Allahabad High Court Directs Refund of TDS Despite Mismatch in Form 26AS
Cooperative Society Entitled to Refund Upon Furnishing Form 16A Certificates; Assessing Officer Obligated to Verify and Process Refunds
In a significant judgment, the Allahabad High Court has directed the refund of Tax Deducted at Source (TDS) amounts to U.P. Rajya Nirman Sahakari Sangh Limited, a cooperative society exempt under Section 80P of the Income Tax Act, 1961. The decision was rendered by a Division Bench comprising Justices Shekhar B. Saraf and Prashant Kumar, emphasizing the taxpayer's entitlement to refunds when Form 16A certificates are provided, despite discrepancies in Form 26AS.
The cooperative society, represented by senior advocate D.D. Chopra, had approached the court challenging the Income Tax Department's refusal to process refunds on the grounds of mismatched figures between TDS certificates and Form 26AS. The petitioner argued that as a cooperative society, it was exempt under Section 80P, and thus eligible for a refund of TDS deducted.
The court referred to precedents set by the Delhi High Court in the case of "Court on Its Motion v. Commissioner of Income Tax" and its own ruling in "Rakesh Kumar Gupta v. Union of India," both establishing the principle that an assessee should not suffer due to discrepancies caused by deductors. The Delhi High Court had previously mandated that Assessing Officers verify details provided by the assessee and ensure refunds are processed, even if the amounts do not match Form 26AS.
Echoing these judgments, the Allahabad High Court held that the taxpayer must not be left at the mercy of the Assessing Officer for delays in refund processing. The court issued a writ of mandamus directing the Income Tax Department to process the refund based on the evidence provided, instructing the petitioner to present necessary documents on a specified date.
Moreover, the judgment underscored the duty of the Assessing Officer to verify TDS details independently and take corrective measures, including issuing notices to deductors for rectifying mismatches. This directive aligns with CBDT Instructions No. 05/2013, which empower Assessing Officers to verify and process refunds upon verification of TDS payments.
The court's decision is a significant reinforcement of taxpayer rights, ensuring that genuine refunds are not withheld due to administrative discrepancies. The ruling serves as a reminder of the obligation of tax authorities to act diligently in verifying claims and facilitating due refunds, providing relief to taxpayers who are otherwise left navigating bureaucratic challenges.
Bottom Line:
Income Tax Law - Refund of TDS amounts when not reflected in Form 26AS - Assessee entitled to refund upon providing Form 16A certificates - Assessing Officer obligated to verify and process refunds based on provided proof, cannot insist on matching figures in Form 26AS.
Statutory provision(s): Income Tax Act, 1961 Section 80P, Section 226(3), Section 154, Instructions No. 05/2013 dated 08.07.2013
