Gujarat High Court
Shri Khetivadi Utppan Bajar Samiti ... vs Chief Commissioner Of Income Tax on 17 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 1960 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
==========================================================
Approved for Reporting Yes No
==========================================================
SHRI KHETIVADI UTPPAN BAJAR SAMITI VERAVAL COMMITTEE
(EARLIER AS AGRICULTURE PRODUCE MARKET COMMITTEE)
Versus
CHIEF COMMISSIONER OF INCOME TAX
==========================================================
Appearance:
DARSHAN R PATEL(8486) for the Petitioner(s) No. 1
KARAN G SANGHANI(7945) for the Respondent(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 17/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE D.N.RAY)
1. Heard learned advocate Mr. Darshan R. Patel appearing on
behalf of the Petitioner, and learned Senior Standing Counsel Mr.
Karan G. Sanghani for the Respondent.
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
2. Rule returnable forthwith. Learned Senior Standing Counsel
Mr. Karan G. Sanghani waives service of notice of rule for the
Respondent. Having regard to the controversy arising in the petition,
which is in narrow compass, with the consent of the learned
advocates for the respective parties, the matter is taken up for
hearing.
3. The brief facts of the case are as follows:
3.1 It is the case of the Petitioner that, for the Assessment Year
(A.Y.) 2017-18,land belonging to the Petitioner was acquired on
11.08.2016 by the National Highways Authority of India (NHAI).
Pursuant thereto,the Petitioner received compensation amounting to
₹10,11,60,371/-.From the said compensation,an amount of10,11,60,371/-.From the said compensation,an amount of
₹10,11,60,371/-.From the said compensation,an amount of1,01,16,037/- was deducted by the deductor towards Tax Deducted
at Source (TDS).The Petitioner contends that the said income was
exempted u/s. 10(26AAB) of the Income Tax Act, 1961, and
therefore,the deduction of TDS was unwarranted. Consequently, the
Petitioner became entitled to a refund of the said amount.It is further
contended that although the deduction of TDS was effected on
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
13.02.2017, the same was communicated to the Petitioner only in
December 2018.
3.2 The due date for filing the return of income for the relevant
Assessment Year was 31.07.2017, which stood extended to
05.08.2017. The Petitioner submits that, having been apprised of the
TDS deduction only in December 2018, which was subsequent to
the due date for filing the return of income, it was not feasible to file
the return within the stipulated period. Accordingly, the Petitioner
preferred an application under Section 119(2)(b) of the Income Tax
Act, 1961 (for short "the Act") on 23.03.2020, seeking condonation
of delay in filing the return of income for Assessment Year 2017-18,
with a view to claiming refund of the TDS amount.
3.3 On 03.11.2020, the Respondent addressed a communication to
the Petitioner, inter alia, advising the Petitioner to submit an
application to the Central Board of Direct Taxes (CBDT), and
treated the Petitioner's application as filed for the purposes of further
consideration. In compliance thereof, the Petitioner addressed a
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
letter to the CBDT on 09.11.2020, seeking condonation of delay in
filing return of income for A.Y. 2017-18.
3.4 Thereafter, vide communication dated 22.03.2021, the
Respondent sought certain details from the Petitioner. The
Petitioner, in response, furnished the requisite information on
23.03.2021. Subsequently, vide letter dated 28.11.2023, the CBDT
again sought further particulars from the Petitioner, to which a
detailed response was furnished on 13.12.2023.
3.5 On 21.12.2023, the Respondent sought additional
information, and the Petitioner submitted its reply on 26.12.2023.
Further, vide communication dated 06.11.2024, the Respondent once
again sought various details from the Petitioner. The Petitioner, in
compliance thereof, submitted the same on 13.11.2024.
3.6. Ultimately, vide order dated 17.12.2024, the Respondent
rejected the Petitioner's application for condonation of delay in
filing the return of income for Assessment Year 2017-18, inter alia,
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
observing that no "genuine hardship" was established by the
Petitioner, and hence, the Petitioner's application was rejected.
4. Aggrieved by the said order dated 17.12.2024, the Petitioner
has invoked the writ jurisdiction of this Hon'ble Court under Article
226 of the Constitution of India, seeking appropriate reliefs as under:
A. "Your Lordships may be pleased to issue a writ of certiorari or
a writ in the nature of certiorari or any other appropriate writ,
order or direction for quashing and setting aside the impugned
order dated 17.12.2024 passed by the Respondent at Annexure
'M'.
