Wp/31614/2011 Of A. Saraiah, Hyderabad v. Commissioner Of Income Tax, Hyderabad

HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD(Special Original Jurisdiction) TUESDAY, THE TWENTY FIRST DAY OF NOVETUBERTWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHYANDTHE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 31614 OF 2011 Between: A. Saraiah, S/o A. Mallaiah, Aged about 69 years, Occ: Special Magistrate,Court No. 2, RR Dist., L.B. Nagar, R/o. H.No. 7-3-18132, Sagar Enclave,Bairamulaguda, Hyderabad - 79. ...PETITIONER AND Commissioner Of lncome Tax, Hyderabad -1, Ayakar Bhavan, Basheerbagh,Hyderabad. ...RESPONDENT Petition under Article 226 ol 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, order ordirection quashing the impugned order passed by the Respondent dt. 23.5.2011passed u/s 119(2Xb) of the I.T. Act, vide F.No. CIT/Hyd-11119(2)(b)l51(3y08-09,as arbitrary, unreasonable, discriminatory and unpst and declaring that the delayin filing the revised income tax return on 28 -4.2009 by the petitioner for theassessment year 20O4-OS should be condoned and direct issue of refund of Rs.1,56,533/- with interest to the petitioner as per revised return. Counsel for the Petitioner: SRI Y.RATNAKARCounsel for the Respondent: SRI J.V.PRASAD, SC FOR INCOME TAX The Court made the following: ORDER THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAMJI WRIT PETITION No.31614 of 201 1 ORDER: (per Hc;rL'bte Si Justice P.SAM KOSHE) The present writ petition has been hled assailing the impugned order passed by the respondent/Commissioner ofIncome-Tax, Hyderabad-I, (Annexure p1) dated 23.OS.2Otl,whereby the respondent had rejected the application filed by thepetitioner under Section I 19(2)(b) of the Income Tax Act, 196 1,(herein referred to as 'the Act') seeking for condonation of delayin filing of the revised return of income for the assessment vear2004-05. 2. Heard Sri Y. Ratnakar, learned counsel for the petitionerSri Y. Ratnakar, learned counsel for the petitionerY. Ratnakar, learned counsel for the petitionerRatnakar, learned counsel for the petitionerlearned counsel for the petitionerfor the petitionerpetitionerand Sri J.V. Prasad, learned Standing Counsel for Income Taxappearing for the respondent. Heard Sri Y. Ratnakar, learned counsel for the petitionerSri Y. Ratnakar, learned counsel for the petitionerY. Ratnakar, learned counsel for the petitionerRatnakar, learned counsel for the petitionerlearned counsel for the petitionerfor the petitionerpetitioner 3. The facts in nut shell which led to filing facts in nut shell which led to filing in nut shell which led to filing shell which led to filing to filing filing of the present writthe present writwritpetition are that the sole petitioner late Sri A. Saraiah who issince been substituted by his legal heirs who are presentlypursuing thc lvrit pctition \ /as a judicial olficer under the unifiedState of Andhra Pradesh stood retired Ed[l service w.e.f. The facts in nut shell which led to filing facts in nut shell which led to filing in nut shell which led to filing shell which led to filing to filing filing of the present writthe present writwrit 3. The facts in nut shell which led to filing facts in nut shell which led to filing in nut shell which led to filing shell which led to filing to filing filing of the present writthe present writwritpetition are that the sole petitioner late Sri A. Saraiah who issince been substituted by his legal heirs who are presentlypursuing thc lvrit pctition \ /as a judicial olficer under the unifiedState of Andhra Pradesh stood retired Ed[l service w.e.f. The facts in nut shell which led to filing facts in nut shell which led to filing in nut shell which led to filing shell which led to filing to filing filing of the present writthe present writwrit 30.lt.2OO2. [Subsequently, ][he was ][re-employed again ][in ][terms ][of]the [judgment ][of ][the Hontrle ][Supreme ][Court ][in ][the ][case ][of ] India Judges [Association ][rts' union ][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 ][sca-le ][done ][with ][retrospective ][effect ][from]0l.oT.l996.IntermsofthesaidG.o.,thepetitionerwaspaidanarrears of [Rs.5,56,86 ][9 ] [- ][and' ][the ][Tax ][Deducted ][at ][Source ][(for]short TDS') [worked ][out ][to ][be ][Rs'1,56,533/-' ][On receipt ][of ][the]arrears [with ][TDS, ][the petitioner filed ][his ][income ][tax return ][for]the said [assessment year ][2OO4-O5 ][on ][19'05'2004 ][deciaring ][the]arrears [of ][salary ][as ][well ][as ][the ][salary as income ][and ][availed the]creditof theTDS [of ][Rs'1,56,5331- ][andotherTDS ][collected'] 4. However, [subsequentlY ][it ][was][ detected ][that ][there][ were]some [arrears ][that ][has ][been ][crept ][in ][the ][course ][of ][the calculation]of arrears [is ][concerned' So ][far ][as ][the ][calculation ][of ][dearness]a]lowanceisconcerned,italreadystoodmergedaspertheprovisions [of Andhra ][Pradesh State Revision ][Ruies' ][1993' ][w'e'f']from O [1.07.1 ][992' ][Therealter' ][the matter ][was again placed ][before] ' [1992 ][atR ][t65] ./ the Honble Supreme Court for clarification in the All IndiaJudges Association (supra) case. The Honble Supreme Courtagain vide order dated 21.11.2006 in I.A.No.152 of 2OO4 inW.P.No.lO22 of 1989 clarified the order. As a consequence of theclarification of the Hontrle Supreme Court, the payment ofarrears was revised and it was found that certain excess arrearsof pay was made to the petitioner. The office of the AccountantGeneral, (A&E) A.P. Hyderabad, vide its memo dated 16.05.2008quantified the excess €unount to the petitioner at Rs.5,72,9OS l -which was ordered to be recovered. Accordingly, the aforesaidamount of Rs.5,72,905/- was recovered from the petitioner.Since the said amoun t was recovered from the petitioner, theTDS on the entire amount collected when the earlier arrears waspaid would now have to be accordingly refunded after deductingthe TDS amollnt of only the amount of arrears actually paid tothe petitioner and the TDS amount of the recovered amount ofRs.5,72,905/- amounting to Rs. 1,56,533/- became refundableto the petitioner. 5. The whole issue in the present writ petition is the refund ofthe said TDS which lies with the respondent. After the recoverywas made by the Department, the petitioner moved an application [under ][Section ][119(2)(b) ][of ][the Act ][seeking ][for]condonation [of ][delay ][in ][filing ][of ][the ][revised ][return ][of income ][and]claiming [refund ][of ][tax' ][It is ][this ][application ][under ][Section]119(2Xb) [of the Act ][which ][stood rejected ][and ][is ][under ][challenge]in the Present [writ ]Petition' 6. It would [be ][relevant ][at ][this ][juncture ][to ][take ][note ][of ][the]relevant [portion ][of the impugned order ][passed ][by ][the ][respondent]while rejecting [the application under ][Section ][119(2)(b) ][of ][the ][Act']which for [ready ][reference ][is ][reproduced ][herein under:] application [under ][Section ][119(2)(b) ][of ][the Act ][seeking ][for]condonation [of ][delay ][in ][filing ][of ][the ][revised ][return ][of income ][and]claiming [refund ][of ][tax' ][It is ][this ][application ][under ][Section]119(2Xb) [of the Act ][which ][stood rejected ][and ][is ][under ][challenge]in the Present [writ ]Petition' 6. It would [be ][relevant ][at ][this ][juncture ][to ][take ][note ][of ][the]relevant [portion ][of the impugned order ][passed ][by ][the ][respondent]while rejecting [the application under ][Section ][119(2)(b) ][of ][the ][Act']which for [ready ][reference ][is ][reproduced ][herein under:] "10' There [is ][a ][genuine ][problem ][that ][arises.in ][tht:i::]ofthesalariedemployeeswhoare.to.payhighertaxesrntheir salaries [are ][revised ][and]the initial [y""t, ][;;';;J ]i" [t^a" in ][the ][subsequent ][years' ][Some]recovery assesses*t'o"tedrawingonly.pensionandwhoarebelow the [taxabte ][limited ][fleaded ][that ][they ][may have ][to]Lr-"r. [p"."ot'tl ][loss if ] [is-not refunded ][and ][the ][same]i" ,. after t" [repaid ][fO ][to ][to ] [the ]V""t" [State Government ][However'-the ][provisions ][in ][the ][long ][of law][run']say are inadequat" [tJ""t*t^in ][these ][claims ][and ][to consider]issual [of refund.] 1 1. It [is ][not ][out ][of ][place ][for ][me ][to mention ][that ][even ][in],h" ;;"; .f [s"qy"t ][Computers' ][similar ][situation ][has]atptttrnent [has held ][that ][original];;i";-;;;."i.,'tr'" income [disclosed ][cannot ][be ][brought ][down ][through]Hisei i","." ""a [refund ][claimed' ][Notwithstanding]irti"lin"t" ""nsidered [the ][application ][of ][the ][assessee]on its [own ][merits'] 12. Some [assessees ][pointed ][out ][that ][one ][or ][two];#;;;;";is in the [s-tate ][have ][entertained ][their ][claim];;.li;A;Gi [f"uou"utv ][Mv ][enquiries ][revealed ][that];a;"i;;;"ilu" [b""t' ][-ttt'"" ][bo[h ][ror ][and ][against]assessees [in ][this ][type ][of cases ][lt ][may ][not ][be ][out ][of];i;:"--;'"i.";"'^t""iil" [that ][in ][some ][cases ][where ][the] .i- -,4 delay was condoned and refund issued, the Audit hasraised an objection. After verifying the correct positionof law, it is my considered opinion that the claim of theassessee is not correct and hence, they are not entitledfor condonation of delay and the claim o[ refund. 