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2025 DIGILAW 955 (KAR)

Shantavva madar v. Governement Of India

2025-11-04

M.NAGAPRASANNA

body2025
ORDER : M.NAGAPRASANNA, J. 1. Heard Sri. H.R. Kambiyavar, learned counsel appearing for the petitioners, Sri. M.Thirumalesh, learned counsel appearing for the respondents and have perused the material on record. 2. Petitioners-the Assessees are before this Court in the subject petitions calling in question the order dated 29.07.2024 passed by respondent No.3-Principal Commissioner of Income Tax and have sought a consequential direction by issuance of a writ in the nature of mandamus to consider the representation and allow the claim for refund. For the sake of convenience, facts obtaining in W.P.No.105667/2024 would be narrated. 3. The petitioner is an agriculturist. Government of Karnataka is said to have acquired lands for the purpose of mining dolomite and limestone. The Karnataka State Mineral Corporation was authorized to acquire the said lands from the petitioners-the agriculturists for the said project. Accordingly, huge extent of land was acquired between 2001-2002. As a consequence whereof, the petitioners lost their lands and were awarded compensation in terms of the Land Acquisition Act. Compensation was paid to these petitioners for the Assessment Years 2022-23 for acquisition of the said lands. Since there was delay in disbursement of compensation, interest was also paid to these petitioners. While filing returns, the amount that was received as compensation along with interest was disclosed in the income tax returns but the compensation that is received was exempt from tax was ignored by the petitioners-the agriculturists and included the amount of compensation and the interest while filing the returns for the Assessment Year 2022- 23. The petitioners realizing that they are entitled to exemption from tax as obtaining under Section 10(37) of the Income Tax Act, 1961, submitted a representation to respondent No.3. The respondent No.3 has rejected the representations on the ground that the return was filed with delay. Therefore, the petitioners are before this Court. 4. Learned counsel Sri.H.R.Kambiyavar appearing for the petitioners would vehemently contend that the petitioners are entitled to refund of the TDS amount as the same is a product of compensation that was granted to the land loser in terms of law. The time prescribed for filing the return of income under Section 139 of the Act should not be imposed upon these petitioners who at all times were entitled to the refund of a tax that was paid which was exempt from income tax. 5. The time prescribed for filing the return of income under Section 139 of the Act should not be imposed upon these petitioners who at all times were entitled to the refund of a tax that was paid which was exempt from income tax. 5. Per contra, learned counsel Sri.M.Thirumalesh representing the respondents would submit that the tax deduction at source should be claimed within the time stipulated and therefore, there is no warrant of interference in the case at hand. He would however leave a decision to the hands of this Court. The only issue now that falls for consideration is whether respondent No.3 should be directed to consider the representation by the assessee being permitted to file his return of income. To consider the said issue, it becomes apposite to refer to a judgment of this Court reported in SRI.A.BALAKRISHNAN vs. THE GENERAL MANAGER, HINDUSTAN MACHINE TOOLS LTD. AND ANOTHER 2007 SCC OnLine Kar 43, wherein the Coordinate Bench has held as follows: “16. The filing of the returns under the Income-tax Act 1961, is now governed by the provisions of section 139 of the said Act. A perusal of the provisions of section 139 does not indicate that the authorities are barred from processing a return filed under the Act just because it is not filed within the time stipulated either under section 139(1) or 139(4) of the Act. 17. While it may not be open to the Income-tax Department to bring to tax any income beyond the period permitted in terms of section 147 of the Act if within that time either a return is filed whether within the time stipulated under section 139(1) or 139(4) or otherwise, it can be looked into and there is no embargo as such. 18. In the present case, the petitioner having filed the return though beyond the time permitted, it is not as though the return is one which is per se prohibited to be processed by the Income-tax authorities under the statutory provisions. It is for this reason, with great respect, I am not inclined to follow the decision rendered by the Calcutta High Court in Minabati's case [1971] 79 ITR 278. 27. In the present case, it is obvious that respondent No.2 is not inclined to process the return as the petitioner may become entitled for refund if the return is processed and orders passed thereon. 