While clarifying that the law does not sanction recovery of tax in the absence of any specific charging statutory provision, the Calcutta High Court ruled that there is no scope for the Income Tax Department to withhold an amount of refund which is duly payable to the taxpayer.
Since in the present case, the respondent Department had released a partial refund after making the petitioner run from pillar to post, and is still holding a substantial sum despite assurances given by them to the petitioner for complete resolution, the Court directed for consequential relief in the form of interest in accordance with law. The Court also directed the respondent to complete the process of refund within a period of ten weeks.
A Single Judge Bench of Justice Raja Basu Chowdhury observed that the petitioner is entitled to the refund as determined by the Income Tax Department, which it has been holding onto without any justification, and that too, when no independent proceeding has been initiated against the petitioner in respect of the withholding of Rs. 22.73 lacs.
The Bench also observed that Section 245 of the Income Tax Act authorises the Income Tax Department to set off a refund against remaining tax payable, but unfortunately, the respondent Department has not been able to demonstrate that any amount is payable or is due from the petitioner in the present case. Accordingly, the Bench allowed the petition.
Briefly, the petitioner, a practising Chartered Accountant, had filed his Form ITR-3 declaring net income of Rs. 37.09 lacs, on which the payable tax was Rs. 9.53 lacs, as TDS to the tune of Rs. 39.51 lacs was deducted, making the petitioner eligible to a refund of Rs. 29.98 lacs. The petitioner, however, received an intimation, reflecting a refund of Rs. 55.54 lacs, out of which Rs. 22.73 lacs were shown to be withheld under Section 245 of the Income Tax Act. The petitioner wrote a letter to the Income Tax Department regarding the shortfall in refund of Rs. 37.28 lacs, and contended that despite the refund of Rs. 32.80 lacs being sanctioned, he received only Rs. 18.26 lacs as refund.
Despite running from pillar to post and despite making a representation on e-Nivaran, since the petitioner did not succeed in getting a refund, the petitioner was constrained to file a writ petition, which was, however, subsequently withdrawn on the assurance of the respondent Department that the issue would be resolved. Since nothing fructified, the petitioner wrote a letter not only calling for an explanation from the respondent but also seeking the details of the figures that could have authorised the respondent to withhold the amount by invoking the power under Section 245. Since no steps were taken thereafter, the petitioner approached the High Court.
Case Distinguished:
Sarguja Transport Service vs. State Transport Appellate Tribunal, M.P., Gwalior [(1987) 1 SCC 5]
Appearances:
Advocates Vinay Shraff, Dev Kr. Agarwal and Swarnwarshi Poddar, for the Petitioner/ Taxpayer
Advocates Soumen Bhattacharjee, Ankan Das, and Shradhya Ghosh, for the Respondent/ Revenue
