Ashok B. Jadhav vs The Commissioner of Income Tax and Another

Mohan M. Shantanagoudar, J.—Petitioner has sought for quashing Annexure-F passed by the first respondent dated 18-3-2010. He has also sought for direction to return deducted amount out of the compensation to be paid to the petitioner. Petitioner is the owner of certain lands. Petitioner''s lands were acquired along with other lands for implementation of Upper Krishna Project (UKP); compensation was paid during the assessment years 1999 to 2006. However, insofar as petitioner is concerned, compensation was paid in instalments. The first instalment of payment was made in the year 2000-2001 and last installment of payment was made in the year 2005-2006. Since there was delay in disbursement of the compensation, interest was also paid to the petitioner. Since the compensation so received is exempted from income tax, petitioner did not disclose the receipt of compensation to Income Tax Department by filing returns. However, the Land Acquisition Officer deducted income tax at source on the entire payments made and had remitted the same to the department. The TDS Certificate was issued in favour of the petitioners in the financial year 2005-2006 only. Immediately thereafter, petitioner filed application for return of the income tax so deducted on 25-2-2005 and one more application was filed for return of income tax on 27-12-2007 for the assessment years 2000-2001 to 2005-2006 before the second respondent. Along with the application petitioner enclosed original TDS Certificate also. The application filed by the petitioner for refund of income tax deducted from the compensation is rejected by the impugned order Annexure-F, dated 18-3-2010 on the ground that the petitioner''s had not prayed for return within a period of six years, i.e., mother words, due to the alleged delay in filing returns.

In the matter on hand, virtually, there is no delay on the part of the petitioner. The TDS Certificate was issued in favour of the petitioner only on 10-2-2005 as is clear from Annexure-A. Only thereafter, petitioner has come to know that an amount of Rs. 2,35,227/- is deducted at source from out of the compensation awarded. The returns were filed by the petitioner in the year 2005 itself. Thus, there is no delay on the part of the petitioner.

There cannot be any dispute that u/s 194L, second proviso of the income tax Act, 1961, no deduction shall be made u/s 194L, second proviso from any payment made on or after 1-6-2000. Thus, deduction made by the Land Acquisition Officer towards income tax, out of the compensation awarded is illegal. The Land Acquisition Officer could not have deducted any amount from out of the compensation awarded in favour of the petitioner after 1-6-2000. In the matter on hand, compensation is awarded to the petitioner after the year 2000. Therefore, the amount so deducted has to be returned to the petitioner.

In addition to the same, as has been held by this Court in Sri A. Balakrishnan Vs. The General Manager, Hindustan Machine Tools Ltd. and The Commissioner, Income Tax, , refusal to process return on the ground that it was not filed on time is not justified. The amount which can be realised by way of income tax from an assessee can only be in accordance with the statutory provisions, as is mandated under Article 265 of the Constitution of India. The said judgment is confirmed by the Division Bench of this Court. Be that as it may, since there is no delay on the part of the petitioner and as certain amount is deducted towards income tax in contravention of the provisions of Section 194L, second proviso, the respondents shall return the deducted amount in favour of the petitioner, The impugned order passed by the Commissioner vide Annexure-F, dated 18-3-2010 stands quashed. Accordingly, the writ petitions stand disposed of with a direction to the second respondent to consider the return filed by the petitioner dated 25-2-2005 and 28-2-2005 Annexures-B to B3 as per law and in the light of the aforementioned observations, as early as possible but not later than the outer limit of three months from the date of receipt of copy of this order.