Madras High Court
Tiam House Service Ltd. vs Central Board Of Direct Taxes And Ors. on 27 November, 1998
Equivalent citations: [2000]242ITR539(MAD)
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu
JUDGMENT R. Jayasimha Babu, J.
1. The assessee had omitted to file all the tax deduction certificates along with the return for the assessment year 1985-86. The certificate that should have been enclosed was for Rs. 379, while the tax deducted at source amount was Rs. 30,579. The assessee filed an appeal against the order of the Assessing Officer in respect of other matters and after the disposal of that appeal, had approached the Commissioner to revise the order of the Assessing Officer so as to take into account the tax deducted at source certificate produced by the assessee before the Commissioner. The Commissioner did not hold that the certificate was not genuine or that the deduction could not, for any other reason, be allowed. He declined to examine the matter on the short ground that the assessee had preferred an appeal against the order of assessment and, therefore, it could not avail of the remedy provided under Section 264 of the Income-tax Act.
2. The assessee, thereafter, applied to the Central Board of Direct Taxes on May 31, 1990, invoking the Board's power under Section 119(2)(b) of the said Act. What it elicited was a two line order informing the assessee that its application is rejected by the Board. This petition is directed against that order of the Board dated April 23, 1991.
3. Learned counsel for the petitioner submitted that the Board was in error in rejecting the application, as under Section 237 of the said Act, the amount paid by an assessee or paid on his behalf for any assessment year as tax if it exceeds the amount with which he is properly chargeable in the year, the excess is required to be refunded to the assessee. The assessee in this case, admittedly, as per the assessment order, was not liable to pay tax in a sum equal to or in excess of amount paid. The refund claim was for the excess paid that the amount being the amount of tax deducted at source.
4. The income in respect of such deduction had been effected was disclosed and formed part of the return. The Revenue had received the amount set out in the, tax deduction at source certificates. The Revenue is not entitled to unjustly enrich itself at the cost of the assessee.
5. Learned counsel for the Revenue submitted, that Section 119(2)(b) of the Act does not have any application so far as the petitioner herein is concerned. It is his submission that the power of the Board to extend the time under this provision is only in respect of the matters, for the doing of which specific time limits are laid down in one or the other provision of the Act, such as Section 239 of the said Act which fixes a time limit within which refund may be claimed. Learned counsel submitted that the Board is not required to give any reason for the rejection of the application under Section 119(2)(b) of the said Act, which vests power in the Board to admit an application or claim for any exemption, deduction, refund or any other relief under the said Act after the period specified under the said Act for such application or claim, if it is considered by the Board to be desirable or expedient so to do for avoiding genuine hardship in any case or class of cases.
6. The power, therefore, is to be exercised in cases where genuine hardship will result if the assessee is not granted the relief sought in respect of a matter covered by that provision. The time for filing a return of income is specified in Section 139(1) of the said Act. The time is, in certain cases, extended as in the situation covered by Section 139(4) of the said Act. The limits are prescribed in the Act for filing loss returns. Time limit is prescribed for claiming refunds. The right of the assessee to claim refund of the amounts paid in excess of the tax found to be lawfully payable is recognised in Section 237 of the said Act.
7. Section 237 of the said Act embodies a very salutary principle that the right of the Revenue to receive and collect tax under the said Act is limited to what is properly due and payable as tax. The amounts collected in excess thereof are not to be treated as tax and retained by the State. That amount is required to be refunded to the person from whom or on whose behalf it had been collected. It was, therefore, incumbent on the part of the Board to examine the genuineness of the claim and to consider the prayer of the petitioner in the background of those provisions of the said Act. The impugned order does not disclose that it has taken note of any of those provisions/The order does not disclose any reason at all. The mere communication of a decision unsupported by the reasons cannot, on the facts of this case, be regarded as proper compliance with the requirements of Section 119(2)(b) of the said Act.
8. It is well settled that vesting of power in an authority results in the imposition of duties on that authority to exercise that power in a manner which is consistent with the requirements of and will advance the purpose of the provision under which the power is vested. Such power is required to be exercised consistent with the principles of natural justice, unless such principles are excludible in law, having regard to the context in which the power is exercised.
9. A person who invokes the jurisdiction which is available to the authority, and which jurisdiction is to be exercised for the purpose of relieving a person who has genuine hardship according to his plea, is entitled to the consideration of his claim in a manner which can be regarded as lawful. The impugned order which is a bald refusal, in the circumstances, cannot be sustained. That order is set aside and the matter is remitted back to the Central Board of Direct Taxes for reconsideration in accordance with law and in the light of the observation made an the course of this order.
10. The writ petition is allowed. No costs.