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G.V.Infosutions Pvt. Ltd. vs. Deputy Commissioner Of Income Tax, Circle 10(2), & Anr.
February, 06th 2019
                            Date of order: January 24, 2019.
+    W.P.(C) 8436/2018

      G.V.INFOSUTIONS PVT. LTD.                      ..... Petitioner
                    Through: Mr. Salil Kapoor, Ms. Soumya Singh,
                              Mr. Sumit Lalchandani, Advocates


      CIRCLE 10(2), & ANR.                         ..... Respondents
                      Through: Mr. Sanat Kapoor, Advocate


      1.     The petitioner is aggrieved by an order of the Commissioner of
      Income Tax, rejecting its application under Section 119(2)(b). It had
      applied for condoning the delay in filing a refund application.

      2.     Facts for the purpose of deciding this writ petition are that the
      petitioner/assessee filed its Income Tax Return on 20.09.2013,
      covering Assessment Year 2013-2014. Its return reflected the tax
      deducted at source (TDS) as Rs.15,62,500/-. It appears, however, that
      a larger amount ­ Rs.31,25,000/- had escaped the attention of the
      Assessee; so it could not be claimed. As an adjustment or for the
      purpose of consequent refund, the assessee paid the amounts due in
      terms of its calculation and assessment was framed under Section
      143(1). The period for revising the demands ended on 31.03.2015

W.P. (C) No.8436/2018                                            Page 1 of 8
      (Assessment year 2013-2014), however the error that had crept in
      while furnishing the returns was not rectified through an application
      or a refund undertaken. The petitioner claims that when it did discern
      the error or claim, it had applied on 12.09.2016 to the Chief
      Commissioner, for condoning the delay for filing the application for
      refund. The application was rejected by the Commissioner ­ on
      28.03.2018. In its application, the assessee had claimed that its
      Chartered Accountant had inadvertently overlooked the TDS
      amounts, as a consequence it could not have sought appropriate
      refund at the first instance or even claimed it before the period of
      seeking refund had expired.

      3.     The Chief Commissioner rejected the application, giving
      reasons as follows:

             "5. Explaining reasons/causes for not claiming the
             TDS of Rs.31,25,000/- while filing return of income for
             AY 2013-14 it was submitted that due to the mistake of
             the Chartered Accountant of the assessee Company the
             claim of the TDS was omitted to be made while filing
             return of income for the year under consideration.
             However, on being specifically questioned to furnish
             evidence that the credit of TDS was not available in form
             26AS at the time of filing of ITR on 29.09.2013, the AR
             for the assessee failed to produce any evidence to prove
             that credit of TDS was not available in form 26AS at the
             time of filing of ITR on 29.09.2013, the AR for the
             assessee failed to produce any evidence to prove that
             credit of TDS was not actually available in form 26AS at
             the time of filing ITR on 29.09.2013. It is amply clear
             from the facts of the case that the claim of the assessee
             that information of TDS of Rs.31,25,000/- was actually
             available to it at the time of filing ITR has not been
             proved during the course of proceedings before me. In
             absence of any such relevant evidence, the claim of the
W.P. (C) No.8436/2018                                          Page 2 of 8
             assessee that due to the mistake of the CA, claim of TDS
             was not made has remained unproved.
             6.     In this case, return for the AY 2013-14 was filed
             on 29.09.2013 and the assessee could have revised the
             return by 31.03.2015. However, the assessee had not
             filed the revised ITR to claim refund of Rs.31,25,000/-.
             Considering no action by the assessee to claim
             substantial amount of refund of Rs.31,25,000/- during
             available period of more than one and a half year from
             the date of filing of ITR, the assessee was asked to
             explain reason for such inaction when the company had
             incurred substantial expenditure in seeking professional
             help of Chartered Accountants. IN response to the query,
             it was as submitted by the AR for the assessee that
             revised return could not be filed due to lack of knowledge
             about claim of credit of TDS of Rs.31,25,000/-. It is
             pertinent to mention here that as per audited account the
             assessee had disclosed a net profit of Rs.24,78,142/- for
             the year and the claim of the assessee was that due to the
             lack of information about non-credit of TDS of
             Rs.31,25,000/- (the amount of TDS was more than the
             income) revised return could not be filed. However, the
             claim of the assessee was not substantiated with any
             evidence and it is difficult to believe that the assessee
             would be so careless that it was not aware about the
             pending TDS credit which was more than the profit for
             the year under consideration.
             7.     The assessee is a company which has availed
             services of independent auditor, inhouse finance
             professional and Chartered Accountant engaged for the
             purpose of filing ITRs and other compliance issues for
             the year under consideration and for subsequent years.
             Both, under the Company Act as well as under the
             Income Tax Act, the assessee company was liable to
             record each transaction i.e. gross receipt, net receipt, tax
             deducted at source and expenses etc. and get its accounts
             audited. The claim of the assessee company that even
             after having gone through the process of audit, credit of
             TDS of Rs.31,25,000/- could not be made at the time of

