2023 (4) TMI 638 - HC - Income Tax

Condonation of delay in claiming refund based on Tax Deducted at Source TDS - permission to carry forward the same to the future assessment years - HELD THAT - The receipt of advances and the deduction of under Section 195A as reflected in the corresponding Form 26AS filed but the TDS is not claimed under the impression that it is not required as the deduction is towards advance as against income which is realized only with the sale of the apartments when capital gains are offered during the assessment year 2021-22. The petitioner has declared the transaction, and a strong case of bonafide error in not claiming the benefit of TDS in the assessment year 2018-19 is established. Though the impugned order cannot be found fault with because of the ambiguous language employed by the petitioner, in the circumstances of the case, the impugned order must be quashed condoning the delay and permitting the petitioner to file revised returns within three months from the date of receipt of certified copy of this order. As the petitioner is being permitted to file revised returns on condonation of delay, if there is any occasion for the respondents to initiate proceedings u/s 143 2 for framing of assessment u/s 143 3 petitioner must be precluded from raising the defence of limitation. ORDER - The petition is allowed, and the impugned order dated 14.09.2022 Annexure-A passed by the first respondent is quashed construing the petitioner's application dated 10.04.2022 as application for condonation of delay in filing the revised ROI u/s 139 5 permitting the petitioner to file such returns within three 3 months from the date of receipt of a certified copy of this order.

Summary

Issues:
The judgment involves the rejection of an application for condonation of delay in claiming a refund based on Tax Deducted at Source (TDS) and the permission to carry forward the same to future assessment years under Section 119(2)(b) of the Income Tax Act, 1961.

Summary:

Issue 1: Application for Condonation of Delay in Claiming Refund based on TDS
The petitioner challenged the first respondent's order rejecting the application for condonation of delay in claiming a refund based on TDS. The petitioner sought permission to carry forward the TDS amount of Rs. 18,54,000/- from the financial year 2017-18 to future assessment years. The first respondent rejected the application on the basis that the petitioner did not file a revised Return of Income (ROI) for the assessment year 2018-19, which is a prerequisite for claiming the refund. The court found that the petitioner did not explicitly request condonation of delay in filing the revised ROI, which is permissible under Section 139(5) of the IT Act. The court quashed the impugned order, condoned the delay, and allowed the petitioner to file revised returns within three months.

Issue 2: Bonafide Error in Not Claiming TDS Benefit
The petitioner entered into a Joint Development Agreement with a developer for residential properties and had TDS deducted. Although the TDS amount was reflected in Form 26AS for the assessment year 2018-19, it was not claimed in the ROI for that year. The court noted that there was a bonafide error in not claiming the TDS benefit, as the petitioner believed it was not required since the deduction was towards an advance and the income would be realized only upon the sale of apartments in a later assessment year. The court found a strong case of bonafide error and allowed the petitioner to claim the TDS benefit by filing revised returns within the specified timeframe.

Conclusion:
The High Court allowed the petition, quashed the impugned order, and granted the petitioner permission to file revised returns within three months. The respondents were given liberty to initiate proceedings under Section 143(2) of the IT Act, and the petitioner was precluded from raising the defense of limitation in case such proceedings were initiated.