Friday, October 16, 2015

TDS Woes Of Taxpayers (contd.)

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http://vswaminathan-swamilook.blogspot.in/2015/10/dda-scheme-for-conversion.html





October 15
 
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
PUBLIC INTEREST LITIGATION NO.27 OF 2014
Arun Ganesh Jogdeo .… Petitioner
V/s.
Union of India & Anr. …. Respondents
Mr. Arun Ganesh Jogdeo, the Petitioner, is
present in person.
Mr. P.C. Chhotaray a/w. Ms. Sangeeta Yadav,
i/by Mr. Sureshkumar, for the Respondents.
CORAM : V.M. KANADE &
DR. SHALINI PHANSALKAR-JOSHI, J.J.
DATE : 28 TH AUGUST, 2015 .
P.C.:

TDS refund harassment case
Court on its own Motion Vs Commissioner of Income Tax
IN THE HIGH COURT OF DELHI AT NEW DELHI
WRIT PETITION (CIVIL) 2659/2012 ...


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More often than not, the communication received from the CPS (C?) by a taxpayer , in the format framed and being commonly adopted, leaves him clueless as to what it is all about.; and why at all he had to be sent such a communication even in respect of any one or years for which , as per his record, he had every reason to honestly believe hence believed that the assessment procedure has reached a stage of finality, once for all.
Looking, however, at what really happens , time and again, is that for varying reasons and super imposingly attending circumstances, such a belief , howsoever bona fide and unquestionable it is, comes to be shattered to tiny pieces.

Should anyone take a conscious note of and keep in sharp focus, the instances of hardships faced by taxpayers in the hands of the Revenue, also give further independent thoughts thereto , such reasons or circumstances leading to consequences, unintended or otherwise, could easily be identified.

To dilate but briefly, (wprt the woes of a taxpayer filing tax return SAY, as ‘individual’) :

1. Tax return filed manually by a taxpayer, - for a year for which e’ filing has (d) not been mandatory,- for sake of convenience the return gets uploaded on the CPC, for processing ; but far belatedly.

2. At the time of such uploading, by jurisdictional AO, no PROPER care, as expected of, is taken to ensure that the record so uploaded is correct and complete in all respects. For example, anyone or more OR all details of tax withheld at source, and paid /payable due but not paid by the deduct or (of TDS), OR paid as Advance tax or on self-assessment , to the Government do not get uploaded. That results in/accounts for an inevitable but easily avoidable, mismatch of the ‘tax payable’ and ‘tax paid’ ; which in turn, leads to issue of a communication by the CPC showing unpaid demand/arrears of tax; not warranted or justifiable though

3. Another instance , objectionable but not uncommon, and often come across is that in which , because of a change in jurisdiction in the interim, mostly internal /departmental but never made known to the taxpayer. That explains why the jurisdictional AO as known to the taxpayer at the time of filing tax return is not the same person (AO) by whom the record gets uploaded on the CPC, which is made known to the taxpayer, for the first time, simplistically through the communication issued to taxpayer, long after the event of change in jurisdiction.

Is it not a tragedy, and highly regrettable, that despite the fact that the HC has once again, been obliged to pin point to and impress upon the Revenue that the looked-forward improvement in the tax administration is still left to be desired, to the discomfort and hardship to the taxpayers?!


In short, it is one's firm conviction, there is still, a nagging grave doubt lingering in the minds of taxpaying community as to whether the CPC brought into being, and in place for quite some time now, could at all be rightly considered to be convincingly a ‘boon’, NOT a ‘bane’, from its view point, based on wishful thinking !

Over to tax experts in field practice, inviting to share more information / thoughts on the foregoing lines, so as to prove useful to the taxpaying public.


KEY NOTE

Paragraph 4 of the Bombay HC Judgment reads:


“4. The Income Tax Department has filed a detailed affidavit-in-reply, in which it has been submitted that the directions given by the Delhi High Court have been followed in letter and spirit.”