B. Your Lordships may be pleased to issue a writ of certiorari or a
writ in the nature of certiorari or any other appropriate writ,
order or direction thereby directing the Respondent to grant the
refund due to the Petitioner along with statutory interest.
C. The Hon'ble Court may issue directions to Respondent to direct
the concerned Assessing Officer to allow Petitioner to file the
return the of income by exercising the power u/s 119 (2) (b) and
grant the refund subject to verification of the claims made by
the Petitioner.
D. Award the cost of this petition.
E. Grant such other and further reliefs as this Hon'ble
Court deems fit."
5. Mr. Darshan R.Patel, learned advocate appearing for the
Petitioner has submitted that the Petitioner's application to condone
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
the delay in filing the Income Tax Return (ITR) for the Assessment
Year 2017-18 has the inevitable effect of the Department being
unjustly enriched at the cost of the Petitioner, inasmuch as, on
merits, the refund to the Petitioner is due and payable and yet the
same cannot be processed because the return for the Assessment
Year 2017-18 is delayed and the delay has been refused to be
condoned only on the ground that "no documentary evidence has
been brought on record by the Assessee to establish that there was
indeed a genuine hardship faced by the Assessee in filing of the
ROI".
6. Mr. Karan G.Sanghani, learned Senior Standing Counsel for
the Department submitted that, since the Assesseee has been
established in the year 1981, it cannot be the case of the Assessee
that they were unaware of the procedure. Further, no supporting
documents have been placed by the Assessee to support the case of
the genuine hardship and the Assessee has been approaching the
filing of the return of income in a most casual and cavalier manner
and hence, there is no justification to entertain the present petition.
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
Mr. Sanghani further referred to and relied upon the Circular No.9 of
2015 dated 09.06.2015 in respect of condonation of delay in filing
the refund claim, inasmuch as, according to Mr.Sanghani, the
Petitioner has failed to adhere to the conditions mentioned in the said
Circular.
7. DISCUSSION & FINDINGS :-
7.1 From the perusal of the impugned order dated 17.12.2024, it
is seen that the CCIT, Rajkot had noted the report submitted by the
Assessing Officer through E-mail dated 01.01.2024 as under:-
"3.2 The reason cited by the assessee is very general in nature
and not found sustainable in the eyes of law. The Assessing Officer
has specifically reported that there is no such circumstances have
been mentioned by the assessee which had prevented it to file ITR
for the Assessment Year 2017-18 and caused genuine hardship.
The Range head and the PCIT have endorsed the view of the
Assessing Officer and submitted that the application of the
assessee may be rejected/dismissed."
7.2 There is no discussion whatsoever on the merits of the
Petitioner's case regarding the entitlement for the refund, which has
arisen because the Department in the first place had wrongly
deducted the TDS on the compensation which was otherwise eligible
for exemption under Section 54D of the Act. In the decision of this
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
Court dated 08.04.2025 passed in Special Civil Application No.
10003 of 2024 in the case of Kalpesh Jayantilal Lakdawala Vs.
Chief Commissioner of Income Tax-1, Surat and Anr., this Court
has examined the entire gamut of the discretion of the CCIT under
Section 119(2)(b) of the Act in an identical situation, wherein, this
Court had held as under :-
"9. Having heard the learned advocates appearing for the
respective parties and taking into consideration the facts of the
case, it is not in dispute that the Petitioner was awarded the
compensation for compulsory acquisition of the land in question by
the Surat Municipal Corporation as per the award passed by the
Civil Judge, Senior Division under the provisions of the Land
Acquisition Act, 1894. It is also apparent from the material place
on record that the Petitioner received the compensation in the
month of September 2021 after the order of determining the share
of the Petitioner passed by the Court on 04.09.2021. The Petitioner
therefore could not show the amount of compensation in the
original return filed on 04.01.2021. The Petitioner therefore was
prevented by sufficient cause to claim the refund of the amount of
tax deducted at source by the Surat Municipal Corporation at the
time of deposit of the compensation with the Court. In such
circumstances, the Respondents-authorities ought to have allowed
the application of the Petitioner to condone the delay in filing the
revised return to claim the refund of the TDS of Rs.37,40,330/-
deposited by the Surat Municipal Corporation. The reasoning
given by the Respondents-authorities while rejecting the
application do not commensurate with the facts of the case
inasmuch as the Respondents have failed to consider that the
compensation received by the Petitioner was exempted from tax
and therefore, the Petitioner is entitled to get the refund of the TDS
which was deposited by the acquiring body with the Government
and for that purpose, the Petitioner is required to file the revised
return which can be possible only if the delay in filing such revised
return is condoned by exercising the powers vested in Section 119
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
of the Act. The objection of Section 119 of the Act is to see that the
Assessee are even not put to any unnecessary hardships to claim
any refund which otherwise is eligible to get.
