2016 (4) TMI 991 - HC - Income Tax

Refund of the tax deducted at source - Held that - The petitioner does have a statutory alternative remedy of filing an appeal. It will, therefore, not be appropriate for the Court to examine the validity of the order passed by the Commissioner of Income Tax, Circle-1 (1) Aligarh. We, therefore, decline to entertain this writ petition.

Summary

Issues:
1. Validity of communication from Assistant Commissioner of Income Tax regarding refund claim.
2. Interpretation of contract between petitioner and postal department under Section 194 (C) of Income Tax Act.
3. Refund of TDS deducted under Section 194 (C) of the Act.
4. Availability of statutory remedy under Section 264 of the Act.

Analysis:
1. The petition challenged a communication from the Assistant Commissioner of Income Tax, informing the petitioner Society that their refund claim could only be considered upon filing the return of income for the respective assessment years where tax at source was wrongly deducted and deposited in the government account. The petitioner had previously filed a writ petition regarding the deduction of income tax at source, which was disposed of with directions to appear before the Income Tax Commissioner (TDS) to determine the nature of the contract between the petitioner and the postal department.

2. The Income Tax Officer (TDS) determined that the contract was for the sale of goods, falling outside the purview of Section 194 (C) of the Income Tax Act. The petitioner subsequently applied for a refund of the tax deducted at source. The petitioner argued that since the contract was for the sale of goods, no TDS should have been deducted under Section 194 (C), and the refund application should have been allowed without requiring the filing of a return of income.

3. The respondents contended that the refund of TDS could only be processed upon filing a return of income, and the petitioner had the option to appeal the impugned order before the Commissioner under Section 264 of the Act. The Court acknowledged the statutory alternative remedy available to the petitioner and declined to entertain the writ petition, emphasizing the availability of the appeal process under the Act.

4. Ultimately, the Court dismissed the writ petition, noting the existence of a statutory remedy for the petitioner to appeal the order regarding the refund of TDS deducted. The judgment highlighted the importance of following the prescribed legal procedures and utilizing the statutory remedies provided under the Income Tax Act, thereby upholding the decision of the Commissioner of Income Tax, Circle-1 (1) Aligarh.