TMI Blog2013 (3) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... rements and directions by the Assessing Officers, Dak counters and Aayakar Sewa Kendras. This is the first mandamus or direction we have issued in the present judgment. ADJUSTMENT OF REFUND CONTRARY TO THE MANDATE OF SECTION 245 OF THE INCOME TAX ACT - held that:- have taken remedial steps to ensure compliance of Section 245 of the Act as they now give an option to the assessee to approach the Assessing Officer. This is the second mandamus which we have issued. As noticed above, the interim order passed in the writ petition [2012 (9) TMI 163 - DELHI HIGH COURT] has been implemented. Directions given in the order dated 21-8-2012, will be applicable only to cases where returns have been processed by the CPC Bengaluru and refunds have been fully or partly adjusted against the past arrears while passing or communicating the order under Section 143(1) of the Act, without following the procedure under Section 245 of the Act. The problem was created and caused by the respondents who did not realise the effect and impact of incorrect and wrong arrears being uploaded in CPU Bengaluru and did not follow the statutory requirements of Section 245 of the Act. Interest u/s 244A - he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as sufficient action on the part of the respondents. Even this, it appears, was done in a few cases as the respondents in the counter affidavit have stated that they have written 20119 communications to the tax deductors, where TDS credit claimed by the taxpayers did not match with the details loaded by the deductors. The Act empowers and authorises the Assessing Officer to verify the contents of the return and notices can be issued to a third party, i.e. the deductor, to furnish information and details. The deductor, the principal officer or person responsible for making deduction, once issued notice to appear, in most cases, would like to comply with the statutory requirements and also furnish details with regard to TDS deducted from the income of the assessee. - AO to exercise powers u/s 133. - WRIT PETITION (CIVIL) 2659 & 5443 /2012 - - - Dated:- 14-3-2013 - Sanjiv Khanna, Siddharth Mridul And Sanjiv Khanna, JJ. Through Ms. Premlata Bansal, Sr. Advocate with Mr. V.P. Gupta Mr. Anuj Bansal, Advocates along with Mr. Nagesh Behl, Chartered Accountant. Through Mr. Sanjeev Sabharwal, Sr. Standing Counsel Mr. Puneet Gupta, Jr. Standing Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting in the 26AS and thereafter, the rectification is possible which is a very lengthy procedure. In many cases the concerned department refuses to revise the statement. 5. The department has communicated the demands outstanding for various years in their records to the Central Processing Unit without carrying out the necessary rectifications lying pending at their end and without reconciling their records. Now Central Process Unit while issuing refunds in the later years adjusts demands for earlier years. Sometimes the demands for earlier years may not have been communicated to the assessee. This is totally against the law. To get the necessary rectification done the assessee has to first approach the assessing officer for necessary rectification for that assessment year. Then that will be communicated by the Assessing Officer to the CPC online or as per their records. And thereafter CPC would issue refund for the Balance amount. 6. The Returns of the assesses who have expired are filed by legal heirs and in case of refund the same is issued by CPC in the name of dead person only. This causes great harassment to get the same rectified online or through assessing officer. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure under Section 245 of the Income Tax Act, 1961 is being followed before making adjustment of refunds and whether assessees are being given full details with regard to demands, which are being adjusted. (2) Whether the Revenue is taking caution and care to communicate rejection of TDS certificates and intimation under Section 143(1) in case any adjustment or modification is made to taxes paid, either as advance tax, self assessment tax or TDS. (3) Whether and what steps are taken to verify and ascertain that the old demands against which adjustment is being made was communicated to the assessee? (4) What steps have been taken to ensure that the deductors correctly upload the TDS details/particulars on the Income Tax website? (5) What is the remedy available to the assessee and can he/she approach the Department in case the deductor fails to correctly upload the particulars in his/her cases? (6) Whether an assessee can get benefit of TDS deducted or/and paid but not uploaded by the deductor and procedure to claim the said benefit? 