Wp/31592/2011 Of K. Ramchander, Hyderabad v. Commissioner Of Income-Tax, Hyderabad

HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD(Special Original Jurisdiction) TUESDAY,THE TWENTY FIRST DAY OF TWO THOUSAND AND TWENTY PRESENT THE HONOURABLE SRI JUSTICE [P.SAM KOSHY]ANDTHE HONOURABLE SRI JUSTICE [N,TUKARAMJI] WRIT PETITION NO: 31592 OF [201 ][1] Between: K. Ramchander, S/o. [K. ][Balaiah, ][Aged ][about]68 years ,Occ: SpecialMagistrate, 12th Court, Secunderabad [Fl/o. ][H.No]2-119, Sai Nagar Colony,Near Chaitanyapuri, [Dilsuknagar, Hyderabad ][-60] ...PETITIONER AND Commissioner Of lncome-Tax, [Hyderabad-1, ][Aayakar ][Bhavan, ][Basheerbagh,]HYderabad ...RESP.NDENTS Petition under Article 226 of [lhe 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 ][certiorari or any other suitable writ, order]or direction [quashing ][the ][impugned ][order passed ][by ][the ][Respondent ][dt. ][23-5-]2011 passed u/s [19(2)(b) ][of the lT Act, vide ][F.No.ClT/Hyd-1/1 ][19(2)(by50(6y08-]09, as arbitrary, unreasonable, [discriminatory ][and ][unjust ][and ][declaring ][that ][the]delay in filing the [revised income tax return on ][29-4-2OO9 ][by ][the ][petitioner for ][the]assessment [year ][2OO4-20O5 ][should be condoned and direct issue ][of ][refund of]Rs.1,66,122l- with [interest ][to ][the petitioner as per revised ][return]l.A. NO:'t OF 2011[(WPMP. ][NO:3920][ 4 ][0F ][20'.111] 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: ][SRl. Y. RATNAKAR]Counsel for the [Respondents: ] [J. ][V. ][PRASAD (SC FOR INCOME TAX)] The Court made the [foltowing: ] THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAMJIWRIT PETITION No.3 L592 of 2Ol1 ORDER: (per Hon'bte Sri Justice P.SAM KOSHlz) The present writ petition has been filed against the impugnedorder passedby the respondent/Commissioner of Income_Tax,order passedby the respondent/Commissioner of Income_Tax,Hyderabad-I,(Annexure P1) dated 23.OS.2Oll, whereby therespondent had rejected the application filed by the petitioner underSection I 19(2Xb) of the Income Tax Act, 1961, (herein referred to asSection I 19(2Xb) of the 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 2OO4_OS.return of income for the assessment year 2OO4_OS. 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 K. Ravichander was a judicialofl-rcer under the unifred State of Andhra pradesh stood retired fromservice w.e.f. 30.ll.2OO2. Subsequently, he was re_employed again interms of the judgment of the Hon,ble Supreme Court in the case of .4lIIndia Judges Associqtion us. union of Indiat. The Law Department 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 K. Ravichander was a judicialofl-rcer under the unifred State of Andhra pradesh stood retired fromservice w.e.f. 30.ll.2OO2. Subsequently, he was re_employed again interms of the judgment of the Hon,ble Supreme Court in the case of .4lIIndia Judges Associqtion us. union of Indiat. The Law Department of the State Government ol Andhra pradesh issued G.O.Ms.No.60dated 07.O5.2003. Vide the said G.O., there was a fixation of pay scaledated 07.O5.2003. Vide the said G.O., there was a fixation of pay scaledone with a retrospective effect from 01.07.1996. In terms of the saidG.O., the petitioner was paid an arrears of Rs.7,24,44O/_ and the TaxDeducted at Source (for short [.TDS,) ]worked out to be Rs.2,32,129 /_.G.O., the petitioner was paid an arrears of Rs.7,24,44O/_ and the TaxDeducted at Source (for short [.TDS,) ]worked out to be Rs.2,32,129 /_.On receipt of the arrears with TDS, the petitioner filed his income taxreturn for the said assessment year 2oo4-o5 on 19.05.2o04 declaringreturn for the said assessment year 2oo4-o5 on 19.05.2o04 declaringthe arrears of salary as wer as the salary as income and availed thecredit of the TDS of Rs. 1,66, 122/- 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 far as the calculation of dearness allowance iscredit of the TDS of Rs. 1,66, 122/- 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 far as the calculation of dearness allowance isconcerned, it aiready stood merged as per the provisions of AndhraPradesh State Revision Rules, 1993, w.e.f. from OI.OZ.1992.Thereafter, the matter was again placed before the Hon,ble SupremeCourt for clarihcation in the . tl India Judges Associcrtion (supra)case. The Hon'ble Supreme Court again vide order d.ated,2l.ll.2006in LA.No. 152 of 2OO4 in W.P.No.1O22 of 7989 clarihed the order. As aconsequence of the clarihcation of the Hon,ble Supreme Court, thepayment of arrears was revised and it was found that certain excessarrears of pay was made to the petitioner. The office of the Accountantin LA.No. 152 of 2OO4 in W.P.No.1O22 of 7989 clarihed the order. As aconsequence of the clarihcation of the Hon,ble Supreme Court, thepayment of arrears was revised and it was found that certain excessarrears of pay was made to the petitioner. The office of the AccountantGeneral, (A&E) A.P. Hyderabad, vide its memo dated 16.05.200gquantified the excess amount to the petitioner at Rs.6,g 1,3g6/_ out ofquantified the excess amount to the petitioner at Rs.6,g 1,3g6/_ out of I II il iiI IiI I Rs.7 ,24,440 / - which was ordered to be recovered. Accordingly, thealoresaid amount of Rs.6,g1,3g6/- was recovered from the petitioner.aloresaid amount of Rs.6,g1,3g6/- was recovered from the petitioner.Since the said amount was recovered from the petitioner, the TDS onthe entire amount coliected 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 theof only the amount of arrears actually paid to the petitioner and theTDS amount of the recovered amount of Rs.6,gl,3g6/- amounting toRs.l ,66,122 / - became refundable to the petitioner.Rs.l ,66,122 / - became refundable to the petitioner. I II il iiI IiI I Rs.7 ,24,440 / - which was ordered to be recovered. Accordingly, thealoresaid amount of Rs.6,g1,3g6/- was recovered from the petitioner.aloresaid amount of Rs.6,g1,3g6/- was recovered from the petitioner.Since the said amount was recovered from the petitioner, the TDS onthe entire amount coliected 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 theof only the amount of arrears actually paid to the petitioner and theTDS amount of the recovered amount of Rs.6,gl,3g6/- amounting toRs.l ,66,122 / - became refundable to the petitioner.Rs.l ,66,122 / - 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 liling of therevised return of income ald 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. 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 l lg(2\(bl 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 initialyear, in case their salaries are reuis.i and recovery is madein . [the ][subsequent ][yea-rs. ][Some ][assesses ][*no ]-J aaa*r.,gthat only pension they may and who are have to incur below personal loss the taxable limited if TDS fleadedis notrefunded and the same is to be repaid to tn1 St.t. Government in the long run, say after 10 to 2O years.However, the provisions of law are inadequate to entertainthese claims and to consider issual of refund.these claims and to consider issual of refund. I l. It is not out of place for me to mention that even in thecase of Satyam Computers, similar situation has ar-isen,wherein the department has held that original incomedisclosed cannot be brought down through revised returnand refund claimed. Notwithstanding this, I have consideredthe application of the assessee on its own mcrits.the application of the assessee on its own mcrits. 12. Some 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 of cases. It may not be out of place here to mentionthat in some cases where t1e delay was condoned ald refundissued, the Audit has raised an objection. After verifying thecorrect position of law, it is my considered opinion that theclalm of the assessee is not correct and hence, they are notentitled for condonation of delay and 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 sala5r, 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 t}re va-lue 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 loan, thereis dilficulty in excluding it from the portion of the salary forthe earlier years. If it is to be treated as excess salaqr paidthen as per section 15, it is liable to tax and the petitionu/s.I I9(2)(b) cannot be entertained. 