The Present Writ Petition Has Been Frled Assailing The Impugned v. Ijnlon Of Indiat. The Law Department

HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD(Special Original Jurisdiction) TUESDAY, THE TWENTY FIRST DAY OF NOVEMBERTWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHYAND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 29246 OF 2011 Between: T. Muthyamaiah, S/o T.Malaiah, aged 68 years, Occ : Special Magistrate, Rl/oH.No.11-5-281, Sri Venkateswara Colony, Saroornagar, Hyderabad [- ]35. .....PETITIONER AND Commissioner of lncome-Tax, Hyderabad-1, Aayakar Bhavan, Basheerbagh,Hyderabad. ...,.RESPONDENT Petition Under Article 226 of the Constitution of lndia [praying ]that in thecircumstances stated in the affidavit filed therewith, the High Court may bepleased to issue a Writ in the nature of certiorari or any other suitable writ, orderor direction [quashing ]the impugned order [passed ]by the [Respondent dated 23-]05-2011 passed u/s 119(2Xb) of the l.T Act, vide F.No.ClT/Hyd-'11119(2)(b)lo8-09, as arbitrary, unreasonable, discriminatory and [unjust and declaring that ][the]delay in filing the revised income tax return on [28.04.2009 ][by ][the ][petitioner ][for]the assessment year 2OO4-05 should be condoned [and direct ][issue ][of ][refund ][of]Rs.1,40,731 with interest to the [petitioner ]as [per ]revised return.|.A.NO:1 OF 2011[(WPMP. ]NO:362't0 oF 2011) 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 for the Respondents [: ]SRI J.V.PRASAD [(SC ] [INCOME TAX)]The Court made the following ORDER THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAMJIWRIT PETITION No.29246 of20lt ORDER: (per Hon,bte Sri Justtce p.SAM KOSHy) The present writ petition has been frled assailing the impugned order passed by the respondent/ commissioner of Incorrie-Tax,Hyderabad-I, (Annexure pl) dated 23.OS.2Otl, whereby therespondent had rejectecl the application filed by the petitioner underSection 119(2)(b) of the Income Tax Act, 1961, (herein referred to as'the Act) seeking for condonation of delay in filing of the revisedreturn of income for the assessment year 2OO4_OS. 2. Heard Sri Y. Ratnakar, learned counsel for the petitioner andSri J.V. Prasad, learnecl Standing Counscl for Income Tax appearingfor thc rcspondent. 3. The facts in nur she[ which led to filing of the present writpetition are that the petitioner Sri T. Muthyamaiah was a judicialofficer under the unified State of Andhra pradesh stood retired fromservice w.e.f. 30. 1 l.2OO2. Subsequently, he was re_employed again interms of the jucigment of the Hon'ble Supreme Court in the case of AItIndia Judges Association vs. IJnlon of Indiat. The Law Department of the 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 ][O1.07.1996. ][In ][terms ][of the ][said]G.O., the petitioner [was ][paid ][arrears ][of ][Rs.7,66,303/- ][and the ][Tax]Deducted at Source [(for ][short ]['TDS) worked ][out to ][be ][Rs.2,34,487 ]l-'On receipt of the arrears [with ][TDS, ][the ][petitionet filed his ][income tax]return for the said assessment [year ][2OO4-05 ][on ][i3.07.2004 ][declaring]the arrears of salary [as ][well ][as ][the ][salary as income ][and ][availed ][the]credrt of the TDS of [Rs. ][1 ],4O,73 [1 ]i [- ][and ][other ] [collected'] of the 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 ][O1.07.1996. ][In ][terms ][of the ][said]G.O., the petitioner [was ][paid ][arrears ][of ][Rs.7,66,303/- ][and the ][Tax]Deducted at Source [(for ][short ]['TDS) worked ][out to ][be ][Rs.2,34,487 ]l-'On receipt of the arrears [with ][TDS, ][the ][petitionet filed his ][income tax]return for the said assessment [year ][2OO4-05 ][on ][i3.07.2004 ][declaring]the arrears of salary [as ][well ][as ][the ][salary as income ][and ][availed ][the]credrt of the TDS of [Rs. ][1 ],4O,73 [1 ]i [- ][and ][other ] [collected'] 4. However, subsequently it [was ][detected ][that ][there were ][some]arrears that has bcen [crept ][in ][the course ][of the ][calculation ][of ][arrears]is concerned. So far 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 ][Ol ]'O7 [l9g2 ][']Thereafter, the matter [was again placed before ][the ][Hon'ble ][Supreme]Court for clarihcation in [the ] [India ][Judges ][Associafion ][(supra)]case. The Honble Supreme [Court ][again vide ][order ][dated ][21 ][II'2006]in i.A.No.152 ol 2OO4 in [W.P.No. ][1022 ][of ][1989 ][clarified ][the order' ][As ][a]of the [clarihcation ][of the ][Hon'ble ][Supreme ][Court' ][the]consequence payment of arrears was