Section 119(2)(b) reads as under :-
(b) the Board may, if it considers it desirable or expedient so
to do for avoiding genuine hardship in any case or class of
cases, by general or special order, authorise 11[any
income-tax authority, not being a Commissioner (Appeals)]
to admit an application or claim for any exemption,
deduction, refund or any other relief under this Act after the
expiry of the period specified by or under this Act for
making such application or claim and deal with the same on
merits in accordance with law;
9.1 On perusal of the above provisions, the Respondents-
authorities were required to consider the facts of the case more
particularly when the Petitioner admittedly has not received the
compensation till the due date of filing of return on 31.05.2021 and
when the Petitioner received such compensation, the delay in
filing the revised return is required to be condoned so that the
Petitioner gets the refund of the TDS deposited by the acquiring
body in the Government, as such compensation received by the
Petitioner is not taxable under the provisions of the Act.
9.2 This Court in case of Ramjibhai Lavabhai Undhad Vs.
Chief Commissioner of Income Tax reported in [2023] 157
taxmann.com.706 (Gujarat) in similar facts after considering the
cases where the authorities have granted the application to
condone the delay while exercising the powers under Section
119(2)(b) of the Act has held as under :-
"9.Therefore, the impugned orders rejecting the
applications to condone the delay are required to be
quashed and set aside in each petition with a direction to
condone delay under section 119(2)(b) of the Act,1961 as
per order dated 25.10.2019 passed by the Respondent in
case of similarly situated persons, however, with a rider to
direct the Assessing Officer to issue refund with interest on
the amount of refund claim from the date of deposit by the
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
Executive Engineer, Irrigation department till the date of
granting of refund.
10. For passing such direction of issuance of the refund with
interest under section 244A of the Act, similar reasons as
given by this Court in case of Special Civil Application
No.12466/2021 and other allied matters are adopted and
reproduced as under:
"8. The Hon'ble Apex Court in case of Union of India v.
Hari Singh and others (Judgment dated 15.09.2017 passed
in Civil Appeal No.15041/2017)reported in (2018) 15 SCC
201, observed as under:
"2. An admitted fact which is common in all these
appeals is that while disbursing the compensation, the
Land Acquisition Collector had deducted the tax at
source and deposited the same with the Income Tax
Department. These appellants preferred the writ
petition in the High Court stating that no such
deduction at source was permissible in view of the
provisions of Section 194-LA of the Income Tax Act,
1961, since the land which was acquired was
agricultural land and this provision categorically
mentions that in respect of agricultural land, tax at
source is not to be deducted.
3. There is no quarrel about the position of law
mentioned above. After examining this provision, the
High Court had passed an order in Risal Singh v.
Union of India [Risal Singh v. Union of India, 2010
SCC OnLine P&H 276 : (2010) 321 ITR 251]
directing the Income Tax Department to refund the
amount to the Collector with a direction to the
Collector to determine whether the compensation is
paid for property other than agricultural land or
otherwise and whether deduction of tax at source was
permissible under any provision of law. The manner
in which the Land Acquisition Collector has to
proceed further after determining the aforesaid issue
is contained in Para 8 of Writ Petition No. 9912 of
2009 decided on 11-1-2001, which is reproduced
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
below:
"8. Accordingly, we allow this petition and direct the
Income Tax Department to refund the amount to the
Collector within one month from the date of receipt of
a copy of this order. Thereafter, the Collector will
determine whether compensation paid is for property
other than agricultural land or otherwise and whether
deduction of tax at source was permissible under any
provision of law. Whether deduction is permissible or
not will be decided by the Collector within two
months from the date of receipt of a copy of this
order. If deduction is found not permissible the
amount will be refunded to the Petitioners not later
than three months from receipt of a copy of this order.
It is made clear that this order will not affect the right
of the Income Tax Department to take such action as
may be permissible under the law."
Similar directions in Sant Ram v. Union of India
[Sant Ram v. Union of India, 2009 SCC OnLine P&H
9638] are given in the other case as well.
