2015 (10) TMI 1902 - HC - Income Tax

Incorrect notices under Sections 244 and 245 of the Income Tax Act - seeking recovery from number of income tax assessees - Held that - At since the directions given by the Delhi High Court 2013 (3) TMI 316 - DELHI HIGH COURT have now been complied by the Income Tax Department, it is not necessary to issue any further directions. The Delhi High Court has given the following directions - (i) Directions given in paragraph 16 to 18 regarding maintenance of register for applications under Section 154, receipt of the said applications and their disposal. (ii) We have confirmed the interim directions given in paragraph 13 of the order dated 31st August, 2012 (see paragraphs 23 and 24 above). The said direction, we understand has been implemented. (iii) With regard to past adjustments where procedure under Section 245 has not been followed, we have issued directions in paragraphs 26 to 28. (iv) With regard to the interest under Section 244 A, we have issued directions set out in paragraphs 31 and 32 that interest should be paid when the assessee is not at fault. (v) With regard to uncommunicated intimations under Section 143(1), directions are given in paragraphs 33 and 34. (vi) With regard to unverified TDS under the heading U in Form 26AS, directions have been issued in paragraph 42 for verification and correcting unmatched challans within a time period, which should be fixed by the Board keeping in mind the date of filing of return and processing of return by the assessing officer. (vii) The seventh direction / mandamus is regarding credit of TDS to an assessee when the tax deducted has been deposited with the Revenue by the deductor. Directions in this regard have been given in paragraphs 50 and 51. The Income Tax authorities shall follow these directions in case of other cities, including the city of Mumbai, in Maharashtra State.

Summary

Issues involved:
Irregularities by Income Tax Department in issuing incorrect notices under Sections 244 and 245 of the Income Tax Act, compliance with directions given by Delhi High Court, hardships caused to income tax assessees, formation of Vigilance Cell by Income Tax Department.

Analysis:

1. Irregularities by Income Tax Department:
The petitioner highlighted alleged mistakes by the Income Tax Department in issuing incorrect notices under Sections 244 and 245 of the Income Tax Act, causing hardships to income tax assessees. The petitioner pointed out that initial returns taken by the department were due to a technical error, which was rectified. It was suggested that these errors were deliberate, possibly due to a bug in the computer system.

2. Compliance with Delhi High Court Directions:
The Income Tax Department submitted a detailed affidavit-in-reply stating that they had followed the directions given by the Delhi High Court. The High Court noted that since the directions had been complied with, issuing further directions was deemed unnecessary. The Delhi High Court's directions included maintaining registers for applications, confirming interim directions, issuing directions for past adjustments, interest payments under Section 244 A, uncommunicated intimations under Section 143(1), and verification of unverified TDS.

3. Formation of Vigilance Cell:
The High Court directed the Income Tax Department to form a Vigilance Cell to ensure greater vigilance and prevent future mistakes. The purpose of this cell was to act as a monitoring authority for policy decisions and implement a self-auditing mechanism to address income tax assessees' grievances promptly. The court emphasized the importance of preventing such errors in the future and ensuring a smoother redressal process for taxpayers.

4. Conclusion:
The Public Interest Litigation was disposed of based on the compliance of the Income Tax Department with the directions issued by the Delhi High Court. The court expressed hope that the department, especially in cities like Mumbai, would be more vigilant in preventing similar errors. Additionally, all pending Notice of Motions and Applications in the petition were also disposed of.