27. In the present case, it is obvious that respondent No.2 is not inclined to process the return as the petitioner may become entitled for refund if the return is processed and orders passed thereon. If it were to be a case where the petitioner was to pay some tax which he had not paid earlier, perhaps the respondents would have been more than willing to even issue a notice under section 147 of the Act and call upon the assessee to file a return or a revised return as the case may be and proceed to take further action under the Act. The test is if a return pursuant to the notice under section 147 of the Act could be processed, there is no reason as to why return filed otherwise cannot be processed. The defence put up by the respondents for not processing the return filed by the assessee in Form No. 2D (copy annexure D) is not supported by any provision of the statute and can only amount to inaction on the part of the respondents. 28. The time stipulation prescribed for filing a return of income in terms of section 139 of the Act is operative on a person who is compelled to file a return in terms of section 139(1) of the Act. It is a person who has income over and above the exempted limit and whose income is taxable under the Act, who is required to file the return and while so, is bound to follow the period. The extended periods in terms of several sub-sections are also applicable to such persons. 29. Likewise, the notice in terms of section 147 and the time stipulation for issue of notice, etc., are also in respect of a person who has taxable income and whose taxable income has either not been offered to assessment at all or who has not declared full particulars of his income. For a person like the petitioner, if his taxable income is nil, in the sense that he has no obligation to file a return, the time stipulations also equally cannot apply. Therefore, to say that the Income-tax authorities are disabled from scrutinising the return filed by the petitioner, in view of the time stipulation in terms of section 153 for processing such return may not be correctly apply at all. Therefore, to say that the Income-tax authorities are disabled from scrutinising the return filed by the petitioner, in view of the time stipulation in terms of section 153 for processing such return may not be correctly apply at all. On the other hand, the employer having deducted certain amount from the petitioner as deduction at source on the payment of salary/retiral benefits and having remitted it to the account of the Income-tax Department and this deduction being in terms of the provisions of the Act and if the assessee is not otherwise enabled to claim refund of this amount under any other statutory provisions and if he is not actually liable to pay the kind of income- tax deducted at source nor learned counsel for the respondent having pointed out to any enabling statutory provision, the only other way the petitioner can seek for refund of the amount is by filing a return of his income and as a result of the assessment if it is found the tax liability of the petitioner is nil, the Assessing Officer may take note of the amount already deducted from out of the amount paid to the petitioner by his employer and remitted to the Income tax Department and direct refund of that amount to the assessee as part of the assessment order. For not performing this exercise, the respondents cannot bind the time stipulation indicated in section 139 of the Act as a defence. 30. For the very reason, reference to the provisions of section 192(1B) of the Act and on which reliance is placed by learned counsel for the respondents is also not tenable, as it is only such assessee who is seeking for an extension of the time stipulation or a condonation of delay in compliance, who may invoke the provisions section 119(2)(a) of the Act. If no time stipulation was in the first instance applicable to the return that is filed by the petitioner, the provisions of section 119(2)(b) are also not needed at all. 31. Viewed from another angle also, the respondents cannot decline to process the return as the exemption of payment as terminal benefit and exceeding a sum of Rs. 5.00 lakhs in terms of section 10(10C) of the Act is also one on a claim by the assessee as an amount received which qualifies for this exemption. 31. Viewed from another angle also, the respondents cannot decline to process the return as the exemption of payment as terminal benefit and exceeding a sum of Rs. 5.00 lakhs in terms of section 10(10C) of the Act is also one on a claim by the assessee as an amount received which qualifies for this exemption. This again can be done only in a return filed by the assessee and not elsewhere. It may be noticed that if the assessee is not entitled for this benefit of section 10(10C) then the income becomes taxable and it can be brought to tax by the Assessing Officer by invoking the provisions of section 147 of the Act. At least for determination of this position, it will be necessary for the Assessing Officer to process the return and finalise the same and if need be by invoking the provisions of section 147 also. Even without looking into the return, it will not be possible for the Assessing Officer to conclude that as there is no taxable income, no need to process the return, etc. Therefore, in either view of the matter, it will be necessary for the Assessing Officer to process the return and to pass orders in accordance with the provisions of the Act and not to justify the inaction. 