2023 (2) TMI 390 - HC - Income Tax

Credit of TDS - income from interest received in the name of her deceased husband was offered for taxation but credit of TDS deducted against the same was not granted to the petitioner - refund due to the petitioner along with the interest and compenstion immediately without any further delay - interest on the fixed deposits with banks and companies standing in the name of her late husband - HELD THAT - The difficulty on the part of the respondent is reflected while recognizing the assessee s right to get the TDS. Credit of the TDS since is being granted on ITBA system, it is also available with the PAN of the assessee who claimed the TDS. In the case of the present petitioner, as the TDS details had not shown of ITBA with PAN of assessee, the credit of the same was not feasible. The amount of TDS was of the husband of the assessee who expired on 3.2.2016. The petitioner was fair enough to offer the interest income received on account of the husband to offer the same in return of income. She has also paid the tax on the same and hence it is reflected in Form 26AS, as specifically ordered by the Commissioner (A). In such eventuality, instead of denying her, when the Commissioner (A) himself was convinced on reflection of the said amount on 26AS form, TDS could have been credited in the account of the petitioner. It was not the case that the petitioner not paid the tax or not having offered the amount which has been accumulated in the account of her late husband. She should have been careful in filing it as a heir, as rightly pointed out by learned counsel Mr.Patel, however, if that was the lapse of her part, she could not have then paralyzed of not getting the refund when Form 26AS had clearly reflected this. The order of Commissioner (Appeals) ought to have been followed by the department. If it the refund was not feasible through the system, the physical grant of refund also could have been possible in any event. The petition is allowed. The order of CIT (Appeals) be complied with without fail within 12 weeks from the date of receipt of this order with interest and with all consequential reliefs.

Summary

Issues:
1. Refund of income tax due to the petitioner for assessment year 2017-18.
2. Discrepancy in TDS credit claimed by the petitioner.
3. Non-issuance of refund despite favorable appeal decision.

Issue 1: Refund of income tax due to the petitioner for assessment year 2017-18
The petitioner sought direction for the refund of income tax due for the assessment year 2017-18. The petitioner's husband passed away in 2016, and she filed a return of income for that year, including interest on fixed deposits in her late husband's name. The respondent found a discrepancy in the TDS claimed by the petitioner, demanding a short payment of tax. The CIT (Appeals) later allowed the appeal, directing the respondent to verify and grant the TDS credit. However, despite the favorable decision, the petitioner did not receive any refund or communication, leading to the filing of a grievance and subsequent petition for refund.

Issue 2: Discrepancy in TDS credit claimed by the petitioner
The respondent contended that the TDS credit claimed by the petitioner was unsustainable as it was in the late husband's name. The respondent argued that the TDS details were only available on the ITBA system and required the petitioner to register as a legal heir, file a return of income, and then claim the TDS. The respondent rejected the petitioner's grievance application, stating that the credit of TDS could only be granted on the ITBA system if available with the PAN of the assessee. However, the CIT (Appeals) found the petitioner's contention valid, as the income of the late husband was reflected in the total income statement and Form 26AS, making the TDS credit of Rs. 81,353 allowable to the petitioner.

Issue 3: Non-issuance of refund despite favorable appeal decision
The High Court acknowledged the petitioner's compliance with tax obligations, offering the interest income from her late husband in her return, paying the tax, and reflecting it in Form 26AS as directed by the CIT (Appeals). The Court criticized the respondent for not granting the refund despite clear evidence and the CIT (Appeals) order. The Court emphasized that the petitioner should have received the refund, either through the system or physically, as the Commissioner was convinced of the validity of her claim. The Court allowed the petition, directing the department to comply with the CIT (Appeals) order within 12 weeks, including interest and all consequential reliefs.