[Income Tax] Non-Functionality Of TRACES Portal Can't Be Ground To Deny Benefit Of Statutory Rights To Assessee: MP High Court
The Madhya Pradesh High Court has made it clear that non-functionality of Income Tax Department's TRACES Portal cannot be grounds for denying the benefit arising to an assessee under statutory provisions of the Income Tax Act, 1961. A division bench of Justices Vivek Rusia and Anuradha Shukla thus held that an assessee' TDS refund cannot be denied merely on the ground that...
The Madhya Pradesh High Court has made it clear that non-functionality of Income Tax Department's TRACES Portal cannot be grounds for denying the benefit arising to an assessee under statutory provisions of the Income Tax Act, 1961.
A division bench of Justices Vivek Rusia and Anuradha Shukla thus held that an assessee' TDS refund cannot be denied merely on the ground that functionality of 'adjustment of refund' against outstanding demand made by the Department is not presently available at TRACES.
It observed that the Portal (TDS Reconciliation Analysis and Correction Enabling System) has been created to “facilitate” the enforcement of rights and discharge of duties of stakeholders, not to create hurdles.
“The rights which have been given to the assessee under the Income Tax Act cannot be withheld due to the non functionality of the TRACES. If the Portal does not function in accordance with the Act and Rules then it requires to be suitably modified to achieve the aims and objects of the Act and Rules, therefore, there is a provision in the Income Tax Act about the refund of the amount with interest as well as set off of refund against the tax payable.”
Petitioner was served a demand for default of non-deduction of TDS from the payments made on various remittances for purchase, installation and supervision charges. Though CIT upheld this demand, ITAT quashed the assessment orders. Meanwhile, Petitioner had deposited the outstanding TDS amount, thus now claiming a refund with interest.
The Income Tax Officer rejected petitioner's request for refund on the ground that the same can be raised only if the assessee files its application on the TRACES Portal. In the same breath, the ITO pointed to the non-functionality of demand adjustment feature on TRACES.
At the outset, the High Court referred to Section 240 of the Income Tax Act which mandates the Assessing Officer to refund the amount to the assessee without his having to make any claim, in the event of refund becoming due as a result of an order passed in appeal.
So far as interest is concerned, Court referred to Section 243 which provides that payment of interest on delayed refunds shall start accruing after expiry of three months from the date of order granting refund.
“...in view of the above, after the order passed by ITAT, the respondents are bound to refund the amount to the petitioner with interest without there being any formalities to be completed by the petitioner,” Court held.
It went on to cite Section 245 which provides for a set off of refunds due to any person, against tax remaining payable by such person.
Accordingly, the High Court directed the Department to either refund the amount with interest or set off of the same against tax payable by Petitioner, within 30 days.
Appearance: Advocate Sapan Usrethe for petitioner; Advocate Siddharth Sharma for respondent
Case title: Birla Corporation Limited v. Principal Commissioner of Income Tax (It And Tp) And Others
Case no.: WRIT PETITION No. 1263 of 2024
Citation: 2024 LiveLaw (MP) 245