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TMI Blog2012 (9) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... y the CPU at Bengaluru. The assessees must be given an opportunity to file response or reply and the reply will be considered and examined by the Assessing Officer before any direction for adjustment is made. Difficulties in getting refunds on account of adjustment towards arrears - Held that:- There can be small and insignificant mismatches, which if purely technical should be condoned or ignored. After all tax has been paid or credited in the name of the assessee. Once the amount is correctly and rightly reflected in Form AS26, small or technical mismatch in the return should not be a ground to deny credit of the amount paid, in such cases, if the AO feels that benefit of TDS reflected in AS26 should not be given, he should issue notice to the assessee to revise or correct the mistake and only if the necessary rectification or correction is not made, an order under Section 143(1) should be passed and the demand should be raised. We issue an interim direction to this effect. As in several cases refunds have been adjusted on account of the debit entry made under the head “modified”. These entries are made by the AO and thus the refund is reduced to nil or zero. Copies of tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be appreciated and is laudable. The problem is not for the said reason but because of the wrong and incorrect data uploaded in the centralized computer system. In the counter affidavit it is stated that the Assessing Officers were asked to carry out physical verification of the past demands and to create manual arrears D CR for upto the financial year 2010-11 vide Board‟s letter dated 28th April, 2010. This was followed by several other letters written by the Board wherein it was emphasized that the Assessing Officer must verify and correct the arrears recorded in the D CR. This was necessary as the arrears or demands were to be uploaded in the Central Processing Unit (CPU for short) at Bengaluru. In the counter affidavit it is stated that more than 46.23 lac entries of demand aggregating to Rs. 2.33 lac crores for the period prior to 1st April, 2010, were uploaded on CPC arrear/demand portal pursuant to the information uploaded/furnished by the Assessing Officers. 5. It is pointed out by Mr. Nagesh Behl, Chartered Accountant, who is present in the Court that CPC, Bengaluru has written letter dated 21st August, 2012 to the Chief Commissioners of Income Tax all over In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner (Appeals), Commissioner (Appeals) or Chief Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section. 7. The respondents in their counter affidavit have accepted that the Board has from time to time issued directions that the aforesaid Section and the procedure prescribed should be strictly adhered to. Reference is made to Instruction Nos. 1952, 1969 and 1989 dated 14th August, 1998, 20th August, 1999 and 20th October, 2010, respectively. In the counter affidavit it accordingly stated as under:- Accordingly, it was again reiterated that the provisions of section 245 of the I.T. Act, 1961 must be followed and written intimation must be sent to the assesses before adjusting refund of the outstanding demand and any lapse in this regard shall be viewed seriously. The CCsIT/DGsIT/CsIT were direct to ensure compliance of the aforesaid direction. Thus, enough safeguards have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h that 14.6 lac communications have been sent by e-mail and 8.33 lac communications have been sent through speed posts making adjustments of refunds. The total amount adjusted as per the letter dated 21st Aug., 2012 is Rs. 4800 crores. 11. At this stage, Mr. Sanjeev Sabharwal, sr. standing counsel states that in some cases prior intimation was sent. Ms. Prem Lata Bansal, Sr. Advocate, however, submits that in very few cases prior intimation was sent and the procedure prescribed under Section 245 was not followed. She further submits that in cases where prior intimation was given, the assessees were required to get in touch with the Assessing Officer and file response. But the Assessing Officer did not accept the reply/response on the ground that the assessee should approach CPU, Bengaluru. At the same time, CPU, Bengaluru did not accept the reply/response on the ground that the assessee should approach the Assessing Officer. It is submitted that the procedure is contrary to statute as an order of adjustment after issue of prior intimation has to be passed by the Assessing Officer. The difference between the first and second stage is being obliterated and the section violated. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without putting a harsh burden and causing inconvenience to the assessee. 15. This brings us to the first problem relating to the failure of the taxpayers to get credit of the TDS, which has been deducted from the income payable/paid to them. The said problem can be further bifurcated into two categories. The first category relates to cases where the amount is reflected in Form 26AS, but because of incorrect entries in the return or small mismatch with the return data, the taxpayers do not get credit. The second category pertains to the cases where the TDS has been deducted by the deductor but the tax payer has been denied and deprived credit for the failure of the deductor to correctly upload the TDS return or details. Thus, the taxpayers do not get credit of the same in spite of payment. Thus they are forced and compelled to make double tax payment. 16. The magnitude of the problem can be understood and appreciated as it is stated that in the financial years 2010-11 and 2011-12 as many as 43% and 39% of the returns processed in Delhi charge were found to be defective. Total demand in Delhi Zone of Rs.3000 crores (approximately) for the financial year 2010-11 was created and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not attributable to the deductee, is a serious matter and causes unwarranted harassment and inconvenience. Revenue cannot be a silent spectator and wash their hands or express helplessness. This problem is normally faced by the small taxpayers including senior citizens as they do not have Chartered Accountants and Advocates on their pay roles. The marginal amount involved compared to the efforts, costs and frustration, makes it an unviable and a futile exercise to first approach the deductor and then the assessing officer. Rectification and getting the corrections done and to get them uploaded is not easy. Most of the assessees will and do write letters but without response and desired results. This aspect must be examined by the Board and appropriate steps to ameliorate and help the small tax payers including senior citizens should be taken and implemented. 21. Mr. S.R. Wadhwa, Advocate states that he would like to make a representation in this regard to the Board and give suggestions. He is at liberty to do so on his behalf and on behalf of the All India Federation of Tax Practitioners. Similarly, Ms. Prem Lata Bansal, Sr. Advocate and Mr. Nagesh Behl, CA are at liberty and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (ii) Thereafter the tax payer ma approach CPC, Bangalore for Rectification‟ of the earlier intimation based onn corrected entries, and the entitled tax credit is allowed to the taxpayer by CPC. Procedure for giving credit even when there is slight mismatch. (i) That the taxpayer is not allowed to credit of taxes even if there is a lightest of mismatch in the TDS particulars reported in form 26AS is not correct because the board has been issuing Instructions to the filed formations for permitting credit of TDS with or without verification depending upon the facts of the case as mentioned in the instructions. In this regard, a reference may be made to Instruction No.2 of 2011 dated 9th February, 2011 and Instruction No.1 of 2012 dated 2nd February, 2012. (ii) In the said Instructions, the Board has asked the Assessing Officers to accept the TDS claims without verification in all returns where the difference between the TDS claimed and matching TDS amount reported in AS26 data does not exceed rupees one lac. Therefore, the Department is aware of the inconvenience which may be caused to smaller taxpayers and has taken a very liberal view of the matter. 24. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns in Delhi zone for the Financial Year 2010-11 and 2011-12 respectively were defective. Substantial number of these defaults relate to mismatch of TDS details and the tax payers have been denied benefit of TDS claimed by them. For the Financial Year 2010-11, the approximate demand created in Delhi Zone because of the defective returns was Rs.3000 crores, which stands reduced to Rs.1900 crores after the tax payers approached the Assessing Officers for corrections. Every attempt possible has to be made to redress the grievance of the tax payers. The tax payers should not be made to run around, make repeated visits to deductor or the Assessing Officer. Rejection of TDS, which has been deducted and paid, hurts the assessee and puts him to needless inconvenience, harassment and costs. It gives bad name to the Revenue. On the issue of refunds also, there is no dispute and it is admitted position that Section 245 of the Income Tax Act has to be complied with. After computerization and pursuant to directions issued by the Board, the Assessing Officers have uploaded data with regard to past arrears . The amount mentioned in the counter affidavit is Rs.2.33 lac crores, which is a substant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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