2022 (3) TMI 155 - HC - Income Tax

TDS credit - Rectification Application granting the consequential TDS credit due to the petitioner and deleting the incorrect demand which only arises due to non-grant of the said TDS credit - HELD THAT - Petitioner relies on the decision of this Court in LS Cable and System Ltd 2021 (8) TMI 1278 - DELHI HIGH COURT wherein in similar facts, this Court directed the AO to dispose of the assessee's rectification application u/s 154 within six weeks from the date of the Court s Order. Issue notice. Mr. Zoheb Hossain, learned counsel for Revenue accepts notice. On instructions, he undertakes to this Court that Petitioner s rectification application dated 14th May, 2020 shall definitely by disposed of within six weeks. The undertaking given by Mr. Zoheb Hossain, learned counsel for Revenue is accepted by this Court and respondents are held bound by the same.

Summary

Issues:
1. Delay in disposal of Rectification Application under Section 154 of the Income Tax Act, 1961.
2. Incorrect demand raised due to non-grant of TDS credit.
3. Compliance with statutory limitations for disposal of rectification applications.

Analysis:

Issue 1: Delay in disposal of Rectification Application
The petitioner filed a writ petition seeking directions for the respondent to dispose of their Rectification Application dated 14th May, 2020 within the statutory period. The petitioner argued that the respondent failed to adhere to the limitation provided in Section 154(8) of the Income Tax Act, 1961, which lapsed on 31st March, 2021. The delay in disposal resulted in the disallowance of TDS credit amounting to ?5,51,15,908 to the petitioner and the raising of an incorrect demand of ?6,97,16,942. The petitioner relied on CBDT Circular No.14/2001 and CBDT Instruction No. 1/2016, emphasizing the mandatory compliance with statutory limitations for rectification applications.

Issue 2: Incorrect Demand Due to Non-Grant of TDS Credit
The incorrect demand of ?6,97,16,942 arose solely due to the non-grant of the TDS credit of ?5,51,15,908 to the petitioner. The petitioner highlighted the adverse financial impact caused by the delay in disposing of the rectification application, leading to the incorrect demand and emphasized the necessity of granting the TDS credit to rectify the situation.

Issue 3: Compliance with Statutory Limitations
The petitioner's counsel referred to a previous decision of the Court in LS Cable and System Ltd. V. UOI, where a similar situation warranted the Court to direct the Assessing Officer to dispose of the rectification application within a specified time frame. Notably, the Court issued notice to the Revenue, and the learned counsel for Revenue accepted the notice. The Revenue undertook to dispose of the rectification application within six weeks, which was accepted by the Court, thereby resolving the matter and disposing of the writ petition.

In conclusion, the Court's judgment addressed the delay in disposing of the rectification application, the incorrect demand resulting from the non-grant of TDS credit, and emphasized the importance of complying with statutory limitations for rectification applications under the Income Tax Act, 1961.