3. The respondents were directed to file counter affidavit providing full particulars regarding : (i) Number of assessees where income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt/demand is payable. It is stated that the uploading/ demand created, is contrary to the official records and wrong as the Assessing Officers have failed and neglected to correctly upload the data despite instructions of the Board. It will be stated whether this correct and what action has been taken or contemplated by the Board? (iv) Whether it is possible to upload and mention on the website details of intimation issued under Section 143(1) of the Income Tax Act, 1961 ( Act , for short) with particulars like amount adjusted, TDS or taxes which have not been credited, when and how the intimation was communicated/ served? (v) The return itself is treated as an intimation under Section 143(1), unless the Assessing Officer makes adjustments. In case adjustment is made, the Assessing Officer is required to communicate his order under Section 143(1). The general complaint/ grievance is that intimation is not communicated to the assessee even in cases of adjustments. If this is correct, what steps have been taken to remedy the said grievance? (vi) Whether prior intimation/ information is being sent to the assessees before adjustment of refund as per Section 245? (vii) Under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Rules, 1962 must be disseminate and published for the benefit of assessee public and deductors so that assessee can claim benefit of tax deducted at source in respect of income which is assessable in his hand. 5. Thereafter the respondents filed their counter affidavit dated 27 th July, 2011 on 28th July, 2011. The respondents have also filed additional affidavits thereafter in response to queries, and questions which are dated 30th November, 2012, 29th January, 2013 and 5th March, 2013. 6. In our order dated 31st August, 2012, we emphasized that two specific problems being faced by the taxpayers were being examined and considered. The first was the difficulties faced by the taxpayers relating to credit of Tax Deducted at Source i.e. TDS which stands paid by the deductors. This amount is deducted from the income earned by the assessee but as noticed for several reasons which may not be attributable to the taxpayers/assesses, they denied credit and, therefore, may have to pay double tax. This is not warranted and acceptable. Further the assessees suffer harassment and inconvenience both from the Department and the deductor. The second category consists of wrong or u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l has to be addressed on a general scale. On the issue of refunds, the respondent do not dispute and admit the position that the data uploaded in the Centrally Processing Unit, Bengaluru has errors and faults. In the counter affidavit, it is stated that Rs.2.33 lac crores is due and payable, as per the data uploaded by the Assessing Officers towards past arrears i.e. arrears payable on or before 31st March, 2010. This is a substantial amount. Arrears, if payable, must be paid. However, the position is that the taxpayers are claiming and stating that arrears have been wrongly shown and the Assessing Officers have not correctly uploaded the data. As noted below, this is partly correct. The respondents also accept that the past arrears as uploaded may not be correct. They have not quantified the amount. The magnitude and the number of assessees adversely affected, can be appreciated from the figure of Rs.2.33 lac crores. Further, as per the counter affidavit on the basis of this data for one assessment year alone Centrally Processing Unit, Bengaluru has made about 23 lacs adjustments and the taxpayers have been denied the refund claim i.e. the refund amount has been reduced or set o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (CCS) was to be sent to be sent to the CBDT by 30th June, 2010. 10. Inspite of the said effort and direction, the CBDT/Board accepts and admits the position that incorrect and wrong demands have been uploaded. This is clear from the further directions which have been issued by the Board to the Assessing Officers on 30th September, 2010, 9th November, 2010 and 15th February, 2012. The aforesaid demands relate to the period on or before 31st March, 2010. In the counter affidavit, it is indicated that 46.34 lac entries of demand aggregating to Rs.2.32 lac crores have been uploaded on the CPC arrear demand portal by the Assessing Officers. 11. Office of the Commissioner of Income Tax, Bengaluru, realising that huge amount has been claimed as tax arrears, had written a letter dated 21st August, 2012, to all Chief Commissioners. The relevant portion of the said letter reads as under: Kind reference is invited to the above, wherein the assessing officers have been instructed to verify and reconcile the demands where such demand or adjustment thereof by CPC is disputed by the taxpayer. They have also been advised to upload amended figure of arrear demand on the Financial Accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub section (7) of section 154 of the Act has expired. Further, in some cases, the Assessing Officers have uploaded such disputed arrear demand on the Financial Accounting system (FAS) portal of Centralized Processing Centre (CPC), Bengaluru which has resulted in adjustment of refund arising out of processing of Returns against such arrear demand which has been disputed by such assessees on the grounds that either such demand has already been paid or has been reduced/eliminated in the appeals, etc. The arrear demands, in these cases also were not corrected/ reconciled for the reason that the period of limitation of our years has elapsed. 