W.P. (C) No.8436/2018                                             Page 3 of 8
             filing of return of income or during time available to file
             the revised return of income for bonafide reason cannot
             be accepted in absence of any verifiable credible
             material evidence in support of the claim."

      4.     It is pointed out on behalf of the assessee by Mr. Kapoor, that
      the TDS portal maintained by the Revenue in fact reflected at the
      relevant time that for Assessment Year 2013-2014, additional TDS
      credit to the extent of Rs.31,25,000/- was payable which in turn
      implied that the amounts were paid. Counsel relied on statements
      made in the application to say that inadvertence or omission in
      claiming appropriate adjustment and consequent refund was on
      account of its auditor/chartered accountant's lack of diligence. The
      petitioner relied upon a Division Bench ruling of this court in
      Indglonal Investment & Finance Ltd. vs. Income Tax Officer, [2012
      343 ITR 44(Delhi)].

      5.     The learned counsel for the revenue relied upon the impugned
      order and submitted that the petitioner's claim for condonation of
      delay was justifiably rejected. Counsel submitted that as pointed out
      by the Chief Commissioner there was no material to substantiate the
      plea urged, i.e. that the concerned auditor or chartered accountant had
      inadvertently omitted to claim the refund amount. It is further pointed
      out that in fact the period provided by law for claiming the refund
      ended on 31.03.2015 and only much later did the assessee claim
      refund, and move to application under Section 119(2)(b) ­ on

      6.     Concededly the facts disclose; firstly, that according to the
      petitioner a sum of Rs.31,25,000/- was inadvertently left out by its

W.P. (C) No.8436/2018                                            Page 4 of 8
      auditor/chartered accountant in the calculation while filing the return;
      secondly, the court notices that the amount in fact reflected on the
      web portal maintained by the Income Tax Department itself at the
      relevant time. It is also a fact that the petitioner does not seem to have
      noticed its omission, at least before September 2016. In the
      meanwhile, the period of limitation to claim refund ended on

      7.     In Indglonal Investment & Finance Ltd. (supra) a Division
      Bench of this court, while dealing with the claim for refund, which
      was made belatedly but rejected by the Revenue, considered the
      relevant judgments of the Supreme Court including Commissioner of
      Income Tax Vs. Shelly Products and Anr., (2003) 261 ITR 367, and
      held as follows :

             "11. Provisions of assessment are independent of
             provisions of refund, but the provisions relating to refund
             may be dependent on the assessment. (See Commissioner
             of Income Tax, West Bengal vs. Central India Industries
             Ltd. (1971) 82 ITR 555). An assessment order or an
             order quantifying the income/net wealth can be rectified
             or modified in the proceedings as contemplated by the
             enactment. The assessment order or the order
             quantifying the income or taxable wealth cannot be
             challenged on merits while the authorities examine the
             question of refund. The authorities cannot go behind the
             assessment order or the order quantifying net
             wealth/income. Section 242 of the 1961 Act is apposite
             and is reproduced below:-
                    "242. Correctness of assessment not to be
                    questioned.--In a claim under this Chapter, it shall
                    not be open to the assessee to question the
                    correctness of any assessment or other matter
                    decided which has become final and conclusive or