13. Without prejudice to the above, there are severalother issues that arise in this case for consideration.Under what head of income, the sum, if reduced fromthe salary, is to be treated for the purposes of income-tax arises for consideration. tf it were to be treated asloan, the consequence would be that section 17(2)(viii) &Rule 3 come into operation and in all the subsequentyears assessee is to pay tax on the value of theperquisites on interest free loan. Assessee may stand tolose in this regard. As per the records it is nothing butsalary i.e., paid and since there is no correspondencethat it was treated as interest free loan, there isdifhculty in excluding it from the portion of the salaryfor the earlier years. If it is to be treated as excess salarypaid then as per section 15, it is liable to tax and thepetition u/s.1 19(2)(b) cannot be entertained. 13.1 Further, assessee claims refund, stating thatmoney including TDS belongs to State Government orthe Employer and it should be reduced from his salary.It is assessee's plea that the TDS be refunded co themnow and over a period of years in the long run, they maypay the same to the State Government. Before taking ahnal decision and during the stage of discussions, thethe Employer and it should be reduced from his salary.It is assessee's plea that the TDS be refunded co themnow and over a period of years in the long run, they maypay the same to the State Government. Before taking ahnal decision and during the stage of discussions, theLaw Secretary of State Government was also addressedfor a clarification and even a reminder was sent. Thestipulation that recovery should not exceed 1O%o offor a clarification and even a reminder was sent. Thestipulation that recovery should not exceed 1O%o ofsaiary applies only to recovery being made from theindividual officer and not with respect to otherrecoveries if any. However, there is no response from theState Government on this letter. Copy of the letter isenclosed as page nos.S & 9.enclosed as page nos.S & 9. 14. However, irrespective of these considerations tJ:eposition of iaw is already clarihed by me in para nos. 7& 8. Since as per the provisions of law the claim is notcorrect the petition u/s. 119(2)(b) is hereby rejected. Ifwereadtheaforesaidcontentsoftheimpugnedorder,thecontents [of ][paragraph ][No ][' ][1O ][would make ][it ][evident ][that ][the]respondent [accepts ][the ][fact ][that ][there ][is ][some force ][on ][the]submission [made ][by the petitioner while ][moving ][an ][application]under Section [119(2)(b) ][of ][the ][Act' ][However' ][therea-fter while]deciding [the ][same, ][the ][respondent ][appears ][to ][have ][gone ][tangent]and have [decided ][the ][same ][on entirely ][extraneous]considerations [without ][properly appreciating ][the ][very ][grievance]of the [petitioner.] 7. At this [juncture, ][it ][would ][also ][be ][relevant ][to ][take ][note ][of]the provision [of ][Section ][1 ][19(2)(b) ][of the ][Act' ][which ][again ][for]reference [is reproduced herein ][under:]ready "section [f ][19(2Ibl- ][The Board ][may' ][if ][considers ][it]desirable o. [e*pldi"t't ][so ][to ][do for ][avoiding ][genuine]ln [any ][case ][or ][class ][of ][cases' ][by ][general ][or]hardship. special trder ,authorise [any ][income-tax ][authority' ][to].-a-it ." [apptication ][or ][claim ][for ][any ][exemption']r"fut'J [ot ][any ][other ][relief ][under ][this ][Act ][after]deduction, it makin! " "*pl.y [such ][of ][application ][the ][period ][specified ][oi ][claim ][under ][and ][deal ][this ][with ][Act ][the][for]o'n merits [in ][accordance ][with ][law ]["]".-. A perusal [of ][the ][aforesaid ][provision ][of law ][would ][make ][it ][evident]that the [very ][purpose ][of ][enacting ][the ][said][ provision ][bY ][the]hardshiP that [an]Parliament [was ][ensuring ][that ][the ][genurne]\ASSESSCCfaces can [be ][redressed exercising ][the ][powers under] A perusal [of ][the ][aforesaid ][provision ][of law ][would ][make ][it ][evident]that the [very ][purpose ][of ][enacting ][the ][said][ provision ][bY ][the]hardshiP that [an]Parliament [was ][ensuring ][that ][the ][genurne]\ASSESSCCfaces can [be ][redressed exercising ][the ][powers under] Section 119(2Xb) in case if some delay has occurred on the partof the assessee and whereby the delay has occurred because ofbonafide, genuine and plausible explanation and cause.8. In the instant case, the facts are undisputed. Thepetitioner being a judicial officer and in terms of the judgmentthe Hon'ble Supreme Court in the case of All India Jud.gesAssociqtlon (supra), he becar.ne entitted for some revised payscale with retrospective effect from or.oz.1996.In the course ofimplementation of the revised pay sca1e, the Governmentcalculated the arrears of pay ard found that the petitioner wasentitled for Rs.5,56,869 /- and the said amount was paid to thepetitioner with a deduction of Rs. 1,56,563/_ towards TDS.