Refund – Sections 237 and 143 of ITA, 1961 – Disability pension of retired army personnel – Exempt by CBDT Circular – Tax paid by mistake – Claim for refund – Non-adherence to technical procedures – Cannot be ground to deny entitlement to legitimate relief of armed forces – Department has to refund tax recovered with interest

27. Col.
Madan Gopal Singh Negi (Retd.) vs. CIT; [2019]
419 ITR 143 (MP) Date
of order: 28^th February, 2019 A.Ys.:
2008-09 to 2015-16

Refund
– Sections 237 and 143 of ITA, 1961 – Disability pension of retired army
personnel – Exempt by CBDT Circular – Tax paid by mistake – Claim for refund –
Non-adherence to technical procedures – Cannot be ground to deny entitlement to
legitimate relief of armed forces – Department has to refund tax recovered with
interest

The
assessee, a retired army personnel, was medically boarded out of the army and was receiving 30% as disability pension for
life on account of disability suffered by him according to a pension payment
order which was issued on 1^st December, 2007. The CBDT, by way of a
memorandum dated 2^nd July, 2001, had notified that the disability
pension received by officers of the Indian Armed Forces was completely exempted
from tax. The assessee, under a bona fide mistake had paid the tax on
his entire income for the years 2008 to 2016, including the disability pension.
The assessee then came to know about the exemption of pension from tax. He then
made applications to the AO in 2017, requesting him to refund the tax so paid
by mistake which totalled Rs. 11,16,643. In spite of repeated requests, the
Department did not refund the amount. The assessee filed a writ petition before
the Madhya Pradesh High Court requesting for appropriate directions to the
Income Tax Department for granting refund of the tax so paid by mistake.

The Madhya Pradesh High Court allowed the writ petition
and held as under:

‘i)   As the income
of the assessee was exempted, the Department had to refund the amount of the
tax deducted. The assessee could not be made to run from pillar to post on
account of various technicalities in such matters by those who are invested
with administrative powers to deal and decide the affairs of the personnel of
the Indian Armed Forces.

ii)   The Department
was directed to refund the entire amount of tax recovered, which was an
exempted amount and which the assessee had paid in respect of his disability
pension. The assessee was entitled to interest at the rate of 12% per annum
from the date the amount was deposited with the Department till the amount was
refunded to the assessee. If this order was not complied within 30 days as
directed, the rate of interest would be 18% per annum from the date of
entitlement till the actual payment of the amount to the assessee.’