The veracity / validity of the statement so made / factual actual position as explicitly affirmed by the Department, in its detailed reply affidavit, might, however, for obvious reasons, be required to be gone into / investigated on a case to case basis.  Possibly may become suspect; particularly, in those cases in which the Department is found to have not followed, strictly or otherwise, the “letter and/or spirit” of the law, e.g. the unequivocally clear mandates of the related provisions of the law (the IT Act).   

Some of those provisions  are: - 


Section 143   - each of its applicable sub-sections; essentially,sub-sections (1), (1a), so on


Section 143 (2)


Section 154 


Section 205


Further, it ought not to be over sighted that the time limits prescribed for initiation and / or conclusion of any action by AO under each of those provisions are rigid; and if not read harmoniously , and strictly adhered to, will inevitably render any adverse decision of / conclusion reached by AO, non-est; and not enforceable in law.


In the cited judgment, in paragraph 5, the court’s observations of relevance have been reiterated and reinforced. 

More significantly, the critical observations in paragraph 6 are noteworthy; that reads:

“The Income Tax authorities shall follow these directions in case of other cities, including the city of Mumbai, in Maharashtra State. We hope and trust that the Income Tax Department will be more vigilant and ensure that such mistakes will not occur in future. We also direct the Income Tax Department to form a Vigilance Cell to ensure that there is a monitoring authority, which would monitor various policy decisions which are taken and a self auditing mechanism is required to be formulated to ensure that the income tax assessees are not made to run from pillar to post for the purpose of redressed of their grievances.”



KEY NOTE



In terms of sec 143 (1) (a), as clearly provided, an adjustment is not ‘permissible’, and cannot be made, unless it is of the nature of,-
(A)         any arithmetical error; or

(B)         any “incorrect claim” within the  meaning of the Explanation (a) u/s 143 (1).

The said Explanation READS:
Explanation — For the purposes of this sub-section,—
(a)  “an INCORRECT claim APPARENT FROM ANY INFORMATION IN the returnSHALL MEAN A CLAIM, ON THE BASIS OF AN ENTRY, IN THE RETURN,
 (i)  of AN ITEM, WHICH IS INCONSISTENT WITH ANOTHER ENTRY OF THE SAME OR SOME OTHER ITEM in such return;
(ii)  in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or
(iii)  in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;
(b)  the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a).”


Accordingly, therefore, -

(A)        if taxpayer has received no “INTIMATION’ in the prescribed form; and
within the prescribed time limit (1 year from the end of assessment year) OR
(B)        any adjustment is made but is not strictly within the scope/parameters  as laid down;
the tax return filed must be taken to have been accepted.
And as such, no tax demand can be raised ; or in case of a claim for refund, that  must be accepted and granted , with no quarrel.
Now, if the above referred Explanation were to be critically analysed:
In today’s changed circumstances, - i.e. CPS,  e’filing of tax return, etc., in place, and with an automatic verification of arithmetical accuracy having been inbuilt in CPS itself, an ‘arithmetical error’ , so also any adjustment in regard thereto, can never arise.
As regards ‘incorrect claim’, the provision to the effect that, -
an entry in the return, “ (ii)  in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished;” shall constitute a ground /reason for AO to make an adverse adjustment is, to say the least, bereft of any logic, or sane / sound reasoning. For, that flies in the face of the very mandate of the law by virtue whereof an e’filed return has to be with no attachment or annexure (even evidence of TDS.. Form 16, 16A,..) ; and as such, even if taxpayer wants, he is precluded / prohibited by the law from furnishing any supporting document/ evidence in regard to any claim /item/entry in the return.

To sum up:

Pithily stated, the Explanation, if were subjected to a critical scrutiny / intelligent and incisive analysis, in one's conviction, -  as conceived of and framed, and brought on the statute book , ostensibly with no proper application of  'mind' or serious thought given,  betrays the blatant ineptness, and uncouth imbecility, to the core, in its drafting.



(Leaving Unedited ; OPEN TO the tax law experts at large , in field practice, - particularly,  if do not mind but are willing to share info., specific instances, etc.,  they may have come across, of contextual relevance , for the common good -  freely volunteer and EDIT).




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