13. I F\rrther, 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 pleathat the TDS be refunded to them now and over a period o[years 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 Govemmentwas also addressed for a clarifrcation and even a reminderwas sent. The stipulation that recovery should not exceed1O% of salary applies only to recovery being made from theindividual oflicer and not with r€spect 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. i I 14. ..However, irrespective of these considerations theposition of law is already clarifred by me l" p"r" z A A.position of law is already clarifred by me l" p"r" z A A.Srnce as per the provisions of law the claim is not "o". correct thepetition u/s. I19(2)(b) is hereby rejected.petition u/s. I19(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 withoutproperly appreciating the verygrievance of the petitioner. 7At this juncture, it would also be relevant to take note of theprovision of Section 119(2)(b) of theAct, which again for readyreference is reproduced herein under: "Section f 19(2lpl- The Board may, if considers it desirableor expedient so to do for avoiding genuine hardship.-tr, ,rrycase.or class of cases, by general oi special ordei ,iutrrori".any income-tax ror any exemptlon, deduction, .authority, to admit an refund application or any other or claimreliefunder this Act after tJle expiry of the period ,rra..this Act for making such application or claim "i.Jfif and deal withthe same on merits in accordance 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 t I9(2)(b) in case if some delay has occurred on the part of the assessee and whereby thedelay has occurred because of bonafide genuine and plausibleexplanadon and cause.delay has occurred because of bonafide genuine and plausibleexplanadon and cause. 8. In the instant case, the lacts are undisputed. The petitionerbeing a judicial officer and in terms of the judgment the Hon,bleSupreme Court in the case of All India Judges Associqtion(supra),he became entitled for some revised pay scale with a retrospectiveeffect from Ol.OT.1996.In the course of implemenhtion of the revisedpay scale, the Government calculated the arrears of pay and foundthat the petitioner was entitled for Rs.7,24,44O/ _ and the said amountwas paid to the petitioner with a deduction of Rs.2,32, 129/_ towardsTDS. Subsequently, the arrears of amount paid were found to havebeen erroneously calculated and paid and it was ordered to berecovered. Accordingly, the Department recovered an amount ofRs.6,81,386/-. The said amount was deducted without adjustment ofthe tax already deducted. Therefore, the petitioner became entitled forrefund of an amount of Rs.|,66,122,/_ deducted towards TDS on theearlier 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 any 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. 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 any 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 fromthe date of recovery of the excess arrears paid to the petitioner in theyear 2OO8, whether there has been any reasonable delay on the partof the petitioner in approaching the authorities for submission of hisrevised return of income lO. In the teeth of the aforesaid admitted factual matrix of the caseand considering the provisions of Section ll9(2Xb) of the Act, we areof the considered opinion that the manner in which the respondenthas rejected the apprication 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 I L9(2)(bl 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 ear.lier also has to berefunded. The respondent while passing the impugned order has nottouched upon any of these issues. L2. The impugned order dated 23.OS.2Oll therefore is notsustainable. As a consequence, the same is set aside/quashed andthe application under Section llg(2)(bl 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 year2OO4-O5 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 stands allowedNo order as to costsNo order as to costs Miscellaneous petitions, pending if any, shall stand closed SD/. K, AMMAJIASSISTA NT REGIS //TRUE COPY// SECTION OFFICER To,1. The Commissioner Of lnln The Commissioner Of lnln^ [Basheerbagtr, ][Hvo"raor'3o'e-Tax' ][Hyderabad-l' Aayakar ][Bhavan,]. i, fl ii cD EE copiesF [.'#l ][:I ][#IHmi ]# !"Sft,",.18 BH,?,o,) ro p u clJff GJP. i, fl ii cD EE copiesF [.'#l ][:I ][#IHmi ]# !"Sft,",.18 BH,?,o,) ro p u clJff GJP HIGH COURT DATED:21 11112023 ORDERWP.No.31592 ot 2011 ALLOWING THE WRITPETITIONWITHOUT COSTS G\i0bGse- w 1[t\][e][ STAT€]oqoi()2[ [sts ][2s8]at+ioE$ P^JC