Tax deducted from income not chargeable to tax should be refunded even if assessee files return belatedly
Where revenue authorities rejected assessee’s claim for refund of TDS merely on the ground that return raising said claim was filed after expiry of prescribed time period, view taken by authorities below was hyper technical and, thus, matter was to be remanded back for disposal in accordance with law
In the instant case, assessee a recognized trust invested its funds as per instructions of Government of India in various financial institutions and those institutions deducted tax at source from interest earned on fixed deposits. In order to claim refund of TDS erroneously deducted by the financial institutions, the assessee filed returns for relevant assessment years. The AO held that since said returns had been filed beyond the prescribed time-limit, they were to be treated as invalid returns and, thus, application for the TDS refunds was to be rejected. The CIT, however, refused to condone the delay in filing the returns on the ground that it was not a case of genuine hardship as envisaged under section 119(2)(b). Contending that the stance taken by the respondent authorities is contrary to law, the petitioner-trust filed this instant writ petition for appropriate relief.
The HC held in favour of assessee as under:
1) The assessee-trust was being deprived of a sum for which it could not be blamed at all. It had no liability whatsoever to pay this amount to the revenue. Yet, the revenue had refused to refund the same by taking some hyper technical view of the matter;
2) No specific or express provision is engrafted in this section to deal with refund of TDS erroneously deducted when there is admittedly no due from the assessee, but then, this is precisely the reason, for enacting section 119(1)(b). This is in the nature of an inherent power granted to the CBDT to entrust any income-tax authority other than a Commissioner (Appeals) to admit an application or claim for refund even belatedly and dispose of the same in accordance with law;
3) Section 119(1)(b) is the appropriate provision to deal with cases of this nature. The assessee is entitled to condonation of the delay in filing the claim for refund. Resultantly, the respondent authorities are directed to process the application of the assessee trust for refund in accordance with law – North eastern electric power corporation employees provident fund trust v. Union of india  31 taxmann.com 62 (gauhati)