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 ofRs.5,72,905/-. The said amount was deducted withoutadjustment of the tax already deducted. Therefore, the petitionerbecame entitled for refund of an amount of Rs. I _,56,563 / deducted towards TDS on the earlier occasion. 9' There is no dispute so far as the aforesaid factuar matrix isconcerned. Under the said circumstances, it cannot-trE 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]was [at ][any ][point of time ][blamed ][for ][raising ][of ][the]petitioner claim of [refund ][after so ][long ][period' ][What ][the ][authority]concerned [ought ][to][ have ][seen ][was whether ][from ][the ][date ][of]recovery [of the ][excess ][arrears ][paid to the petitioner ][in ][the ][year]whether [there has ][been ][any ][reasonable ][delay ][on ][the ][part]2008, of the [petitioner ][in ][approaching ][the authorities for submission of]his revised [return ][of ][income] 10. In the [teeth of the ][aforesaid ][admitted ][factual ][matrix ][of ][the]case and [considering ][the ][provisions ][of ][Section ][119(2)(b) ][of ][the]Act, we [are ][of ][the ][considered ][opinion ][that the ][manner ][in ][which]the resPondent[has ][rejected ][the ][application ][filed ][by ][the]to be too [harsh ][a decision' ][Further' the ][same]petitioner [seems]to [have ][been decided ][on hyper technical grounds' ][The]appears same alsoappears [to]be arbitrary [for the ][reason ][that ][the]himself [had]specifically [pleaded ][that ][in ][respect ][of]petitionerwho are Posted [under ][the ][other]other [judicial ][officers]commissionerate [in ][the ][State ][of ][Andhra ][Pradesh ][itself like ] (Vijayawada) [and ][CIT (Tirupati) have allowed ][the ][said ][application] under Section 119(2Xb) of the Act and have ordered for refund ofthe excess TDS amount. 11. An income tax payee whose TDS has been deducted by theGovernment at the time of making payment and the saidpayment subsequently being recovered, the TDS deducted earlieralso has to be refunded. The respondent while passing theimpugned order has not touched upon any of these issues. 12. The impugned order dated 23.05.20 I I therefore is notsustainable. As a consequence, the same is set aside/quashedand the application under Section 119(2)(b) of the Act is orderedto be allowed condoning the delay in making the revised returnof income and at this stage, the matter stands remitted back tothe respondent for passing appropriate orders on merits so faras the revised return of income being .filed on behalf of thepetitioner for the assessment year 2OO4-O5 and appropriateorder for refund of the amount payable to the petitioner isordered forthwith without any further delay r,r,ithin an outer limitof sixfy (60) days from the date of receipt of a copy of this order. I 12. The impugned order dated 23.05.20 I I therefore is notsustainable. As a consequence, the same is set aside/quashedand the application under Section 119(2)(b) of the Act is orderedto be allowed condoning the delay in making the revised returnof income and at this stage, the matter stands remitted back tothe respondent for passing appropriate orders on merits so faras the revised return of income being .filed on behalf of thepetitioner for the assessment year 2OO4-O5 and appropriateorder for refund of the amount payable to the petitioner isordered forthwith without any further delay r,r,ithin an outer limitof sixfy (60) days from the date of receipt of a copy of this order. I 13. With the above observations, [the ][writ ][petition ][stands]allowed. No order as [to ][costs.] Miscellaneous petitions, [pending ][if ][any, shall stand ][closed] SD/. P. PADMANABHA REDDYASSISTANT REGISTRARVSECTION OFFICER //TRUE COPY// To 1. Commissioner Of lncome Tax, Hyderabad [-1, ]Ayakar [Bhavan, ][Basheerbagh,]Hyderabad. 2. One CC to SRI Y.RATNAKAR, [Advocate ] 3. One CC to SRI J.V.PRASAD, SC 4. Two CD Copies PSK.GJP6' HIGH COURT DATED:21 11112023 ORDER WP.No.31614 of 2011 ALLOWING THE WRIT PETITIONWITHOUT COSTS. aq'b?5p'l,b\ttz' 1[t\][6 ][5T416,]eJ[ 3 [Jr]rl?[2{o**Olior.:'t([-.\t][C]:;'