Revenue Department is Obligated for Time-Bound Disposal of TDS Refund Application and Interest Payment
Summary in Key Points:
- Issue: Whether the revenue department is obligated to process and dispose of a TDS refund application within a specific time frame and whether interest is payable on delayed refunds.
- Facts: The assessee filed a writ petition seeking a refund of TDS, submitting that the TDS certificate was already on record.
- Decision: The High Court held that the revenue department must dispose of the assessee’s representation within three months. If the refund is granted, it should be paid within two months to avoid interest liability. If the refund is delayed beyond two months, the revenue department would be liable to pay interest as per the law.
Decision:
The High Court ruled in favor of the assessee, directing the revenue department to take the following actions:
- Time-Bound Disposal: The revenue department must dispose of the assessee’s representation seeking a TDS refund within three months.
- Verification and Refund: If the department verifies the TDS certificate and determines that the refund is due, it should be granted to the assessee within one month of such determination.
- Interest on Delayed Refund: To avoid paying interest on the refund, the department must make the payment within two months of the determination. If there is a delay beyond two months, the department will be liable to pay interest as per the law.
Important Note: This case highlights the importance of timely processing and disposal of refund applications by the revenue department. It also clarifies the circumstances under which interest is payable on delayed refunds, ensuring that taxpayers receive fair compensation for any undue delays in receiving their rightful refunds.
HIGH COURT OF BOMBAY
Bizznet Online Systems Pvt Ltd.
v.
Dy. Commissioner of Income-tax
M.S. Sonak and Jitendra Jain, JJ.
WRIT PETITION NO. 2715 OF 2019
JANUARY 6, 2025
Bharat Gandhi and Swapnil Newaskar for the Petitioner. Akhileshwar Sharma for the Respondent.
JUDGMENT
Ms Sonak, J. – Heard learned Counsel for the parties.
2. Rule. The Rule is made returnable immediately at the request of and with the consent of the learned Counsel for the parties.
3. By amending the Writ Petition, the petitioner prayed for a refund of Rs. 6,16,650/—along with interest applicable under Section 244A of the Income Tax, 1961. However, at a later stage, the learned Counsel for the Petitioner, based on instructions from the Petitioner, confined the relief to a refund of Rs. 2,89,775/—, as reflected in the TDS certificate on page 16 of the paper book.
4. Accordingly, by our order dated 4 October 2024, we recorded the statement of the learned Counsel for the Petitioner and adjourned the matter at the request of Mr Sharma, the learned Counsel for the Respondents, to obtain instructions on whether the Petitioner’s claim could be allowed after examining the department documents.
5. The Respondents have now filed an affidavit in this Court. However, the affidavit is not quite clear on the status of the TDS certificate on page 16 of the paper book. The affidavit does not speak about verification of the records, including finding out whether this amount of Rs. 2,89,775/- was indeed deducted by Percept Picture Company Pvt Ltd.
6. The record shows that the Petitioner, through his Advocate, had addressed a representation dated 19 June 2019 seeking a refund of Rs. 2,89,775/- along with interest. Because this representation was not decided, the Petitioner has instituted this Petition.
7. Mr Sharma pointed out that the assessment order in this case was made in 2008, and the representation was filed only on 19 June 2019.
8. Mr Bharat Gandhi, the learned Counsel for the Petitioner, on instructions submitted that the Petitioner will not claim any interest on the refund. He, however, submits that since the TDS certificate has been placed on record, the Respondents should at least verify the position regarding deductions and grant a refund to the Petitioner.
9. In the peculiar facts of this case, we think that the Respondent must dispose of the Petitioner’s representation dated 19 June 2019 within three months from today. For this, the Respondents must verify the status of deductions, if any, carried out by Percept Pictures Company Pvt Ltd. If the Petitioner has any further material regarding the deductions, the Petitioner is granted liberty to place the same before the concerned Respondent within two weeks from today. The concerned Respondent must hear the Petitioner, consider the material placed by the Petitioner on record, verify the status of deductions, if any, made by Percept Pictures Company Pvt Ltd and the other material available with the department and dispose of the Petitioner’s representation, dated 19 June 2019.
10. Suppose the concerned Respondent is satisfied that deductions were indeed made as reflected in the TDS certificate on page 16 of the paper book. In that case, this amount should be refunded to the Petitioner within a month from such determination. If the refund is made within two months from such determination, there will be no question of paying interest to the Petitioner, given the Petitioner’s statement recorded by us. However, if there is a delay beyond two months, the Respondents will be liable to pay interest as per the law.
11. At this stage, we clarify that we have not examined the rival contentions because such an examination would involve determining factual issues. Accordingly, all parties’ contentions are left open.
12. This Petition is disposed of in the above terms without any costs order. All concerned to act on an authenticated copy of this order.