7 mandamus issued by Delhi High Court - Relating to CPC Banglore Working

Seven mandamuses of Delhi HC to deal with assessee's grievances on computerized processing of ret...

IT : First Mandamus regarding Misplacement of rectification applications and assessee called upon to file duplicate applications [Paras 15 to 18 of the Judgment]
• As per Citizen Charter on the website of Income Tax Department, refund along with interest in case of electronically filed returns should be made within six months. In case of manually filed
returns, refund should be made within nine months.
• The time commences from the end of month in which the return/application is received.
• Similarly, the Citizen Charter states that a decision on the rectification application under section 154 will be made within a period of two months.
• The Board has, however, issued instructions that rectification application under section 154 should be disposed of within 4/6 months.
• There is a general grievance that the Assessing Officers do not adhere to the said time limits and the assessees are invariably called upon to file duplicate applications or new applications in case they want disposal.
• It is stated that there are no dak or receipt counters or register for receipt of applications under section 154. Thus there is no record/register with the Assessing Officer with details and particulars of application made under section 154, the date on which it was made, date of disposal and its fate.
• Noticing this fact in the order dated 5th February, 2013, it was directed that the respondents must examine the necessity for proper dak/receipt counters for receipt of applications under section 154 by hand or by post.

• It was observed that it will be desirable that each application received should be entered in a diary/register and given a serial number with acknowledgement to the applicant indicating the diary number.

• It was also suggested that details of applications under section 154 should be uploaded on the website as this would entail transparency.
• The website should indicate the date on which the application was received and date of disposal of the application by the Assessing Officer concerned.
• In the affidavit filed on 5th March, 2013, the respondents have stated that they have "recently" prescribed a register for receipt of rectification applications. The said register has various columns namely, date of disposal, date of service of rectification application, demand/refund etc. This is the right step but it must be ensured by the Board that the registers are made available to all Assessing Officers or at the dak counters. The said registers will be made available to the dak counters and the Assessing officers within two months, if not already provided. The Board will also issue instructions that all Assessing Officers and dak counters shall henceforth in the said register, enter and allocate a serial number on the rectification applications and the date of receipt and the serial number will be mentioned on the acknowledgement, which is issued to the assessee. Uploading of the details of the said registers as stated in the affidavit should be made online preferably within a period of six months. This, we reiterate would be in accordance with the mandate of the Citizen Charter of the Department which states that the respondents believe in equity and transparency.
• In the counter affidavit filed on 5th March, 2013, it is stated that Aayakar Seva Kendras provide for single window service to tax payers for receipt of Dak/grievance and paper returns and applications under section 154 are also within the scope of Aayakar Seva Kendras. Information in this regard will be disseminated and informed to the assessees, who can take advantage and benefit of the same. It is stated that there are already 75 Aayakar Seva Kendras and 57 more such Kendras are being set up in the current year. Similarly, it is stated that Sevottam Aayakar Seva Kendras are being set up in 112 income tax offices.

• Each application under section 154 has to be disposed of and decided by a speaking order. This is the mandate of the Act. The order has to be communicated to the assessee and there is a relevant column to be filled in the register, which is now required to be maintained.

• The Board should issue specific directions to ensure that there is full compliance of the said requirements and directions by the Assessing Officers, Dak counters and Aayakar Sewa Kendras. This is the first mandamus or direction we have issued in the present judgment.
Second Mandamus regarding adjustment by CPU, Bengaluru of refund against existing demand without compliance with section 245
• section 245 mandates and envisages prior intimation to the assessee so that he/she can respond before any adjustment of refund is made towards the demand relating to any other assessment year.
• Thus, an opportunity of response/reply should be given and after considering the stand and plea of the assessee, justified and valid order or direction for adjustment of refund can be made.
• The section postulates two stage action; prior intimation and then subsequent action when warranted and necessary for adjustments of the refund towards arrears.
• Department's affidavit accepted the fact that that when a return of income processed under 143(1) at Central Processing Unit at Bengaluru, the computer itself adjusts the refund due against the existing demand, i.e., there is adjustment but without following the two stage procedure prescribed in section 245 of the Act.

• The interim order dated 31-8-2012 required Department to in future follow the procedure prescribed under section 245 before making any adjustment of refund payable by the CPU at Bengaluru. The assessees must be given an opportunity to file response or reply and the reply will be considered and examined by the Assessing Officer before any direction for adjustment is made. The process of issue of prior intimation and service thereof on the assessee will be as per the law. The assessees will be entitled to file their response before the Assessing Officer mentioned in the prior intimation. The Assessing Officer will thereafter examine the reply and communicate his findings to the CPC, Bengaluru, who will then process the refund and adjust the demand, if any payable. CBDT can fix a time limit for communication of findings by the Assessing Officer. The final adjustment will also be communicated to the assessees.

