Taxpayers Cannot be Left at Mercy of Assessing Officer for Genuine Income Tax Refund Delays: Allahabad HC [Read Order]
The Court directed that the assessee was entitled to a refund once the Form 16A certificates were verified.
Income - Tax - Refund
Income - Tax - Refund
The High Court of Allahabad ruled that taxpayers cannot be left at mercy of assessing officer (AO) for genuine income tax refund delays.
U.P. Rajya Nirman Sahakari Sangh Limited,petitioner-assessee, through counsel argued that it was entitled to a refund of tax deducted at source as it was a Cooperative Society exempt under Section 80P of the Income Tax Act, 1961. He stated that refund applications had been submitted along with Form 16A certificates, but the Department declined to release the refund, citing the absence of the Tax Deducted at Source (TDS) amount in Form 26AS.
The Court, after hearing the counsel for both parties, observed that the law, as laid down by the Delhi High Court in Court on Its Motion vs. Commissioner of Income Tax and by this Court in Rakesh Kumar Gupta vs. Union of India, was settled: even if the TDS amount was not reflected in Form 26AS, a refund was to be granted if the petitioner produced Form 16A certificates.
The Delhi High Court had held that the AO had sufficient statutory powers to verify TDS payments and could contact the TDS circle or the deductor to ensure correct details were uploaded, as the assessee should not suffer due to the deductor’s fault.
This Court, in Rakesh Kumar Gupta, held that where the mismatch in Form 26AS arose solely from the deductor’s error, the petitioner was entitled to a refund of TDS along with interest, since the delay in payment was attributable entirely to the Income Tax Department.
The assessee counsel relied on Instruction No. 05/2013 dated 08.07.2013, which referred to the Delhi High Court’s judgment in Court on Its Motion. The instruction directed that when an assessee submitted TDS certificates to challenge any mismatch, the AO was to verify whether the deductor had deposited the TDS and, if so, credit it to the assessee.
The officer was permitted to consult the AO (TDS), issue notices to the deductor for corrections, and use all powers under the Income Tax Act, including obtaining approval from the Director or Commissioner if necessary. The procedure was described as a method of due verification and was to be communicated to all officers for compliance.
Justice Prashant Kumar and Justice Shekhar B.Saraf noted that a taxpayer could not be left at the mercy of an AO who delayed genuine refunds. It held that if the assessee produced documents, such as Form 16A, proving TDS, the Assessing Officer was obliged to accept them and could not insist on a match with Form 26AS.
The Court directed that the assessee was entitled to a refund once the Form 16A certificates were verified. The petitioner was instructed to appear before Respondent No. 3 on 28.10.2025, and Respondent No. 3 was directed to examine all submitted documents and pass orders in accordance with law within four weeks. The petitioner was allowed to rely on the cited judgments and the Central Board of Direct Taxes ( CBDT ) circular. The writ petition was accordingly disposed of.
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