Under the provisions of the Income Tax Act, every taxpayer, who is required to file his returns has to file the same within the prescribed due date. The said return is required to be processed in the manner prescribed under section 143(1) of Act. The total income or loss requires to be computed after making certain adjustments one of which is taking into account the arithmetical errors in the return. In the absence of any arithmetical errors or any mistake in the return, it is expected that the Department would need to grant refund under section 143(1) of the Act, as claimed in the return.
A lot of taxpayers in the recent times have been receiving such intimations under section 143(1), like above, whereby either the refund granted is lesser than the one filed for or are asked to pay up.
In one of the recent writ petitions that came up to the Gujarat High Court, the taxpayer had filed his return of income under the relevant provisions of the Income Tax Act ('the Act') electronically. The taxpayer had claimed refund to the tune of Rs 2,11,415 after adjustment of the TDS amount of Rs 3,78,608 against the tax payable of Rs 1,67,193.
Further, when the return was processed by the Centralised Processing Centre (CPC) under section 143(1) of the Act, the adjustment of TDS (Tax Deducted at Source) was not granted and the tax payable was determined at Rs 1,93,429, which included both the tax amount and interest of Rs 26,235.
The Department also contended that the taxpayer had failed to furnish all the relevant information as was required in the e-return and, therefore, the adjustment of TDS was not allowed. Further, in response to the taxpayers rectification application, the CPC had passed an order that certain required details were not furnished by the taxpayer and the same had not been corrected even at the time of rectification.
In response to this, the taxpayer submitted that all the relevant details for claiming the TDS amount were submitted to the Department and all forms including Form 16A were filed with the Department along with the rectification applications. The taxpayer also claimed that with the online system of TDS available, all details of the TDS also are available online. The taxpayer's representative also claimed that lack of co-ordination between the Assessing officer and the CPC has resulted into non-grant of refund to the taxpayer. He also contended that despite extensive computerisation in the Department, no fruitful benefits were available to the taxpayer.
On examination of the documents available on record, the Honourable High Court held that, the Form 26AS, which is available online, clearly reflects different dates on which payment had been credited and the total TDS by various companies amounted to Rs 4,00,647. The Court also held that when these details are available online, in Form 26AS and when the Department's representative had submitted these details to the Court, there is no reason why the amount should be excluded in the final computation of the e-return filed by the taxpayer.
The High Court further observed that when all the details of the TDS are available with the Department, all it has to do is to compute the income and give credit for the TDS. The Court was of the firm opinion that the objective of computerisation is facilitate easy access to the taxpayers and make the system more transparent and viable. In the event of any shortcomings of the software or any genuine mistake, the Department is expected to respond to such situations by rectifying the mistake and give the corresponding relief to the assessee.
The High Court also pointed out that while the taxpayer tried to bring the same to the notice of the Department by filing a rectification application, the Department did not rectify the mistake. In addition to those, the taxpayer was forced to approach the High Court, due to the lack of co-ordination on part of the Department.
Accordingly, the High Court, held the case in favour of the taxpayer and instructed the Department to issue the refund to the taxpayer.
While deciding the case, the High Court pointed out that since the e-filing process promises a taxpayer friendly regime, taxpayers cannot be expected to run from pillar-to-post. The CPC is meant for return processing, accounts, refund, storage of data, and so on. If it adds to the difficulties of taxpayers, due to lack of co-ordination between the back office and front office, then the e-filing and computerisation process needs a serious re-look, the High Court noted.