CIT vs. Digital Global Soft Ltd.; 354 ITR 489 (Kar):
For the A. Y. 1999-00, while filing the return of income, the assessee did not have TDS certificates in respect of Rs. 19,44,692/- and accordingly, could not claim credit of the said amount in the return of income. After receiving the intimation u/s. 143(1), the assesee received the TDS certificates in respect of the said amount. Thereafter, the assessee filed the said TDS certificates and claimed credit of the said amount by rectification u/s. 154 of the Act. The Assessing Officer allowed the claim by passing order u/s. 154. The Commissioner exercising his power u/s. 263 of the Act withdrew the said credit of Rs. 19,44,672/- given by the Assessing Officer u/s. 154. The Tribunal allowed the appeal filed by the assessee and set aside the order of the Commissioner passed u/s. 263.
On appeal by the Revenue, the following question was raised:
“Whether the order passed by the assessing authority giving credit to the amount paid by way of tax deducted at source and consequently directing refund when the assessee has not claimed the said amount in the return filed under the purported exercise of power u/s. 154 of the Act is valid?”
The Karnataka High Court dismissed the appeal and held as under:
“i) As the provisions of section 155(14) were not in the statute book on the day the Assessing Officer passed the order u/s. 154, the order passed on 12th June, 2001, could not be strictly in accordance with law. It was erroneous. The amendment came into effect only from 1st June, 2002.
ii) But on the day the Commissioner exercised his power and passed order on 31st July, 2002, the amendment was in the statute book. Therefore, on 31st July, 2002, when revisional jurisdiction was exercised, the Commissioner could not have held that the order passed by the assessing authority was erroneous, as on that day the amended law provided for such rectification.
iii) Even if it was erroneous, unless the erroneous order was prejudicial to the interest of the Revenue, the Commissioner could not have exercised the power. The amount that was ordered to be refunded to the assessee was not an amount lawfully due to the Revenue at all, but an amount which the Revenue legitimately should have refunded if only the claim had been made in the return enclosing the certificates u/s. 203.
iv) Because the assesee was handicapped by such certificates not being forwarded to it and consequently not being able to make the claim, such a claim was not made. The moment it got possession of those certificates within two years from the end of the assessment year it had put forth the claim. The amount was not a lawful amount due to the Government. It was an amount which should have been refunded to the assessee.
v) In that view of the matter we do not see any merit in this appeal. The substantial question of law framed is answered in favour of the assessee and against the Revenue. The appeal is dismissed.”