revised [and ][it ][was ][found ][that ][certain ][excess]arrears of pay was made [to ][the petitioner. ][The office of the ][Accountant]General, (A&E) A.P. Hyderabad, [vide ][its ][memo ][dated ][24 ]['06'2008]quantilred the excess amount [to ][the ][petitioner at ][Rs'4 ]$9,103/- [out of] Rs.7,66,303/ - which was ordered to be recovered. Accordingly, theaforesaid amount of Rs.4,69,103/- was recovered from the petitioner.Since the said amount was recovered from the petitioner, the TDS onthe 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 thethe 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.4,69, 1O3/_ amounting toRs.1,4O,731/- became refundable to the petitioner.5. The whole issue in the present writ petition is the refund of theRs.1,4O,731/- 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 movecl an application under Sectionby the Department, the petitioner movecl an application under Section119(2)(b) of the Act seeking for condonarion of delay in fi1ing of therevised return of income and claiming refund of tax. It is thisapplication under Section 1 19(2)(b) of the Act which stood rejectedand is under challenge in the present writ petition.and is under challenge in the present writ petition. 6. It would be relevant at this juncture to take note of the relevantportion of the impugned order passed by the respondent whilerejecting the application under Section I 19(2)(b) of the Act, which forready reference is reproduced herein under: 6. It would be relevant at this juncture to take note of the relevantportion of the impugned order passed by the respondent whilerejecting the application under Section I 19(2)(b) of the Act, which forready reference is reproduced herein under: "lO. There is a genuine problem that arises in the case of t1-esalaned employees who are to pay higher taxes in the initialsalaned employees who are to pay higher taxes in the initialyear, in case their salaries ,." ."ui""J and recovery is madein.the sutrsequent yea_rs. Some assesses *ho arJ drawingonly pension and who are below t.l.e ta_xable limited pleadedthat they may have to incur personal loss if TDS is notin.the sutrsequent yea_rs. Some assesses *ho arJ drawingonly pension and who are below t.l.e ta_xable limited pleadedthat they may have to incur personal loss if TDS is notrefunded. arrd the same is to be repaid to tfre StateGovernment in the long run, say a-fte; lO to 20 vears. However, the provisions of law are inadequate to entertainthese claims ald to consider issual of refund.these claims ald to consider issual of refund. 11. It is not out of place for me to mention that even in thecase of Satyam Computers, similar situation has arisen,wherein the department has held that origlna.l incomedisclosed cannot be brought down through revised returnand refund claimed. Notwithstandng this, I have consideredthe application of the assessee on its own merits. 12. Some assessees pointed out that one or two 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 of cases. It may not be out of place here to mentionthat in some cases where the delay was condoned ald refundissued, the Audit has raised an objectuon. After verifying thecorrect position of law, it is my considered opinion that theclarm of thc assessee is not correct and hence, they are notentitled for condonation of delay and the claim of refund. 13. Without prejudrce to the above, there are several otherissues that arise in this case for consideration. Under whathead of income, thc 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 17l2)(vrirl & RuIe 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 iose 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 loan, thereis dilliculty rn excluding it from tJle portion of ttre salary forthe earlier years. If it is to be treated as excess salary paidthen as per section 15, it is liable to tax and the petitionu/s. i 19(2)(b) cannot be entertained. 13. 