In a significant tax-friendly ruling, the Delhi High Court has observed that the software of the income tax department for tax payment shall be tailor-made in accordance with the taxpayer’s requirements.
The Petitioners, a bunch of companies approached the High Court seeking directions to the Respondent No.2 to rectify Forms 3 issued on 22nd April, 2021 and to issue Forms 5 post filing of Forms 4 under Direct Tax Vivad se Vishwas Act (‘DTVSV Act’). The petitioners contended that on 26th March, 2021, the Petitioners filed declarations in Forms 1 and 2 electronically but inadvertently declared the amounts paid by various challans excluding interest component.
It was submitted on behalf of the department that the Assessing Officer (TDS) is taking steps to correct the Code of the Challans but she is facing difficulty, as the software is not permitting the challan Code correction at the Assessing Officer level and will seek assistance from CPC/Systems team. It was further stated that in the event the software does not permit Code correction, then it would be difficult to give relief to the petitioner.
Allowing the petitions, Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “In the opinion of this Court, as the petitioners have paid the taxes, they should be given the credit for the challans paid in Form 3 under the said Act. The order/communication dated 7th April, 2022 rejecting credit of taxes deposited under the DTVSV Act on the hyper-technical ground that challans have been deposited under the minor head ‘200’ instead of ‘400’ is unfair, illegal and contrary to the objective of enacting the DTVSV Act, 2020.”
Directing the department to correct the payment heads, record the credit of taxes deposited and to issue revised Forms 3 within four weeks, the Court added that “If the only impediment in the way of granting relief sought by the petitioner is the software, the same ought to be suitably modified to accept the applications of the petitioners. One of us, (Manmohan, J) in Shalu Nigam & Anr. Vs. The Regional Passport Officer & Anr. 2016 SCC OnLine Del 3023 has held, “In any case, technology is intended to ease and facilitate transactions and cannot be the basis for creating and defeating anybody’s legal rights”. After all, the software has to be tailor-made according to the needs, aspirations and legal rights of the taxpayers and not that the taxpayers’ legal rights have to be tailor-made in accordance with the software being used by the Tax Department.”
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