W.P. (C) No.8436/2018                                             Page 5 of 8
                   ask for a review of the same, and the assessee
                   shall not be entitled to any relief on such claim
                   except refund of tax wrongly paid or paid in

             12. Another principle is that the refund provisions should
             be interpreted in a reasonable and practical manner and
             when warranted liberally in favour of the assessee. If
             there is substantial compliance of the provisions for
             refund, it may not be denied because it is not made
             strictly in the form or the prescribed manner. The forms
             prescribed may be merely intended to facilitate payment
             of refund. The tax authorities have to act judiciously
             when they exercise their power under an enactment. The
             power given to the tax authorities under the enactments
             are mandated with the duty to exercise them when the
             statutory provisions so warrant. It is imperative upon
             them to exercise their authority in an appropriate
             manner. In case the Assessing Officer or tax authority
             comes to know that an assessee is entitled to deduction,
             relief or refund on the facts of the case and the assessee
             has omitted to make the claim, he should draw the
             attention of the assessee. The tax authorities should act
             as facilitators and not occlude and obstruct. The role of
             tax authorities has been aptly described in CIT versus
             Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2008) 14 SCC
             208 as :-

                   "19............ The function of the assessing officer
                   is to administer the statute with solicitude for the
                   public exchequer with an inbuilt idea of fairness to

      8.     The rejection of the petitioner's application under Section
      119(2)(b) is only on the ground that according to the Chief
      Commissioner's opinion the plea of omission by the auditor was not
      substantiated. This court has difficulty to understand what more plea
      or proof any assessee could have brought on record, to substantiate
      the inadvertence of its advisor. The net result of the impugned order is

W.P. (C) No.8436/2018                                            Page 6 of 8
      in effect that the petitioner's claim of inadvertent mistake is sought to
      be characterised as not bonafide. The court is of the opinion that an
      assessee has to take leave of its senses if it deliberately wishes to
      forego a substantial amount as the assessee is ascribed to have in the
      circumstances of this case. "Bonafide" is to be understood in the
      context of the circumstance of any case. Beyond a plea of the sort the
      petitioner raises (concededly belatedly), there can not necessarily be
      independent proof or material to establish that the auditor in fact acted
      without diligence. The petitioner did not urge any other grounds such
      as illness of someone etc., which could reasonably have been
      substantiated by independent material. In the circumstances of the
      case, the petitioner, in our opinion, was able to show bonafide reasons
      why the refund claim could not be made in time.

      9.     The statute or period of limitation prescribed in provisions of
      law meant to attach finality, and in that sense are statutes of repose;
      however, wherever the legislature intends relief against hardship in
      cases where such statutes lead to hardships, the concerned authorities
      ­ including Revenue Authorities have to construe them in a
      reasonable manner. That was the effect and purport of this court's
      decision in Indglonal Investment & Finance Ltd. (supra). This court is
      of the opinion that a similar approach is to be adopted in the
      circumstances of the case.

      10.    For the above reasons, the impugned order dated 28.03.2018
      rejecting the petitioner's application under Section 119(2)(b) is hereby
      set aside and quashed. The application for condonation of delay is
      hereby allowed for these reasons. The petitioner is permitted to prefer

W.P. (C) No.8436/2018                                            Page 7 of 8
      its refund claim within two weeks from today. In such event, the
      concerned Assessing Officer shall verify the concerned claim and
      pass the order in accordance with law within six weeks thereafter.
      Any amount due to the petitioner shall also be remitted to it within
      three weeks thereafter.

      11.    The writ petition is disposed of in the aforesaid terms.

                                                    S. RAVINDRA BHAT, J

                                                       PRATEEK JALAN, J
      JANUARY 24, 2019

W.P. (C) No.8436/2018                                             Page 8 of 8
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