32. It is the duty of the functionaries under the Income- tax Act to implement the provisions of the Act in accordance with law. A return filed is bound to be processed by the Income-tax authorities for which purpose they are meant unless there is an embargo placed. Learned counsel for respondent No. 2 has not been able to point out a specific statutory provision which places an embargo and on the other hand is only pointing out to other possibilities of invoking relaxation etc., which by itself does not place an embargo to process the return. 33. It is rather unfortunate that the Income-tax Department has taken such an adamant and stubborn stand only to deny a possible refund to the petitioner. An amount which would have been otherwise due to the petitioner if it is retained by the Income-tax Department without any justification, then inaction cannot be put up as a defence for retention of an amount. An amount which would have been otherwise due to the petitioner if it is retained by the Income-tax Department without any justification, then inaction cannot be put up as a defence for retention of an amount. I say this because the amount which can be realised even by way of Income-tax from any assessee can only be in accordance with the statutory provisions, as is mandated under article 265 of the Constitution of India. 34. In terms of the law laid down by this court in the case of CIT v. P. Surendra Prabhu [2005] 279 ITR 402 ; [2005] 59 KLT 609 on which reliance is placed by learned counsel for the petitioner it does point out that in respect of any payment received by a person seeking voluntary retirement the first five lakhs rupees is exempt under section 10(10C) of the Act and in respect of balance of the amount, the tax deducted is not justified as the balance amount is one which entitles for exemption within the permissible limit. 35. It is not necessary for this court to go into these details. If such is perhaps the factual position, retention of the amount can be obviously in violation of law and as one without proper authority. 36. Though a writ of mandamus could have been issued even for refunding of the amount, as this aspect of the matter has not been examined by the authorities, it is but proper to issue a mandamus directing the second respondent to ensure that the return filed by the assessee is duly processed in accordance with law and appropriate orders are passed on the same within three months from today. 37. The petitioner having been put to the ordeal of not processing his return, declining an amount which he would have earned by his toil, the respondents are bound to compensate and I am of the view it calls for commensurate cost to be paid to the petitioner. 37. The petitioner having been put to the ordeal of not processing his return, declining an amount which he would have earned by his toil, the respondents are bound to compensate and I am of the view it calls for commensurate cost to be paid to the petitioner. Cost is also increased to make the respondents realise the effect of it, as this court cannot appreciate an inaction on the part of a public authority being put forth as a defence for not performing the duty and that in turn resulting in harassment and hardship to a hapless citizen like the petitioner, who is compelled to approach this court for relief.” The said judgment was tossed before the Division Bench and the Division Bench rejects the appeal against which a Special Leave Petition is preferred and Special Leave Petition also comes to be rejected. In the light of the law laid down by the Coordinate Bench, these petitions deserve to succeed albeit in part. 6. For the aforesaid reasons, the following: i. All these petitions are allowed ii. The impugned order vide Annexure–D stands quashed. iii. The order passed by the Principal Commissioner of Income Tax-Respondent No.3, is hereby quashed. iv. The assessees are permitted to file their return of income, which shall be assessed in accordance with law, without reference to limitation, and necessary orders shall be passed thereon in accordance with law. v. The petitioners shall file their return of income within eight (8) weeks from the date of receipt of a copy of this order. vi. In the event, the return of income is filed within the said period of eight (8) weeks, the same shall be considered on its merits. vii. All contentions urged before this Court are left open, and the petitioners are at liberty to urge them before the appropriate forum.