The Income-tax authorities must process returns even if filed late when the underlying income is exempt from tax, reflecting the obligation to enforce lawful claims for refunds.

ORDER :

M.NAGAPRASANNA, J.

1. Heard Sri. H.R. Kambiyavar, learned counsel appearing for the petitioners, Sri. M.Thirumalesh, learned counsel appearing for the respondents and have perused the material on record.

2. Petitioners-the Assessees are before this Court in the subject petitions calling in question the order dated 29.07.2024 passed by respondent No.3-Principal Commissioner of Income Tax and have sought a consequential direction by issuance of a writ in the nature of mandamus to consider the representation and allow the claim for refund. For the sake of convenience, facts obtaining in W.P.No.105667/2024 would be narrated.

3. The petitioner is an agriculturist. Government of Karnataka is said to have acquired lands for the purpose of mining dolomite and limestone. The Karnataka State Mineral Corporation was authorized to acquire the said lands from the petitioners-the agriculturists for the said project. Accordingly, huge extent of land was acquired between 2001-2002. As a consequence whereof, the petitioners lost their lands and were awarded compensation in terms of the Land Acquisition Act. Compensation was paid to these petitioners for the Assessment Years 2022-23 for acquisition of the said lands. Since there was delay in disbursement of compensation, interest was also paid to these petitioners. While filing returns, the amount that was received as compensation along with interest was disclosed in the income tax returns but the compensation that is received was exempt from tax was ignored by the petitioners-the agriculturists and included the amount of compensation and the interest while filing the returns for the Assessment Year 2022- 23. The petitioners realizing that they are entitled to exemption from tax as obtaining under Section 10 (37) of the Income Tax Act, 1961, submitted a representation to respondent No.3. The respondent No.3 has rejected the representations on the ground that the return was filed with delay. Therefore, the petitioners are before this Court.

4. Learned counsel Sri.H.R.Kambiyavar appearing for the petitioners would vehemently contend that the petitioners are entitled to refund of the TDS amount as the same is a product of compensation that was granted to the land loser in terms of law. The time prescribed for filing the return of income under Section 139 of the Act should not be imposed upon these petitioners who at all times were entitled to the refund of a tax that was paid which was exempt from income tax.

5. Per contra, learned counsel Sri.M.Thirumalesh representing the respondents would submit that the tax deduction at source should be claimed within the time stipulated and therefore, there is no warrant of interference in the case at hand. He would however leave a decision to the hands of this Court. The only issue now that falls for consideration is whether respondent No.3 should be directed to consider the representation by the assessee being permitted to file his return of income. To consider the said issue, it becomes apposite to refer to a judgment of this Court reported in SRI.A.BALAKRISHNAN vs. THE GENERAL MANAGER, HINDUSTAN MACHINE TOOLS LTD. AND ANOTHER 2007 SCC OnLine Kar 43, wherein the Coordinate Bench has held as follows:

“16. The filing of the returns under the Income-tax Act 1961, is now governed by the provisions of section 139 of the said Act. A perusal of the provisions of section 139 does not indicate that the authorities are barred from processing a return filed under the Act just because it is not filed within the time stipulated either under section 139(1) or 139(4) of the Act.

17. While it may not be open to the Income-tax Department to bring to tax any income beyond the period permitted in terms of section 147 of the Act if within that time either a return is filed whether within