1 Further, assessee clarms refund, stating that moneyincluding TDS belongs to State Government or the Employerand it should be reduced from his salary. It is assessee's pleathat the TDS be refunded to them now and over a period ofincluding TDS belongs to State Government or the Employerand it should be reduced from his salary. It is assessee's pleathat 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 takrng a final decision and during thestage of discussions, the Law Secretary of State GovernmentGovernment. Before takrng 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 shouid not exceedwas sent. The stipulation that recovery shouid not exceed10% of salary applies only to recovery being made from theindividual officer and not wrth 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.any. However, there is no response from the StateGovernment on this letter. Copy of the letter is enclosed aspage nos.8 & 9. ,r 74. However, irrespective of these considerations theposiLion of law is already clarified by me in para nos. 7 & g.Since as per tJ.e provisions of law the claim is not correct thepetition u/s.119(2)(b) is hereby rejected.Since as per tJ.e provisions of law the claim is not correct thepetition u/s.119(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 I l9(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(2)(b) of the Act, which again for readyreference is reproduced herein under: "Sectloa 119(2lpl- The Board may, i[ 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 arr application or claimfor any exemption, deduction, refund or any other reliefunder this Act after the expiry of the period specified underthis Act for making such application or claim and deal withthe same on merits in accordance with 1aw." 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 1-ace s can beredressed exercising the powers under Section 119(2)(b) in casc if some delay has occurred [on the ][part of ][the ][assessee ][and ][whereby ][the]delay has occurred [because ][of ][bonahde ][genuine ][and ][plausible]explanalion and [cause.] 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 1-ace s can beredressed exercising the powers under Section 119(2)(b) in casc if some delay has occurred [on the ][part of ][the ][assessee ][and ][whereby ][the]delay has occurred [because ][of ][bonahde ][genuine ][and ][plausible]explanalion and [cause.] 8. In the instant [case, ][the ][facts ][are ][undisputed ][The ][petitioner]being a [judicial ][ofhcer ][and ][in ][terms ][of ][the ][judgment the ][Hon'ble]Supreme Court in [the ][case ][of ][All ][India Judges ][Association ][(supra)']he became entitled [for ][some revised ][pay ][scale ][with ][a ][retrospective]effect from [Ol.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'7,66,3O3/- and the ][said ][amount]was paid to the [petitioner ][with ][a ][deduction ][of ][Rs ][2,34,487/- ][towards]TDS. Subsequently, [the ][arrears ][of ][amount ][paid ][was ][lound to ][have]been erroneously [calculated ][and ][paid ][and ][it ][was ][ordered ][to ][be]recovered. Accordingly, [the ][Department ][recovered ][an ][amount ][of]Rs.4,69,103/- out of [Rs.7,66,3031-' ][The said amount ][was ][deducted]without adjustment [of ][the ][tax ][already deducted' Therefore' ][the]petitioner became entitled [for ][refund ][of ][an amount ][of ][Rs' ][1'40'73 ][1/ ][-]deducted towards [on ][the ][earlier occasion'] g. 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 ] [by ][the petitioner ][to ][be ][in ][any ][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 ]['] /r' al \ What the authority concerned ought to have seen was whether fromthe date of recovery of the excess arrears paid to the petitioner in theyear 2008, whether there has been any reasonable delay on the partof the petitioner in approaching the authorities for submission of hisrevised 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 filed 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 specifically 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(2)(b) of the Act and have ordered for refund of theexcess TDS amount. 11. 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. (- 11. 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. (- 12. The impugned order dated 23.O5.2O11 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 fi1ed on behalf of the [petitioner for ]the [assessment ][year]2OO4-O5 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 reccipt ][of ][a ][copy ][of ][this]ord er. 13. With the above observations, the writ [petition ][stands ][allowed]No order as to costs. Miscellaneous petilions, [pending ]if any, [shall stand ][closed] SD/- K. VENKAIAHASSISTANT REGISTRAR\t-r' //TRUE COPY// SECTION OFFICER To1. The Commissioner of lncome-Tax, Hyderabad-1 , Aayakar [Bhavan,]Basheerbagh, Hyderabad. 2. One CC to Sri Y.Ratnakar, Advocate 3. One CC to Sri J.V.Prasad [(SC ]FOR INCOME [TAX) ]IOPUC] 4. Two CD Copies SA GJP a) HIGH COURTDATED:21 11112023 ORDER WP.No.29246 ot 2011 ALLOWING THE W.P WITHOUT COSTS. ,y 1t\[e ][STAfe:](.qPzo(-)0 2 Jtll [?t?E]**O i. s p r,i [i--]'(]