2014 (2) TMI 132 - HC - Income Tax

Condonation of delay u/s 119(2)(b) for claiming refund of tax paid - Refund of Tax on TDS Payment made in Optional early retirement scheme Held that - The application under section 119(2)(b) of the Act is being denied by adopting a very hyper technical view that the application for condonation of delay was made beyond 6 years from the date of the end of the assessment year 2004-05. - The revised return of income filed on 08 September 2011 should itself be considered as application for condonation of delay under section 119(2)(b) of the Act and refund granted The Decision in Chandra Ranganathan and ors. vs. Commissioner of Income Tax 2009 (10) TMI 498 - SUPREME COURT OF INDIA followed. The amounts received by retiring employees of Reserve Bank of India opting for the scheme are eligible for exemption under section 10(10C) of the Act thus, the revenue is directed to grant refund to the assessee Decided in favour of Assessee.

Summary

Issues:
Challenge to dismissal of application for condonation of delay under Secrtion119(2)(b) of the Income Tax Act for claiming refund of tax paid.

Analysis:
The petitioner, a Senior Citizen, challenged the order of the respondent revenue dismissing the application for condonation of delay under Secrtion119(2)(b) of the Income Tax Act, 1961, seeking a refund of tax deducted at source (TDS) by the Reserve Bank of India (RBI) in the year 2004. The RBI had deducted Rs.1,64,117/- as tax at source when the petitioner opted for the Optional Early Retirement Scheme. The petitioner did not claim the refund in the return of income filed for the assessment year 2004-05. However, in 2009, the Central Board of Direct Taxes (CBDT) clarified that employees of RBI opting for early retirement in 2004-05 were entitled to exemption under section 10(10C) of the Act. The petitioner then filed a revised return in 2011 claiming the exemption and seeking a refund of the TDS. The respondent-revenue rejected the application for condonation of delay based on a technicality that the application was filed beyond the 6-year period stipulated in Instruction No.13 of 2006 by the CBDT.

The respondent revenue did not dispute the petitioner's entitlement to the refund on merits but denied it based on a strict interpretation of the limitation period. The court noted that the CBDT circular in 2009 and the Supreme Court's decision supported the petitioner's claim for exemption under section 10(10C) of the Act. The court held that the revised return filed in 2011 should be considered as an application for condonation of delay under section 119(2)(b) of the Act, and the refund should be granted. The court emphasized that the denial of the refund based on a hyper-technical view was unjust, especially when the petitioner was entitled to the benefit under the Act.

In conclusion, the court allowed the petition and directed the respondent-revenue to grant the refund due to the petitioner. The court highlighted that the respondent's denial of the refund was solely based on a technicality and not on the merits of the petitioner's claim, which was supported by legal provisions and judicial decisions.