Facts of the Case

  • The petitioner deposited a tax amount of ₹19,05,21,564 for Assessment Year (AY) 2003-04.
  • Due to a digitization error by HDFC Bank, the payment was incorrectly reflected as pertaining to AY 2007-08 in the OLTAS system.
  • Consequently, the Income Tax Department refused to grant credit for the correct assessment year.
  • The petitioner approached the authorities and the bank, but no rectification was made.
  • Aggrieved, the petitioner filed a writ petition seeking rectification of Form-3 dated 29.01.2021.

Issues Involved

  1. Whether the petitioner is entitled to rectification of Form-3 under the Vivad Se Vishwas Scheme.
  2. Whether tax credit should be granted for the correct assessment year despite a bank reporting error.
  3. Whether the Income Tax Department is obligated to verify and rectify such discrepancies.

Petitioner’s Arguments

  • The tax payment was genuinely made for AY 2003-04, supported by challan and bank records.
  • The incorrect reflection in OLTAS was due to a clerical/digital error by the bank.
  • The bank itself confirmed the mistake and requested rectification.
  • Denial of credit defeats the purpose of the Vivad Se Vishwas Scheme, which aims at dispute resolution.

Respondent’s Arguments

  • The Revenue contended that as per system records, the payment related to AY 2007-08.
  • Rectification could not be granted without proper verification of records.
  • The department relied on the data available in the official tax system (OLTAS).

Court’s Findings / Judgment

  • The Court observed that:
    • It was undisputed that the tax amount was paid by the petitioner.
    • The bank admitted the error in mentioning the wrong assessment year.
  • The Court applied the principle of preponderance of probability and accepted the petitioner’s version.
  • It held that procedural or technical errors should not deprive a taxpayer of legitimate credit.

Final Directions:

  • The Assessing Officer (AO) was directed to:
    • Rectify the assessment year to AY 2003-04
    • Update records within 10 days
  • The designated authority under the Vivad Se Vishwas Act was directed to:
    • Rectify Form-3 accordingly
    • Proceed further as per law

Important Clarification by the Court

  • Errors arising from digitization or bank reporting cannot override substantive tax rights.
  • Authorities must adopt a practical and proactive approach in resolving such discrepancies.
  • The judgment reinforces that procedural lapses should not defeat substantive justice.

Sections Involved

  • Article 226/227 of the Constitution of India
  • Direct Tax Vivad Se Vishwas Act, 2020
  • Income Tax Act (Procedural provisions relating to tax credit and rectification)

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:1791-DB/RAS02062021CW50132021_005727.pdf

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