. 3.Thereafter, on 10.01.2020, the AO issued a notice under Section221(1) of the Act for recovery of the demand, which had arisen solely forthe reason that the TDS certificate furnished by the petitioner had not beenaccounted for. The petitioner responded to the said notice by letters dated14.02.2018 and 20.01.2020 and requested the AO to allow the credit for theTDS certificate. The record indicates that the AO sought verification of thededuction and deposit of TDS from the Sigma Freudenberg NOK Pvt. Ltd. –the entity that had deducted the TDS. Sigma Freudenberg NOK Pvt. Ltd.responded to the AO confirming that it had deducted TDS from paymentsmade to the petitioner and had also deposited the same to the credit of theGovernment. We consider it apposite to set out the tabular statement set out Signature Not Verified in the response of Sigma Freudenberg NOK Pvt. Ltd. and the same isreproduced below: 4.It is apparent from the above that Sigma Freudenberg NOK Pvt. Ltd.had provided full details of the TDS of ₹20,66,087/-, which was deducted from the payments made to the petitioner during the FY 2006-07 and hadfurther also given details of the deposits made to the account of the CentralGovernment. Sigma Freudenberg NOK Pvt. Ltd. had not only indicated the cheques by which the amounts were deposited in the account of theGovernment, but also the bank account and the branch in which the chequeswere deposited and the date of the deposit. Signature Not Verified in the response of Sigma Freudenberg NOK Pvt. Ltd. and the same isreproduced below: 4.It is apparent from the above that Sigma Freudenberg NOK Pvt. Ltd.had provided full details of the TDS of ₹20,66,087/-, which was deducted from the payments made to the petitioner during the FY 2006-07 and hadfurther also given details of the deposits made to the account of the CentralGovernment. Sigma Freudenberg NOK Pvt. Ltd. had not only indicated the cheques by which the amounts were deposited in the account of theGovernment, but also the bank account and the branch in which the chequeswere deposited and the date of the deposit. 5.Notwithstanding that all requisite details of the deposit of TDS hadbeen furnished to the AO, the AO did not process the petitioner’s request foraccording it the credit for the TDS. This is for the reason that the same wasnot verified from the data available on the portal. Apparently, the AO hadsentacommunicationdated22.08.2022totheconcernedDeputyCommissioner of Income Tax (TDS), Chandigarh enclosing therewith thecopy of the TDS Certificates furnished by the petitioner and requesting thatthe same be verified in order to enable the AO to process the petitioner’sapplication. The concerned authority had responded by a letter dated30.01.2023 stating that the data on the TRACES Portal is available from FY2007-08 and this data is not available for FY 2006-07.Further, the ITRinformation is also not readily available for the said period. 6.It is apparent from the above that although the AO had taken steps toprocess the petitioner’s request, it could not complete the same for want ofverification from its records. Although the records may not be available onthe portal, we are unable to accept that the same cannot be verified. As notedabove Sigma Freudenberg NOK Pvt. Ltd. has provided details of thecheques and the concerned bank account where the same were deposited tothe credit of the Central Government. The same can be verified from theconcerned banks. However, it does not appear that any such exercise hasbeen initiated. 7.We may refer to the order on 05.09.2023 passed by the coordinatebench. The same is set out below: “CM No.45814/2023 1. Allowed, subject to the petitioner filing legible copies of theannexures, at least three days before the next date of hearing. W.P.(C) 11727/2023 2. The grievance of the petitioner is that the refund payable to itconcerning Assessment Year (AY) 2007-08 has been pending forthe last decade and a half. 2.1 It appears that the petitioner had filed a return for theaforementioned AY claiming refund amounting to Rs.7,92,621/-. 3. The petitioner asserts, as noticed above, that the refund waswrongly withheld and a fictitious demand was raised amounting toRs.16,23,450/-. 3.1 The petitioner also claims that an applicationdated 22.06.2016 under Section 154 of the Income Tax Act, 1961[in short, “Act”] was filed, which is pending adjudication up untiltoday. 4. It appears that the respondent/revenue has, however, thrown upits hands claiming that it cannot trace the relevant records. For thispurpose,ourattentionhasbeendrawntoaninternalcommunication dated 30.01.2023, wherein it was noted that thedata on the “TRACES Portal” was available commencing from theFinancial Year (FY) 2007-08. 5. The tax at source (TDS) has been deduced by an entity going bythe name Sigma Freudenberg NOK Pvt. Ltd. [hereafter referred toas “Sigma”]. 5.1 If tax deducted at source by the said entity is taken intoaccount, then, it appears that the amount claimed as refund wouldbe payable to the petitioner. 6. We may note that the respondent/revenue had also written toSigma on 21.07.2020. In this communication, it was indicated to Sigma that the petitioner/assessee is claiming that Sigma haddeducted TDS amounting to Rs.20,66,087/- concerning AY 2007-08. [See Annexure P7 of the case file]. 5. The tax at source (TDS) has been deduced by an entity going bythe name Sigma Freudenberg NOK Pvt. Ltd. [hereafter referred toas “Sigma”]. 5.1 If tax deducted at source by the said entity is taken intoaccount, then, it appears that the amount claimed as refund wouldbe payable to the petitioner. 6. We may note that the respondent/revenue had also written toSigma on 21.07.2020. In this communication, it was indicated to Sigma that the petitioner/assessee is claiming that Sigma haddeducted TDS amounting to Rs.20,66,087/- concerning AY 2007-08. [See Annexure P7 of the case file]. 7. We have, on record, Sigma’s communication, which givesdetails of the cumulative TDS deducted from payments made tothe petitioner. [See Annexure P8 of the case file]. 8. According to us, if the respondent/revenue is unable to locatethe record, then the information given in Annexure P-8 by Sigmashould be worked on to reach a conclusive finding qua deductionof tax at source as claimed by the petitioner. 8.1 This exercise will be done by the respondent/revenue beforethe next date of hearing. 9. Issue notice. 9.1 Mr Shailendera Singh, learned senior standing counsel, acceptsnotice on behalf of the respondent/revenue. 10. Counter-affidavit will be filed before the next date of hearing,which will, inter alia, allude to the exercise conducted by therespondent/revenue in ascertaining whether or not, as claimed bySigma, tax at source amounting to Rs.20,66,087/- was deducted. 11. List the matter on 22.11.2023.” 8.In terms of the aforesaid order, in absence of the Revenue locating therecord, the information as provided by Sigma Freudenberg NOK Pvt. Ltd.was required to be considered to reach a conclusive finding regardingdeduction and deposit of TDS as claimed by the petitioner. 9.It is material to note that the AO has not controverted any of the factsas set out by Sigma Freudenberg NOK Pvt. Ltd. in its response to theverification sought by the AO. In the peculiar circumstances of this case, itwould be necessary to accept the said communication as correct. 10.In view of the above, we consider it apposite to dispose of the presentpetition directing the AO to consider the response furnished by SigmaFreudenberg NOK Pvt. Ltd. as correct, unless it determines otherwise, andprocess the petitioner’s request on the aforesaid basis as expeditiously aspossible and preferably within a period of eight weeks from date. 11.The petition is disposed of in the aforesaid terms. VIBHU BAKHRU, J MAY 09, 2025RK TEJAS KARIA, J Click here to check corrigendum, if any