Wp/6175/2023 Of Sandhya Srivatsan v. The Commissioner Of Income Tax

Digitallysigned byNARASIMHAMURTHYVANAMALALocation:HIGHCOURT OFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30 DAY OF MARCH, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD -WRIT PETITION NO. 6175 OF 2023 (TIT) BETWEEN: SANDHYA SRIVATSAN, DAUGHTER OF K.S. AYODHYANATH, AGED ABOUT 55 YEARS, 4331, RADISSON CRESCENT, MISSISSAUGA, ONTARIO, L5M4C2, ONTARIO, CANADA ALSO AT NO. 10/35, SHAAVAN 16 CROSS, GAYATHRI DEVI PARK EXTENSION, VYALIKAVAL, BENGALURU - 560003 PAN REPRESENTED BY HER POWER OF ATTORNEY HOLDER, SRI. KRISHNAMURTHY S., AGED ABOUT 73 YEARS, …PETITIONER (BY SRI. MADHUSUDHAN U A., ADVOCATE) AND: 1. THE COMMISSIONER OF INCOME-TAX (INTERNATIONAL TAXATION), BENGALURU, BMTC BUILDING , 80 FEET ROAD, BMTC BUILDING , 80 FEET ROAD, 6 BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 095. 2. CENTRALIZED PROCESSING CENTRE, INCOME TAX DEPARTMENT, BENGALURU - 560 500 INCOME TAX DEPARTMENT, BENGALURU - 560 500 REPRESENTED BY ITS INCOME TAX OFFICER 3. THE INCOME TAX OFFICER, WARD - 5 (3) (5), BENGALURU , BMTC BUILDING, 80 FEET ROAD, 6 BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BANGALORE - 560 095. WARD - 5 (3) (5), BENGALURU , BMTC BUILDING, 80 FEET ROAD, 6 BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BANGALORE - 560 095. …RESPONDENTS (BY SRI. K.V.ARAVIND AND SRI. M. DILIP, ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 14.09.2022 PASSED UNDER SECTION 119(2)(B) OF THE ACT FOR THE ASSESSMENT YEAR 2018-19 BY THE RESPONDENT NO. 1 BEARING DIN AND ORDER NO.ITBA/COM/F/17/2022-23/1045465835(1) HEREIN MARKED AS ANNXURE-A; TO DIRECT THE RESPONDENT NO. 1 TO CONDONE THE DELAY IN MAKING A CLAIM FOR CARRY FORWARD OF TAX DEDUCTED AT SOURCE OF SUM OF RS.18,54,000/- IN THE RETURN FILED FOR THE A.Y.2018-19; DIRECTING THE RESPONDENT NO. 2 TO GIVE CREDIT OF THE TAXES DEDUCTED AT SOURCE OF A SUM OF RS.18,54,000/- FOR THE A.Y.2021-22. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has impugned the first respondent's order dated 14.09.2022 [Annexure-A] under Section 119[2][b] of the Income Tax Act, 1961 [for short, 'IT Act']. The first respondent by the impugned order has rejected the petitioner's application dated 10.04.2022 for condonation of delay in claiming refund based on Tax Deducted at Source in a sum Rs.18,54,000/- in the financial year 2017-18 and for permission to carry forward the same to the future assessment years. 2.The first respondent has rejected the petitioner's application observing that the petitioner in seeking condonation of delay is making a request for refund of TDS on the basis of the original Return of Income filed on 31.08.2018 for the assessment year 2018-19 which is processed, and such request cannot be accepted based on the ROI which is not revised as there is no provision in the IT Act in that regard. Sri. Madhusudhan U A, the learned counsel for the petitioner, and Sri. K V Aravind, the learned standing counsel for the respondent, are heard for final disposal. 3.The petitioner has entered into a Joint Development Agreement on 19.02.2018 with M/s. Radiance Realty Developers India Limited [the Developer] for development of residential properties in Chennai. The Developer has paid advances and deducted a sum of Rs.18,54,000/- as TDS. Though this receipt and deduction is reflected in Form 26AS for the assessment year 2018-19, the benefit thereof is not claimed in the ROI for such year. With the completion of the project and sale of the apartments allotted to her share, the petitioner has offered capital gains claiming credit for the TDS reflected in Form 26AS filed for the assessment year 2018-19. 3.The petitioner has entered into a Joint Development Agreement on 19.02.2018 with M/s. Radiance Realty Developers India Limited [the Developer] for development of residential properties in Chennai. The Developer has paid advances and deducted a sum of Rs.18,54,000/- as TDS. Though this receipt and deduction is reflected in Form 26AS for the assessment year 2018-19, the benefit thereof is not claimed in the ROI for such year. With the completion of the project and sale of the apartments allotted to her share, the petitioner has offered capital gains claiming credit for the TDS reflected in Form 26AS filed for the assessment year 2018-19. 