• The Second mandamus confirmed the above interim order dated 31-8-2012
Third Mandamus regarding existing cases where section 235 not followed by CPU before adjusting refunds

Inspite of the opportunity given to the Revenue to take steps, prescribe, adopt a just procedure, to correct the records, etc., nothing has been done and they have not taken any decision or steps. The affidavits filed subsequently after 31st August, 2012, are silent on this specific point. In these circumstances, we direct and issue the third mandamus and direction which will be applicable only to cases where returns have been processed by the CPC Bengaluru and refunds have been fully or partly adjusted against the past arrears while passing or communicating the order under section 143(1) of the Act, without following the procedure under section 245 of the Act. In such cases, it is directed that:-

A. All such cases will be transferred to the Assessing Officers;
B. The Assessing Officers will issue notice to the assessee which will be served as per the procedure prescribed under the Act;
C. the assessees will be entitled to file response/reply to the notice seeking adjustment of refund;
D. After considering the reply, if any, the Assessing Officers will pass an order under section 245 of the Act permitting or allowing the refund.
E. The Board will fix time limit and schedule for completing the said process.
The aforesaid directions are only applicable to cases where two stage procedure under section 245 of the Act has not been followed and not to cases where procedure under section 245 of the Act was followed.
Fourth mandamus-no denial of interest where assessee not at fault
• An assessee can be certainly denied interest if delay is attributable to him in terms of sub-section (2) to section 244A.
• However, when the delay is not attributable to the assessee but due to the fault of the Revenue, then interest should be paid under the said section.

• False or wrong uploading of past arrears and failure to follow the mandate before adjustment is made under section 245 of the Act, cannot be attributed and treated as a fault of the assessee.

• These are lapses on the part of the Assessing Officer i.e. the Revenue. Interest cannot be denied to the assessees when the twin conditions are satisfied and in favour of the assessee.
• However, even in such cases Assessing officer may deny interest for reasons to be recorded in writing if the assessee was in fault and responsible for the delay.
Fifth mandamus-no enforcement of demand where there is no communication of the order/intimation to assessee under section 143(1)
• In case an order under section 143(1) is not communicated or served on the assessee, the return as declared/filed is treated as deemed intimation and an order under section 143(1).
• Therefore, if an assessee does not receive or is not communicated an order under section 143(1), he will never know that some adjustments on account of rejection of TDS or tax paid has been made.
• While deciding applications under section 154, or passing an order under section 245, the Assessing Officers are required to know and follow the said principle.
• Of course, while deciding application under section 154 or 245 or otherwise, if the Assessing Officer comes to the conclusion and records a finding that TDS or tax credit had been fraudulently claimed he will be entitled to take action as per law and deny the fraudulent claim of TDS etc.

• The Assessing Officer, therefore, has to make a distinction between fraudulent claims and claims which have been rejected on ground of technicalities but there is no communication to the assessee of the order/intimation under section 143(1). In the later cases, the Assessing Officer cannot turn around and enforce the demand created by uncommunicated order/intimation under section 143(1).

Sixth mandamus-Unmatched challans of TDS deductor for which credit not reflected in Form 26AS
• Another problem highlighted relates to the use of alphabets "U", "M" and "P" in form 26 AS. The said alphabets stand for "unmatched challan", "matched challan" and "provisional booking".
• It is stated that "provisional booking" is applicable for DDOs, i.e., Government deductors and shall be shortly discontinued.
• "Unmatched challans" relate to challans where the report by the deductor in the TDS statement are not found available in the OLTAS data base stands for Online Tax Accounting System).
• The respondents will fix a time limit within which they shall verify and correct all unmatched challans.
• This will necessarily require communication with the deductor and steps to rectify. The time limit fixed should take into account the due date of filing of the return and processing of the return by the Assessing Officer.
• An assessee as a deductee should not suffer because of fault made by deductor or inability of the Revenue to ask the deductor to rectify and correct.
• Once payment has been received by the Revenue, credit should be given to the assessee.
• Board will issue such suitable directions in this regard and this is the sixth mandamus which we are issuing.
Seventh Mandamus-Assessee can approach AO with TDS certificate where mismatch is there and AO to issue necessary notice to deductor to resolve matters
• When an assessee approaches the Assessing Officer with requisite details and particulars, the said Assessing Officer will verify whether or not the deductor has made payment of the TDS and if the payment has been made, credit of the same should be given to the assessee.
• These details or the TDS certificate should be starting point for the Assessing Officer to ascertain and verify the true and correct position.
• The Assessing Officer will be at liberty to get in touch with the TDS circle in case he requires clarification or confirmation.
• He is also at liberty to get in touch with deductor by issuing a notice and compelling him to upload the correct particulars/details.
• The said exercise must be and should be undertaken by the Revenue, i.e. the Assessing Officer as an assessee who suffers in such cases is not due to his fault and can justifiably feel deceived and defrauded.
• The stand of the Revenue cannot be accepted that they can only write a letter to the deductor to persuade him to correct the uploaded entries or to upload the details.
• Power and authority of the Assessing Officer, cannot match and are not a substitute to the beseeching or imploring of an assessee to the deductor.
• The directions given above, are in accord with the provisions of the Act, namely, section 133 and TDS provisions of the Act.
• If required and necessary, the income tax authorities can obtain prior approval from the Director or the Commissioner.

• The authorities can also examine whether general approval can be given.

• The said exercise is undertaken by the Assessing Officer while verifying or examining the return.

• section 234E will also require similar verification by the Assessing Officer. In such cases, if required, order under section 154 of the Act may also be passed. Circular No. 4 of 2012 will be equally applicable.

• This is the seventh mandamus which we have issued.