2020 (3) TMI 434 - HC - Income Tax

Application for Income Tax Settlement Commission - Short payment of admitted tax - payment of additional taxes is a primary condition for maintainability of the application - HELD THAT - Admitted position is that there is no shortfall as on date as confirmed by the officer, even though there was a shortfall, according to the Department, as on date of application before the SC. On an overall consideration of the matter, this is not a case where the assessee has consciously short-paid admitted tax. There are computational differences that exist that could well be the reason for the remittances falling short of the required amounts. This is apparent from the contentions of the assessee/petitioner and revenue extracted above. In addition, the differences are quite insignificant in the context of the entirety of the payments made. In the interests of substantial justice the petitioners' case should be considered on merits by the Commission. The impugned order treating the application as invalid is thus set aside and the Settlement Commission is directed to take the matter up for hearing on merits and pass appropriate orders, in accordance with law.

Summary

Issues Involved:
1. Validity of the Settlement Commission's order rejecting the application as invalid due to short payment of additional taxes.
2. Discrepancies in Tax Deducted at Source (TDS) credits for various assessment years.
3. Pending applications for rectification under Section 154.
4. Adjustment of excess taxes paid and interest calculations under Sections 234B and 244A.

Issue-wise Detailed Analysis:

1. Validity of the Settlement Commission's Order:
The petitioner challenged the order of the Income Tax Settlement Commission (SC) dated 11.12.2018, which rejected the application for assessment years (AY) 2011-12 to 2017-18 as 'invalid' due to short payment of additional taxes. The Commissioner's report under Rule 2(B) indicated shortfalls of ?4,58,772/- for AY 2015-16, ?3,52,780/- for AY 2013-14, and ?7,84,966/- for AY 2016-17. However, the Assessing Authority later confirmed via a letter dated 21.01.2020 that there was no shortfall in the tax remitted by the petitioner, considering the TDS credits available for AYs 2015-16 and 2016-17.

2. Discrepancies in TDS Credits:
For AY 2015-16, the department raised a demand of ?5,06,210/- due to a TDS mismatch. The petitioner clarified that there was no mismatch as of the settlement application date, supported by Form 26AS. The department acknowledged a wrong TAN quoting issue and confirmed that the additional TDS credit of ?4,26,712/- would nullify the demand.

For AY 2016-17, the petitioner addressed a TDS mismatch of ?7,84,960/-. The department verified that the petitioner considered a lower TDS credit of ?17,45,528/- in the settlement application, eliminating any additional demand.

For AY 2013-14, the petitioner argued that the demand of ?3,52,780/- should be adjusted against increased TDS credits and excess refunds. The department noted an excess TDS credit of ?3,34,972/- for AY 2016-17, which, along with other credits, covered the demand for AY 2013-14.

3. Pending Applications for Rectification under Section 154:
The petitioner filed applications for rectification under Section 154 for AYs 2006-07 and 2010-11, which could result in substantial refunds. Despite multiple notifications to the Assessing Officer, these applications remained pending.

4. Adjustment of Excess Taxes Paid and Interest Calculations:
The petitioner contended that interest under Section 234B should be calculated only until the date of tax adjustment and not until the settlement application filing date. The petitioner also argued for interest under Section 244A for taxes paid in excess. The department maintained that interest should be calculated independently for each assessment year but acknowledged the excess TDS credits and taxes paid.

Conclusion:
The court concluded that there was no shortfall in tax remittance as of the current date, although there were computational differences at the application date. The differences were minor in the context of the total payments made. The court set aside the impugned order and directed the Settlement Commission to consider the petitioner's case on merits and pass appropriate orders in accordance with the law. The writ petition was allowed, and connected miscellaneous petitions were closed with no order as to costs.