2. The Board, in consideration of genuine hardship faced by the abovementioned class of cases, in exercise of powers vested under Section 119(2)(b) of the Act, hereby authorise the Assessing Officers to make appropriate corrects in the figures of such arrear demands after due verification/reconciliation and after examining the same on merits, whether by way of rectification or otherwise, irrespective of the fact that the period of limitation of four year as provided under Section 154(7) of the Act has elapsed. 3. In view of the above the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officers must comply and follow the said manual and upload the correct and true data. Filing of applications under Section 154 i.e. application for rectification and correction by the assessee would entail substantial expenses on the part of the assessee who would be required to engage a counsel or advocate or make repeated visits to the Income Tax office for the said purpose. This would defeat the main purpose behind computerisation i.e. to reduce involvement of human element. 15. As per Citizen Charter on the website of Income Tax Department, refund along with interest in case of electronically filed returns should be made within six months. In case of manually filed returns, refund should be made within nine months. The time commences from the end of month in which the return/application is received. Similarly, the Citizen Charter states that a decision on the rectification application under Section 154 will be made within a period of two months. The Board has, however, issued instructions that rectification application under Section 154 should be disposed of within 4/6 months. There is a general grievance that the Assessing Officers do not adhere to the said time lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is stated that Aayakar Seva Kendras provide for single window service to tax payers for receipt of Dak/grievance and paper returns and applications under Section 154 are also within the scope of Aayakar Seva Kendras. Information in this regard will be disseminated and informed to the assessees, who can take advantage and benefit of the same. It is stated that there are already 75 Aayakar Seva Kendras and 57 more such Kendras are being set up in the current year. Similarly, it is stated that Sevottam Aayakar Seva Kendras are being set up in 112 income tax offices. 18. Each application under Section 154 has to be disposed of and decided by a speaking order. This is the mandate of the Act. The order has to be communicated to the assessee and there is a relevant column to be filled in the register, which is now required to be maintained. The Board should issue specific directions to ensure that there is full compliance of the said requirements and directions by the Assessing Officers, Dak counters and Aayakar Sewa Kendras. This is the first mandamus or direction we have issued in the present judgment. ADJUSTMENT OF REFUND CONTRARY TO THE MANDATE OF SECTION 245 OF THE INCOME TAX ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen warranted and necessary for adjustments of the refund towards arrears. 22. In the next paragraph of the counter affidavit, the respondents, however, have taken a different stand on adjustment of refunds by CPU, Bengaluru and have stated as under: After handing over of old demands to the CPC and commencement of processing of returns by CPC, the procedure u/s 245 of the Income Tax Act, 1961 is being followed by CPC before making adjustment of the refunds and assesses are being given full details with regard to the demands which are being adjusted. The intimation u/s 143(1) issued from CPC incorporates the full details of the existing demands that the adjusted against the refunds. Further, when the processing of a return at CPC results in demand, the communication u/s 245 is incorporated into the intimation itself. As far as the demands uploaded by the AOs to CPC portal are concerned, CPC has already issued a communication of the taxpayers through e-mail (wherever e-mail address is available) and by speed post informing him the existence of the demand in the books of the AO and that such demand is liable for adjustment against refund u/s 245 of the IT Act, 1961. As on dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can make adjustments contrary to the procedure prescribed under Section 245 of the Act based on the wrong data uploaded by the Assessing Officers. Question of payment of interest also arises. However, before issuing final directions in this regard, an affidavit as directed above explaining the procedure adopted by them should be brought on record. Opportunity is given to the Revenue to adopt a just and fair procedure to rectify and correct their records and issue refunds with interest without putting a harsh burden and causing inconvenience to the assessee. 