Allahabad High Court Rules on TDS Refund Claim: No Need for Form 26B under VSV Act
The Allahabad High Court recently ruled that an assessee claiming a refund of excess Tax Deduction at Source (TDS) is not required to fill out Form 26B under the Income Tax Rules once Form 5 of the Vivad Se Vishwas Act, 2020 has been issued. Chief Justice Arun Bhansali and Justice Kshitij Shailendra highlighted that a perusal of the Rules indicates that Form 26B must be completed only if the assessee claims a refund paid under Chapter XXVII-B of the Income Tax Act, 1961. They pointed out that the requirement to fill out Form 26B had long expired in the financial year 2008-09, and the present refund was being sought under the provisions of the VSV Act, which does not necessitate filling out any form.
Case Background
The petitioner, Dish TV India Ltd., filed an Income Tax Appeal against a demand of INR 2.25 Crores due to short payment of TDS during the assessment of its returns for the financial year 2008-09. During the pendency of this appeal, the Vivad Se Vishwas Act, 2020, was enacted by the Central Government. The petitioner submitted Forms 1 and 2 to settle the disputed tax for the financial year, indicating a payable amount of INR 6.05 lakhs.
The petitioner’s application was accepted, resulting in a certificate in Form 3 that designated the refundable amount to the petitioner as INR 2.19 Crores. After the petitioner withdrew the Income Tax Appeal, the respondent issued an order for the final settlement of tax under Section 5(2) of the VSV Act, 2020 via Form 5. However, despite repeated notices, the refund amount was not released to the petitioner. Consequently, the petitioner filed a writ petition before the High Court, seeking the payment of the refundable amount along with interest.
Arguments Presented
Counsel for the respondents argued that on November 19, 2024, a communication was sent to the petitioner stating that they needed to submit Form 26B of the Income Tax Rules to claim a refund through the TRACES portal. It was indicated that compliance would facilitate the refund. The respondents contended that Section 7 of the VSV Act precluded the petitioner from receiving any interest on the refund.
In contrast, the petitioner argued that the demand for Form 26B was an attempt to unjustly delay the refund. They emphasized that, according to Form 5 issued on September 20, 2022, they were entitled to a refund of INR 2.19 Crores along with interest per Section 244A of the Income Tax Act, 1961.
High Court Verdict
The High Court held that the respondents could not impose a requirement to fill out Form 26B two years after the petition was filed. Once Form 5 under the VSV Act was issued, the petitioner was entitled to the refund. The court stated, “the said act of the respondents has no basis; once Form 5 was issued entitling the petitioner to a refund of INR 2,19,42,954, there was no question of the respondents then requiring the filing of Form 26B.
Regarding the interest claim raised by the petitioner, the court referred to a precedent set by the Delhi High Court in the case of Ms. Anjul v. Office of PCIT. The ruling stated that if the state receives funds without right and retains them, it is obliged to return the amount with interest.
The court examined Section 7 of the VSV Act and clarified that it pertained to payments under the Income Tax Act for periods before filing a declaration under subsection (1) of Section 4 of the VSV Act, with no bearing on the entitlement to interest post-issuance of Form No. 5.
Consequently, the respondents were directed to pay the refundable amount along with interest at a rate of 6% per annum.
Case Title
Dish TV India Limited v. Commissioner of Income Tax (TDS) and 2 Ors. [WRIT TAX No. – 1953 of 2024]
