Facts of the Case

The petitioner, FADA Trading Private Limited, deposited a total sum of ₹40,00,000 as self-assessment tax in two installments (₹10,00,000 and ₹30,00,000). However, due to an inadvertent error while filling the challans, the payment was wrongly reflected under Assessment Year (AY) 2019–20 instead of AY 2020–21.

  • There was no tax liability for AY 2019–20 due to incurred losses.
  • The error was purely clerical.
  • The Assessing Officer corrected the record to reflect the payment under AY 2020–21.
  • The petitioner filed an application before the Principal Chief Commissioner of Income Tax seeking condonation of delay in filing a revised return to claim a refund.

Issues Involved

  1. Whether the delay in filing a revised return could be condoned under Section 119(2)(b) of the Income Tax Act.
  2. Whether the petitioner is entitled to refund or adjustment of wrongly deposited self-assessment tax.
  3. Whether the CBDT is obligated to consider and decide the petitioner’s representation within a reasonable time.

Petitioner’s Arguments

  • The error in depositing tax under the wrong assessment year was inadvertent and clerical.
  • Since no tax liability existed for AY 2019–20, the deposited amount should not be retained by the Revenue.
  • The petitioner proposed three possible remedies:
    1. Refund of ₹40,00,000
    2. Condonation of delay and permission to file a revised return
    3. Adjustment of the amount against another assessment year
  • The continued inaction of authorities caused undue hardship and warranted judicial intervention.

Respondent’s Arguments

  • The Revenue submitted that the alternatives suggested by the petitioner could be examined by the Central Board of Direct Taxes (CBDT).
  • It was argued that an appropriate decision could be taken administratively based on the available record. 

Court’s Findings & Order

  • The CBDT shall examine the three alternatives proposed by the petitioner.
  • A reasoned order must be passed after granting an opportunity of hearing to the petitioner.
  • The decision must be communicated to the petitioner.
  • The process should be completed expeditiously, preferably within 10 weeks from receipt of the order.

Important Clarifications by the Court

  • The Court did not adjudicate on merits of refund or condonation but emphasized administrative responsibility of CBDT.
  • Authorities must act within a reasonable time and cannot indefinitely delay decisions affecting taxpayer rights.
  • The judgment reinforces the principle that procedural lapses should not defeat substantive rights, especially in cases of bona fide errors.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60813092023CW120442023_181419.pdf

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