2020 (6) TMI 34 - HC - Income Tax

Harassment by the Income Tax Department - higher demand on the ground that the petitioner had not paid the Self Assessment Tax - HELD THAT - When the petitioner pointed out that the tax had been paid, the respondents passed yet another rectification order dated 16th August, 2019 allowing the credit of Self Assessment Tax of ₹ 1,32,860/-, but this time raised a fresh demand by adding back an amount donated by the petitioner. When the petitioner pointed out that the donated amount had already been added back by him in his return, the respondents uploaded the very first order / intimation under Section 143(1) of the Income Tax Act dated 20th November, 2017 whereby the addition in income on account of donation was deleted, but credit of TDS amount of ₹ 37,100/- was once again denied. Prima facie this Court is of the view that there is no legitimate tax demand against the petitioner. Issue notice. Mr. Zoheb Hossain, learned senior Standing counsel accepts notice on behalf of the respondents. Learned senior Standing counsel for respondents is directed to examine the matter. Let a status report be filed within a period of two weeks.

Summary

Issues:
1. Alleged harassment by Income Tax Department
2. Denial of credit of TDS amount
3. Higher demand due to alleged non-payment of 'Self Assessment Tax'
4. Rectification orders and fresh demands
5. Legitimacy of tax demand against the petitioner

Analysis:
The petitioner filed a writ petition under Article 226 of the Constitution, claiming harassment by the Income Tax Department. The respondents initially denied the credit of TDS amount but later, upon objection by the petitioner, issued a rectification order allowing the credit. However, a higher demand was created alleging non-payment of 'Self Assessment Tax'. Subsequent rectification orders were issued, raising fresh demands based on the addition of a donated amount. The Court observed that there seems to be no legitimate tax demand against the petitioner, leading to the issuance of a notice to the respondents.

The learned senior Standing counsel for respondents accepted the notice and was directed to examine the matter. A status report was ordered to be filed within two weeks, and the petitioner was granted the opportunity to file a rejoinder affidavit before the next hearing date. In the interim, the respondents were restrained from taking any steps to recover the impugned demand mentioned in the Intimation-Cum-Demand Notice issued under Section 143(1) of the Income Tax Act, 1961. The case was listed for further proceedings on 30th June, 2020, with instructions to upload the order on the website and provide a copy to the counsel via e-mail.