2022 (4) TMI 1286 - HC - Income Tax

Refund of excess Tax - Rectification of mistake u/s 154 - settlement of case under the Vivad se Vishwas scheme under VSV Act, 2020 - whether the petitioners are entitled for an order under Section 154 in the light of the case of the petitioner having being settled under Vivad Se Vishwas Scheme, 2020 and opted under the Vivad Se Vishwas Act, 2020 for the Assessment Year 2011-2012 and to consequently refund the tax paid by the respective petitioners alone with interest under Section 244A ? - HELD THAT - Recently, under similar circumstances as decided in 2021 (11) TMI 1055 - MADRAS HIGH COURT there is no dispute that the petitioner has paid the tax for the relevant assessment year viz., 2011-12 and therefore, the protective assessment for the year 2014-15 results in excess payment of tax. The petitioner cannot be taxed twice on the same income. Ultimately, the purpose of exercising power under the Act is only intended to collect correct and just tax under the provisions of the Income Tax Act, 1961 from an assessee. The Act is not intended either to collect or retain any amount which is not due from an assessee. The above passage squarely applies to the facts of the present case as the department has also not disputed the fact that the petitioner has settled the dispute under the Vivad se Vishwas scheme for the assessment year 2011-12 as a consequence of which the tax offered and paid by the petitioner during the assessment year 2014-15 had become excess. That apart, under Section 237 under Chapter XIX of the Income Tax Act, there is no limitation prescribed for granting refund of the amount paid in excess as tax. Therefore, I do not find any merits in the submissions made by the learned Senior Standing Counsel appearing on behalf of the respondents. Therefore, these Writ Petitions deserves to be allowed. WP allowed.

Summary

Issues:
1. Entitlement for an order under Section 154 of the Income Tax Act, 1961.
2. Refund of tax paid by the petitioners under the Vivad Se Vishwas Scheme, 2020.
3. Applicability of previous judgments to the current case.

Analysis:

Issue 1: Entitlement for an order under Section 154 of the Income Tax Act, 1961
The petitioners sought a Writ of Mandamus to direct the first respondent to pass an order under Section 154 of the Income Tax Act, 1961, deleting the protective addition for the Assessment Year 2014-2015. The petitioners had voluntarily offered to pay tax for 2014-2015 but later settled under the Vivad Se Vishwas Scheme, 2020 for the previous year. The respondents argued against revising returns post-assessment, citing the decision in Goetze (India) Limited Vs. Commissioner of Income Tax. The court considered whether the settlement under the Vivad Se Vishwas Scheme justified passing an order under Section 154.

Issue 2: Refund of tax paid by the petitioners under the Vivad Se Vishwas Scheme, 2020
The court examined if the petitioners, having settled under the Vivad Se Vishwas Scheme, 2020 for the Assessment Year 2011-2012, were entitled to a refund of the tax paid. Previous judgments highlighted that the purpose of the Income Tax Act is to collect correct and just tax, not to collect or retain any undue amounts from an assessee. The court referred to the Unichem Laboratories Ltd case, emphasizing that the department should not levy or collect tax that is not due, and there is no limitation for refund under Section 237 of the Income Tax Act.

Issue 3: Applicability of previous judgments to the current case
The court referenced a previous judgment where similar circumstances led to a decision in favor of the petitioner, emphasizing that an assessee should not be taxed twice on the same income. The court reiterated that the department's duty is to collect the correct amount of tax under the law, not to retain excess amounts. Based on these precedents, the court allowed the Writ Petitions, directing the respondents to refund the excess tax paid by the petitioners for the Assessment Year 2014-2015 along with interest within a specified period.

In conclusion, the court allowed the Writ Petitions, granting relief to the petitioners based on the settlement under the Vivad Se Vishwas Scheme, 2020 and the principle that an assessee should not be taxed twice on the same income.