9. After the aforesaid observations, the Apex Court
issued the following directions:
"7.1 The Respondents shall file appropriate returns
before the Assessing Officer(s) in respect of
Assessment Years in question within a period of two
months from today in case they feel that the
compensation in respect of land belonging to them
which had been acquired was agricultural land, and
claim refund of the tax which was deducted at source
and deposited with the Income Tax Department. On
the filing of these returns, the Assessing Officer(s)
shall go into the aforesaid question and wherever it is
found that the compensation was received in respect
of agricultural land, the tax deposited with the Income
Tax Department shall be refunded to these
Respondents.
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
7.2 While determining as to whether the compensation
paid was for agricultural land or not, the Assessing
Officer(s) will keep in mind the provisions of section
28 of the Land Acquisition Act and the law laid down
by this Court in Commissioner of Income Tax,
Faridabad v. Ghanshyam (HUF) [2009 (8) SCC 412]
in order to ascertain whether the interest given under
the said provision amounts to compensation or not"
10. In view of the above decision, the Income Tax
department has allowed the application made by the
applicant to condone the delay in filing the return of
the income to claim the refund and also issued the
refund. However, the Respondent did not grant any
interest on the amount of refund though the delay
cannot be said to be attributable to the Petitioners in
the facts of the case.
11. Instruction No.7/2013 dated 15.07.2013 was
issued pursuant to the directions issued by the Delhi
High Court in the case of Court On its Own Motion v.
Commissioner of Income Tax (supra), that in no case
interest u/s 244A of the Act be denied to the assessee
where the assessee is not at fault. In the facts of the
case, the Petitioners-assessees were not at fault for
not filing the return of income to claim the refund as
the deductor i.e. Executive Engineer, Irrigation
department neither informed the Petitioners about the
deduction of tax nor Form-16A which is mandatory
was issued. On the contrary, when the Petitioners
made representations by informing the Executive
Engineer, Irrigation department about the wrong
mentioning of the provision for deduction of tax in
Form No. 26AS issued as per return of TDS to be filed
by the deductor, no reply was given. Therefore, it is
clear that the Petitioners were not at fault for the
delay caused in filing the return of income claiming
the refund of the tax deducted at source as no tax was
payable by the Petitioners on the amount of interest
under section 194LA of the Act, 1961.
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
12. The Hon'ble Apex Court in case of Tata
Chemicals Limited (supra) while considering the issue
of payment of interest in case of refund has held as
under:
"37. A "tax refund" is a refund of taxes when the tax
liability is less than the tax paid. As per the old
section an assessee was entitled for payment of
interest on the amount of taxes refunded pursuant to
an order passed under the Act, including the order
passed in an appeal. In the present fact scenario, the
deductor/assessee had paid taxes pursuant to a
special order passed by the assessing officer/Income
Tax Officer. In the appeal filed against the said order
the assessee has succeeded and a direction is issued
by the appellate authority to refund the tax paid. The
amount paid by the resident/ deductor was retained by
the Government till a direction was issued by the
appellate authority to refund the same. When the said
amount is refunded it should carry interest in the
matter of course. As held by the Courts while
awarding interest, it is a kind of compensation of use
and retention of the money collected unauthorizedly
by the Department. When the collection is illegal,
there is corresponding obligation on the revenue to
refund such amount with interest in as much as they
have retained and enjoyed the money deposited. Even
the Department has understood the object behind
insertion of Section 244A, as that, an assessee is
entitled to payment of interest for money remaining
with the Government which would be refunded. There
is no reason to restrict the same to an assessee only
without extending the similar benefit to a resident/
deductor who has deducted tax at source and
deposited the same before remitting the amount
payable to a non-resident/ foreign company.
38. Providing for payment of interest in case of refund
of amounts paid as tax or deemed tax or advance tax
is a method now statutorily adopted by fiscal
legislation to ensure that the aforesaid amount of tax
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
which has been duly paid in prescribed time and
provisions in that behalf form part of the recovery
machinery provided in a taxing Statute. Refund due
and payable to the assessee is debt-owed and payable
by the Revenue. The Government, there being no
express statutory provision for payment of interest on
the refund of excess amount/tax collected by the
Revenue, cannot shrug off its apparent obligation to
reimburse the deductors lawful monies with the
accrued interest for the period of undue retention of
such monies. The State having received the money
without right, and having retained and used it, is
bound to make the party good, just as an individual
would be under like circumstances. The obligation to
refund money received and retained without right
implies and carries with it the right to interest.