26. Inspite of the opportunity given to the Revenue to take steps, prescribe, adopt a just procedure, to correct the records, etc., nothing has been done and they have not taken any decision or steps. The affidavits filed subsequently after 31st August, 2012, are silent on this specific point. In these circumstances, we direct and issue the third mandamus and direction which will be applicable only to cases where returns have been processed by the CPC Bengaluru and refunds have been fully or partly adjusted against the past arrears while passing or communicating the order under Section 143(1) of the Act, without following th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the incorrect or wrong uploading of arrears and wrong and incorrect adjustment of refund on the part of the respondents. 30. There are two more issues connected with this question. The first issue relates to interest under Section 244A of the Act. Revenue‟s stand is that interest under Section 244A is not payable on selfassessment tax but is payable on advance tax and TDS. The respondents have further stated that interest is paid from 1st day of April of the assessment year till the date on which the refund is granted. We are not examining the said stand of the Revenue and leave these questions open. 31. In the affidavit filed on 29th January, 2013, the respondents have stated as under:- Where an assessee makes a mistake in the claim of TDS in the e-return and the return is processed and a demand is raised and subsequently the assessee rectifies the mistake in the claim and files an online rectification application, the same is processed and on any excess TDS refunded, the interest under section 244A is granted as per the I.T. Act after excluding the period of delay attributable to the assessee in terms of sub-section 2 of section 244A of the Income Tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10, will be treated as non est or invalid for want of communication/service within a reasonable time. This exercise, it is desirable should be undertaken expeditiously by the Assessing Officers. CBDT will issue instructions to the Assessing Officers. 34. The onus to show that the order was communicated and was served on the assessee is on the Revenue and not upon the assessee. We may note in case an order under Section 143(1) is not communicated or served on the assessee, the return as declared/filed is treated as deemed intimation and an order under Section 143(1). Therefore, if an assessee does not receive or is not communicated an order under Section 143(1), he will never know that some adjustments on account of rejection of TDS or tax paid has been made. While deciding applications under Section 154, or passing an order under Section 245, the Assessing Officers are required to know and follow the said principle. Of course, while deciding application under Section 154 or 245 or otherwise, if the Assessing Officer comes to the conclusion and records a finding that TDS or tax credit had been fraudulently claimed he will be entitled to take action as per law and deny the fraudule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary or vice-versa Use appropriate Schedules in the Return to report TDS on Salaries, and TDS on Incomes other than Salaries. TDS/TCS aggregated under one TAN Number even though TDS/TCS effected by several Deductors/Collectors. Indicate the TDS/TCS amounts effected by each Deductor/Collector separately in the Schedules provided in the return of Income. Advance Tax/Self-Assessment tax BSR code of the bank branch/challan serial number/date of payment/amount paid stated in return does not match with information in 26AS. Ensure that BSR code of the bank branch/challan serial number/date of payment/amount paid as stated in return matches with information available in 26AS. Advance Tax/Self Assessment Tax Payment particulars filled up wrongly in the Schedules meant for TDS/TCS for vice versa Use appropriate Schedule in the Return to report Advance Tax/Self Assessment Tax Payment Particulars. Mistake in PAN, Assessment Year etc. committed while preparing the challan Furnish the correct particulars to the bank branch where challan was paid and request for uploading correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the said aspect and if they feel that unnecessary burden or harassment will be caused to the assessees, suitable remedial steps should be taken. 40. However, we appreciate the stand taken by the respondents that assessee would be given credit even in cases of mismatch or other details not exceeding the specified amounts, in case the name of the assessee, PAN number and the assessment year tally with the details furnished in the return by the assessee and the data uploaded in form 26AS by the deductor. The said stand of the respondents is mentioned in their affidavit filed on 5th March, 2013, the relevant portion of which reads as under: 1. That it is submitted that according the last order of this Hon‟ble Court dated 05.02.2013 four core fields were identified i.e. Name of Assessee, PAN No, Assessment Years and the Amounts and it was further explained that Central Board of Direct Taxes on representation, has directed its officers to give credit of Rs.5000/- in case of mismatch of amount. However, it needs to be clarified that such relaxation is for the amount mismatch‟ but other three core fields must match. 