2025 (1) TMI 246 - HC - Income Tax

Excise duty refund and interest subsidy - full credit of challans deposited by the petitioner had not been given by the assessing officer due to wrong PAN number mentioned in the challans by the petitioner - petitioner has mentioned on the challans TAN number instead of PAN number - HELD THAT - We are inclined to dispose of this petition by directing the Deputy Commissioner Income Tax, Circle-1, Jammu to ensure that the necessary correction in the challan as stated above is carried out with or without the approval of the Chief Commissioner Income Tax, Amritsar within a period of two weeks and the amount payable to the petitioner is released. We also make it clear that in case no approval is received by the Deputy Commissioner Income Tax Appeals for correction of an inadvertent and clerical error in the challans from the office of the Chief Commissioner Income Tax, Amritsar, the approval, as may be required, shall be deemed to have been granted and the Deputy Commissioner Income Tax, Circle-1, Jammu shall be competent to carry out the necessary correction and release the amount payable to the petitioner.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the petitioner is entitled to a refund of Rs. 25.00 lacs, which was not credited due to an error in the PAN number on the tax payment challans.
Whether the respondents are justified in withholding the refund pending correction of the PAN number on the challans.
What procedural steps are necessary to rectify the error in the challans and facilitate the refund?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Refund

Relevant Legal Framework and Precedents: The case involves the interpretation of Section 154 of the Income Tax Act, which allows for rectification of mistakes apparent from the record.
Court's Interpretation and Reasoning: The court acknowledged that the petitioner is entitled to the refund. The error was clerical, involving the mention of a TAN number instead of a PAN number on the challans.
Key Evidence and Findings: The petitioner had made the payment, and the only issue was the incorrect PAN number on the challans. The respondents did not dispute the payment or the amount due.
Application of Law to Facts: The court applied Section 154 to conclude that the error was apparent and should be rectified to facilitate the refund.
Treatment of Competing Arguments: The respondents argued that the refund could not be processed until the correction was made. The court found this argument valid but insisted on a timely resolution.
Conclusions: The petitioner is entitled to the refund, and the necessary corrections must be made promptly to release the funds.

Issue 2: Justification for Withholding Refund

Relevant Legal Framework and Precedents: The withholding of refunds is typically justified under tax laws when there are discrepancies or errors in documentation.
Court's Interpretation and Reasoning: The court recognized the procedural requirement for accurate documentation but emphasized the need for efficiency in resolving clerical errors.
Key Evidence and Findings: The respondents had communicated with various authorities to correct the error but had not received a response.
Application of Law to Facts: The court balanced the need for procedural accuracy with the petitioner's right to a timely refund.
Treatment of Competing Arguments: The court acknowledged the respondents' procedural concerns but directed them to expedite the correction process.
Conclusions: Withholding the refund is justified only until the error is corrected, which should be done promptly.

Issue 3: Procedural Steps for Correction

Relevant Legal Framework and Precedents: The process for correcting tax documentation errors involves coordination between various tax authorities.
Court's Interpretation and Reasoning: The court directed specific procedural steps to ensure the correction is made efficiently.
Key Evidence and Findings: The Deputy Commissioner of Income Tax, Circle-1, Jammu, was involved in facilitating the correction.
Application of Law to Facts: The court ordered the Deputy Commissioner to proceed with the correction with or without further approvals.
Treatment of Competing Arguments: The court preemptively addressed potential delays by deeming approval granted if not received within a specified timeframe.
Conclusions: The necessary corrections should be made within two weeks, and the refund should be processed without unnecessary delay.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "We also make it clear that in case no approval is received by the Deputy Commissioner Income Tax Appeals for correction of an inadvertent and clerical error in the challans from the office of the Chief Commissioner Income Tax, Amritsar, the approval, as may be required, shall be deemed to have been granted."
Core Principles Established: Clerical errors in tax documentation should be corrected promptly to ensure taxpayers receive their entitled refunds without undue delay.
Final Determinations on Each Issue: The petitioner is entitled to the refund of Rs. 25.00 lacs, and the necessary corrections should be made within two weeks to facilitate this. The respondents must act efficiently to resolve the clerical error.

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