2023 (12) TMI 1232 - HC - Income Tax

Refund of tax - Applications to condone delay in filing the return of income and claim of refund u/s 119(2)(b) rejected - HELD THAT - Respondent could not have rejected the applications to condone the delay of the petitioners when in case of similarly situated persons, the respondent has ordered to condone the delay after considering the decision in case of Hari Singh and others 2017 (11) TMI 923 - SUPREME COURT while exercising the jurisdiction u/s 119(2)(b) of the Act, 1961. Therefore, the impugned orders rejecting the applications to condone the delay are required to be quashed and set aside in each petition with a direction to condone delay u/s 119(2)(b) as per order passed by the respondent in case of similarly situated persons, however, with a rider to direct the AO to issue refund with interest on the amount of refund claim from the date of deposit by the Executive Engineer, Irrigation department till the date of granting of refund. For passing such direction of issuance of the refund with interest under section 244A, similar reasons as given by this Court in case of Special Civil Application No. 12466/2021 2023 (12) TMI 1165 - GUJARAT HIGH COURT the words or the deductor, as the case may be, which is inserted with effect from 01.04.2017 would not be applicable as the petitioners have been permitted to file the refund claim for the AY 2013-2014 after condonation of delay and such delay in claiming the refund cannot be said to be attributable to the petitioners as the petitioners were not made aware about the deduction of tax at source by the deductor in absence of issuance of Form No. 16-A which was mandatorily required as per Rule 31(3) of the Rules. In view of the foregoing reasons, the petitions succeed and are accordingly allowed. The respondents are directed to pass the order to condone the delay in filing the return for the Assessment Year 2013-2014 and to issue the refund with interest under section 244A of the Act, 1961 from the date of deposit of the amount of TDS till date of payment of refund as per provisions of section 244A of the Act, 1961

Summary

Issues Involved:
1. Condonation of Delay in Filing Return of Income and Claiming Refund under Section 119(2)(b) of the Income Tax Act, 1961.
2. Entitlement to Interest on Refund under Section 244A of the Income Tax Act, 1961.

Summary:

Issue 1: Condonation of Delay in Filing Return of Income and Claiming Refund
The petitioners challenged the respondent's order rejecting their applications to condone the delay in filing the return of income and claiming a refund under Section 119(2)(b) of the Income Tax Act, 1961 for the Assessment Year 2013-2014. The agricultural land of the petitioner was acquired, and additional compensation was awarded by the Reference Court. The State of Gujarat challenged this award, leading to a series of judicial proceedings. During the deposit of compensation, the Irrigation Department deducted TDS on the interest portion without informing the petitioners or issuing Form-16A, resulting in the petitioners missing the deadline to file returns and claim refunds.

The petitioners argued that the respondent should have condoned the delay as done in similar cases, citing the decision of the Hon'ble Apex Court in Union of India v. Hari Singh and others. The respondent's rejection was based on the absence of a reasonable cause and credible evidence justifying the delay. However, the court found that the respondent could not reject the applications when similarly situated persons had their delays condoned.

Issue 2: Entitlement to Interest on Refund
The court directed the respondents to condone the delay and issue refunds with interest under Section 244A of the Act, 1961. The court adopted similar reasons as given in Special Civil Application No. 12466/2021, emphasizing that the petitioners were not at fault for the delay. The Hon'ble Apex Court in Union of India v. Hari Singh and others observed that no TDS was deductible on compensation for agricultural land, and refunds should be processed accordingly.

The court further referenced the case of Tata Chemicals Limited, stating that the government must pay interest on refunds for amounts retained without right. The court concluded that the delay in filing the return was not attributable to the petitioners, as they were not informed about the TDS deduction and were not issued Form-16A.

Conclusion:
The petitions were allowed, directing the respondents to condone the delay in filing the return for AY 2013-2014 and issue the refund with interest under Section 244A of the Act, 1961 from the date of TDS deposit till the date of refund payment. This exercise was to be completed within 12 weeks from the receipt of the court's order.