41. There can be mismatch because of deductor an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequence or action against them. The deductee being taxpayer is harassed but the deductor does not suffer when the deductee does not get benefit of tax paid. 45. The response by the respondents to the said question in their affidavit dated 28th July, 2012 reads as under: (i) When returns are processed u/s 200A by TDS assessing Officers the deductors are informed about the errors in such returns. In case of failure to correct such errors by the deductors, no penal provision is provided under the Act. They can only be persuaded to correct such errors. (iii) While processing returns at CPC if any TDS credit claimed by the taxpayer in the return doesn‟t match with the details uploaded by the deductor list of such mismatches is sent to the tax deductors total of 20119 such communications had been issued by CPC up to April 2011. A deductor-wise consolidated list of such mismatches are sent from CPC to the CIT (TDS) having jurisdiction over the deductor for necessary follow-up with the deductors. 46. The response is unfortunate and unsatisfactory. The response purports to express complete helplessness on the part of the Revenue to take steps and seeks to absolve them from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tend helplessness. The problems highlighted here are normally faced by small or middle class taxpayers, including senior citizens as they do not have Chartered Accountants or Advocates on their pay rolls. The amount involved in several cases and inconvenience/harassment involved makes it unviable and futile exercise to first approach the deductor and then the Assessing Officer. Rectification and getting corrections made by the deductor and to get them uploaded is not an easy task. The second phase of filing a revised return or an application under Section 154 is equally daunting and expensive . Invariably the assessees will write letters or even visit the office of the deductors, but when there is no response or desired result, they get frustrated and suffer. This causes distrust and feeling that the assessee has not been treated justly, fairly and in an honest manner. In our earlier orders, we had emphasised this aspect and asked the Board to take appropriate steps to ameliorate and help the small taxpayers. 50. It is unfortunate that the Board did not take immediate steps after even noticing lacuna and waited till Finance Act, 2012, when Section 234E was enacted. Mere writing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, the income tax authorities can obtain prior approval from the Director or the Commissioner. The authorities can also examine whether general approval can be given. The said exercise is undertaken by the Assessing Officer while verifying or examining the return. Section 234E will also require similar verification by the Assessing Officer. In such cases, if required, order under Section 154 of the Act may also be passed. Circular No. 4 of 2012 will be equally applicable. This is the seventh mandamus which we have issued. 51. The problem mentioned above will generally arise in cases prior to financial year 2011-12 as the TDS certificate forms had undergone a change and is now required to be down loaded from the Income Tax Portal. 52. In some cases, it is possible that the assessee may not be able to file his Income Tax Return because the deductor has not furnished the TDS certificate. The assessee in question will be at liberty to correspond with his Assessing Officer or the TDS circle pointing out the said factual position and appropriate action, as directed in the aforesaid paragraphs, will be taken by the Assessing Officers concerned. 53. In the affidavit filed on 5th Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee relating to his personal or individual grievance will be entertained. In case, there is non compliance of the directions/ mandamus issued above, the individual assessee will be required to approach the writ court for appropriate order or direction. We hope and trust that the respondents will be responsive and comply with the directions mentioned above. 57. In nutshell, we have issued the following directions: (i) Directions given in paragraph 16 to 18 regarding maintenance of register for applications under Section 154, receipt of the said applications and their disposal. (ii) We have confirmed the interim directions given in paragraph 13 of the order dated 31st August, 2012. (see paragraphs 23 and 24 above). The said direction, we understand has been implemented. (iii) With regard to past adjustments where procedure under Section 245 has not been followed, we have issued directions in paragraphs 26 to 28. (iv) With regard to the interest under Section 244 A, we have issued directions set out in paragraphs 31 and 32 that interest should be paid when the assessee is not at fault. (v) With regard to uncommunicated intimations under Section 143 (1), directions are giv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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