Whenever money has been received by a party which
ex ae quo et bono ought to be refunded, the right to
interest follows, as a matter of course."
13. It is true that in the said case, the refund was
claimed in the return of income which was filed in
time. However, the ratio of the said judgment is with
regard to the entitlement of the assessee to receive
interest on the amount of refund when the collection
was illegal and the revenue was obliged to refund
such amount with interest as money so deposited is
retained and enjoyed by the revenue whereas in the
facts of the present case delay in filing the return of
income is not attributable to the Petitioners and such
fact is also not in dispute as the Respondent has
condoned delay and granted refund to the Petitioners.
14. Reliance placed by the Respondent authority on
Circular No.9/2015 is also misplaced because
paragraph no.6(ii)of the said circular is to the effect
that no interest will be admissible on belated claim of
refund when such application is for supplementary
claim of refund i.e. claim of additional amount of
refund after completion of assessment for the same
year. Therefore, reliance placed by the Respondent
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
upon the said circular for denying the interest on the
refund claim of the Petitioners is misplaced. As held
by the Apex Court in case of Tata Chemicals Limited
(supra), the Respondent is liable to pay the interest on
the amount of refund claim as such amount was
wrongly collected because of provisions of section
194LA as no tax was liable to be deducted from the
amount of interest paid to the Petitioners on the
acquisition of agricultural land. The Hon'ble Apex
Court has therefore, held that money received and
retained without right carries with it right to interest
and whenever money received by a party which ex ae
quo et bono ought to be refunded, the right to interest
follows as a matter of course.
15. It is not in dispute that the amount of refund is
already paid to the Petitioners and therefore, as a
natural corollary, the Petitioners are entitled to have
the right to get interest on such amount of refund
claim.
16. Even as per sub-section(2) of section 244A of the
Act, 1961, as it existed during the relevant AY 2013-
2014, when the proceedings resulting in the refund
are not delayed for reasons attributable to the
assessee whether wholly or in part, the period of the
delay so attributable only can be excluded from the
period for which interest is payable under subsections
(1) or (1A)or (1B) to section 244A of the Act, 1961. In
the facts of the case, the words "or the deductor, as
the case may be," which is inserted with effect from
01.04.2017 would not be applicable as the Petitioners
have been permitted to file the refund claim for the AY
2013-2014 after condonation of delay and such delay
in claiming the refund cannot be said to be
attributable to the Petitioners as the Petitioners were
not made aware about the deduction of tax at source
by the deductor in absence of issuance of Form
No.16-A which was mandatorily required as per Rule
31(3) of the Rules." 11. In view of the foregoing
reasons, the petitions succeed and are accordingly
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
allowed. The Respondents are directed to pass the
order to condone the delay in filing the return for the
Assessment Year 2013-2014 and to issue the refund
with interest under section 244A of the Act, 1961 from
the date of deposit of the amount of TDS till date of
payment of refund as per provisions of section 244A
of the Act, 1961. Such exercise shall be completed
within a period of 12 weeks from the date of receipt of
a copy of this order. Rule is made absolute to the
aforesaid extent. No order as to costs.
10. Mr. Karan Sanghani, learned Senior Standing
Counsel also submitted that that the Petitioner is liable to
pay the tax on the interest component which was received by
the Petitioner after the Order dated 04.09.2021 passed by
the Court. Such contention of the learned Senior Standing
Counsel Mr. Sanghani is contrary to the provisions of Act as
the entire compensation received by the Petitioner is
exempted from tax and therefore, no taxes is payable on any
part of the compensation received by the Petitioner from the
acquiring body i.e. Surat Municipal Corporation. "
8. In view of the aforesaid decision which is squarely applicable
to the facts of the present case and the position in law as explained
in painstaking detail in Kalpesh Lakdawala (Supra), the present
petition succeeds and is accordingly allowed. The impugned order
dated 17.12.2024 passed by the Respondent under Section 119(2)
(b) of the Act is hereby quashed and set aside. The Respondent is
directed to pass a fresh order condoning the delay in filing the
Petitioner's return of income for the Assessment Year 2017-18, so
NEUTRAL CITATION
C/SCA/1960/2025 JUDGMENT DATED: 17/04/2025
undefined
as to process the same in accordance with law by the concerned
Assessing Officer. The entire exercise as aforesaid shall be
completed within a period of twelve (12) weeks from the date of
receipt of a copy of this Order. Rule is made absolute to the
aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
BINA SHAH