4.The Assessing Officer [the second respondent] has determined the refund permissible to the petitioner but excluding the amount of Rs.18,54,000/- reflected in Form 26AS for the assessment year 2018-19. The petitioner's application for rectification is rejected, and thereafter the present application for condonation of delay is filed on 10.04.2022. It is obvious on reading of the impugned order that the first respondent has rejected the petitioner's application for condonation of delay essentially on the ground that the petitioner has not filed revised ROI for the assessment year 2018-19. 5.On perusal of the petitioner's application, it cannot be said that the petitioner has asked for condonation of delay in filing the revised ROI which is admittedly permissible under Section 139(5) of the IT Act. It is also not disputed that if the petitioner could establish sufficient cause for condonation of delay in filing application for revised ROI, the delay could be condoned permitting the petitioner to file revised ROI but with liberty to the second respondent to initiate, if necessary, proceedings under Section 143[2] of the IT Act for framing of assessment under Section 143[3] of the IT Act. 6.At this stage, Sri. K V Aravind submits that if this Court is persuaded to opine that there is sufficient cause for condonation of delay and the delay must be condoned with leave to the petitioner to file revised ROI, the respondents must be protected against a possible defence of delay in initiation of the proceedings for the purposes of Section 143[3] of the IT Act. 7.As could be seen from the petition averments, the receipt of advances and the deduction of Rs.18,54,000/- under Section 195A of the IT Act is reflected in the corresponding Form 26AS filed but the TDS is not claimed under the impression that it is not required as the deduction is towards advance as against income which is realized only with the sale of the apartments when capital gains are offered during the assessment year 2021-22. The petitioner has declared the transaction, and a strong case of bonafide error in not claiming the benefit of TDS in the assessment year 2018-19 is established. 8.Though the impugned order cannot be found fault with because of the ambiguous language employed by the petitioner, in the circumstances of the case, the impugned order must be quashed condoning the delay and permitting the petitioner to file revised returns within three months from the date of receipt of certified copy of this order. Further, as the petitioner is being permitted to file revised returns on condonation of delay, if there is any occasion for the respondents to initiate proceedings under Section 143[2] of the IT Act for framing of assessment under Section 143[3] of the IT Act, the petitioner must be precluded from raising the defence of limitation. Hence the following: ORDER [a] The petition is allowed, and the impugned order dated 14.09.2022 [Annexure-A] passed by the first respondent is quashed construing the petitioner's application dated 10.04.2022 as application for condonation of delay in filing the revised ROI under Section 139[5] of the IT Act permitting the petitioner to file such returns within three [3] months from the date of receipt of a certified copy of this order. petitioner must be precluded from raising the defence of limitation. Hence the following: ORDER [a] The petition is allowed, and the impugned order dated 14.09.2022 [Annexure-A] passed by the first respondent is quashed construing the petitioner's application dated 10.04.2022 as application for condonation of delay in filing the revised ROI under Section 139[5] of the IT Act permitting the petitioner to file such returns within three [3] months from the date of receipt of a certified copy of this order. [b] The respondents are reserved liberty to initiate action if necessary for proceedings under Section 143[2] of the IT Act and in event the second respondent does not initiate such proceedings, the petitioner shall not be entitled to take the defense of limitation. Sd/- JUDGE AN/-