Zulhkar Jeewanjee Moriswala and Others vs Deputy Commissioner of Income Tax (TDS) and Others

Mr. F.B. Andhyarujina, learned senior counsel for the petitioner, seeks liberty to amend the petition to add the Commissioner of Income-tax-17 as party respondent and suitably amend the prayer clause. Mr. Pinto, learned counsel for the Revenue, has no objection to the amendment being carried out. Liberty granted to carry out the amendment. The amendment to be carried out by Friday, the 20th day of February, 2015. Re-verification dispensed with. This petition under article 226 of the Constitution of India has been filed seeking a direction to the respondent-assessee to accept the petitioner''s return of income for the assessment year 2014-15 which is not being accepted by its system in view of non-deposit of tax deducted at source by respondent No. 5. The petitioners had sold their property to respondent No. 5 who, inter alia, deducted a sum of Rs. 1.23 crores as the tax deducted at source ("the TDS") but had failed to deposit it with the Revenue. Yet it appears no action was taken by the respondent-Revenue against respondent No. 5 to deposit the TDS in spite of the petitioner''s repeated request that the non-deposit does cause them prejudice.

The petitioners are non-residents indians who in February, 2014, along with another resident co-owner sold immovable property to respondent No. 5, i.e., M/s. Vardhaman Developers Ltd. for a consideration of Rs. 9 crores. M/s. Vardhaman Developers Ltd. after deducting the tax at source at 20 per cent out of the sums payable to each of the petitioners (aggregating to Rs. 1.23 crores) paid the balance consideration to the petitioners. In terms of section 200 of the Income-tax Act, 1961 ("the Act") read with the Income-tax Rules, 1962, the person who deducts tax at source is required to deposit the tax deducted within seven days of the end of the month in which the deduction is made. However, M/s. Vardhaman Developers Ltd., after having deducted the tax at source and paying only balance consideration to the petitioners, did not deposit the same into the Government treasury.

The petitioners by notice dated July 21, 2014, requested M/s. Vardhaman Developers Ltd. to deposit the tax deducted at source from the consideration payable to them with the Revenue. It was pointed out that this non-deposit would cause them prejudice as they would not be able to upload their return of income for the assessment year 2014-15 which was due to be filed on July 31, 2014. However, M/s. Vardhaman Developers Ltd. did not act upon the same. Consequently, the petitioners could not upload their returns of income for the assessment year 2014-15. Thereafter, on August 12, 2014, and December 26, 2014, the petitioners by their chartered accountant''s letter brought the aforesaid facts to the notice of respondent No. 3, namely, the Commissioner of Income-tax (TDS), particularly the failure of respondent No. 5 to pay the tax deducted at source into the Government treasury and the prejudice to the petitioners in being unable to file/upload their returns of income for the assessment year 2014-15. However the respondent-Revenue were unmoved and apparently did not take any action against M/s. Vardhaman Developers Ltd. to the prejudice to the petitioner. It was this callous attitude of the respondent-Revenue and apparently dishonest act on the part of M/s. Vardhaman Developers Ltd. that compelled the petitioners to file the present petition.

The petition was on board on February 13, 2015, and we were shocked at the attitude of the respondent-Revenue and also the conduct of respondent No. 5 which has resulted in unnecessary harassment of the petitioners. At which time Mr. Pinto, learned counsel appearing for the respondent, sought time to take instructions. This on account of the fact that we were of the view that the petitioners should not suffer in any manner for no fault of theirs. Today, Mr. Pinto on instructions states that respondent No. 5, viz., M/s. Vardhaman Developers Ltd., have already paid the tax deducted at source into the Government treasury together with interest and the petitioners would now be able to upload their returns of income for the assessment year 2014-15. Mr. Pinto on instructions further states that once return of income has been uploaded, the respondent-Revenue could be in a position to make a statement that no penal or financial consequence would be visited upon the petitioners on account of delay in uploading the return of income for the failure of respondent No. 5 to pay the tax deducted into the treasury.

Ms. Akshita Mehta, learned counsel appearing for respondent No. 5, states that the amount of tax deducted at source along with interest has already been deposited in the Government treasury and no sooner they receive Form 16A which is generated online, the same would be handed over to the petitioners.

In the above view, we adjourned the, hearing of the petition to enable the petitioners to upload their returns of income and enable Mr. Pinto to take instructions that no penal and/or financial consequence would visit the petitioners only on account of delay in uploading their returns of income of the assessment year 2014-15 for no fault of theirs.

S.O. to February 27, 2015.

February 27, 2015.--Mr. Andhyarujina, learned senior advocate appearing for the petitioners, states that respondent No. 5 has forwarded only today Form 16A which is generated online (being evidence of amount of tax being deposited along with the interest by respondent No. 5). Mr. Pinto, learned counsel for the Revenue, states that now there would be no difficulty in the petitioners uploading their returns of income. Mr. Andhyarujina, learned senior advocate, states that they would upload their returns of income by Monday, i.e., March 2, 2015.

Mr. Pinto states that once the return of income is uploaded, the respondent-Revenue would be in a position to make a statement that no penal or financial consequences would be visited by the Revenue only on account, in filing the return of income.

Keeping in view the facts given rise to the present petition as set out in our order dated February 18, 2015, no sooner the return has been uploaded, the respondent-Revenue would take a decision on waiving of interest and/or any penal consequences which are likely to be visited upon the petitioners only on account of failure to upload the return of income in time and inform the same on next date of hearing.

Stand over to March 5, 2015.

March 5, 2015.--This petition has been filed seeking a direction to the respondent-Revenue to accept the petitioners'' returns of income for the assessment year 2014-15 which were not being accepted in view of non-deposit of tax deducted at source by respondent No. 5.

Briefly the facts leading to this petition are that the petitioners are non-resident Indians who sold their property to respondent No. 5. Respondent No. 5 while paying consideration to the petitioners deducted Rs. 1.23 crores as TDS but failed to deposit the same with the Revenue. The petitioners repeatedly requested respondent No. 5 to deposit the TDS and also the respondent-Revenue to take action against respondent No. 5 as non-deposit of TDS was causing them prejudice. This was for the reason that they are unable to upload their returns of income for the assessment year 2014-15.

After filing of this petition, respondent No. 5 has deposited the tax deducted at source along with interest and the petitioners have been able to upload their returns of income for the assessment year 2014-15 on February 28, 2015. Mr. Pinto, learned counsel for the Revenue, instructions, states that the respondent-Revenue will, on the basis of the facts stated in the petition, not charge any interest under section 234A of the Income-tax Act, 1961, for default in furnishing of return of income in time nor interest under section 234B and section 234C of the Act will be charged for default in payment of advance tax. In support thereof, an affidavit dated March 5, 2015, of Mr. K.A. Paryani, Income-tax Officer-the respondent No. 2 in the petition is taken on record. In view of the above, the petition becomes infructuous. Therefore, petition is dismissed as withdrawn.