Facts of the Case

The petitioner, Clean Wind Power Kurnool Private Limited, filed a writ petition seeking relief against technical issues in the TRACES portal which prevented it from claiming a refund of excess Tax Deducted at Source (TDS).

The petitioner had deposited ₹69,59,265/- as TDS but could only adjust ₹19,87,733/-, leaving an excess amount of ₹49,71,532/-. However, due to a system error, the TRACES portal displayed “Maximum Refund Allowed” as nil, despite the excess amount being reflected as “Remaining Available Balance.”

The petitioner had raised a grievance earlier, but it was closed without resolution. Consequently, the petitioner approached the High Court seeking directions to enable refund processing or treat its representation as a manual refund application.

Issues Involved

  1. Whether technical glitches in the TRACES portal can deprive a taxpayer of claiming a legitimate TDS refund.
  2. Whether the petitioner is entitled to refund under statutory provisions despite system limitations.
  3. Whether the department is obligated to provide an alternative mechanism for processing refund claims.

Petitioner’s Arguments

  • The inability to claim refund was solely due to technical errors in the TRACES portal.
  • The excess TDS amount was clearly reflected but incorrectly categorized.
  • Non-refund violates Section 200A of the Income Tax Act, 1961, read with Rule 31A(3A) of the Income Tax Rules and CBDT Circular No. 2/2011 dated 27 April 2011.
  • The authorities failed to resolve the grievance despite repeated attempts.

Respondent’s Arguments

  • The respondents submitted that such cases require manual scrutiny and verification.
  • A standard operating procedure (SOP) exists for handling such refund claims.
  • The department is in the process of introducing system changes to enable such refunds through the portal.

Court’s Findings / Order

The Delhi High Court acknowledged the procedural mechanism provided by the department and directed as follows:

  • The petitioner must follow the prescribed manual procedure for claiming refund.
  • Upon compliance by the petitioner within two days,
  • The respondents shall process and decide the refund claim within four weeks.

The writ petition was accordingly disposed of with directions.

Important Clarification by Court

The Court recognized that:

  • Technical/system limitations cannot override substantive taxpayer rights.
  • Where the system fails, manual administrative remedies must be made effective and accessible.
  • The department must ensure timely resolution once procedural compliance is met.

Sections Involved

  • Section 200A – Income Tax Act, 1961 (Processing of TDS statements)
  • Rule 31A(3A) – Income Tax Rules
  • CBDT Circular No. 2/2011 dated 27.04.2011


Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2020:DHC:2249-DB/MMH08072020CW39022020_195828.pdf

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