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2020 Supreme(Pat) 253
IN THE HIGH COURT OF JUDICATURE AT PATNA
Sanjay Karol, S. Kumar, JJ.
Syed Jamaluddin Ali S/o Late Syed Asghar Ali - Appellant
Versus
State Bank of India, West Gandhi Maidan, Patna - Respondent
Civil Writ Jurisdiction Case No. 6052 of 2018
Decided On : 14-10-2020
Raju Giri, Advocate, Santosh Kumar Mishra, Advocate, Kaushlendra Kumar Sinha, Advocate, Archana Sinha, Advocate, Rakesh Kumar Singh, Advocate, Sunil Kumar Singh, Advocate
The main legal point established in the judgment is the requirement for the petitioner to avail the statutory remedy under Section 89 of the Income Tax Act, 1961, before seeking relief through a writ petition.
Headnote:
Mandamus - Income Tax - 1961 - Section 89(1), 192(2A) - The court discussed the provisions of Section 89 and 192 of the Income Tax Act, 1961, and their application in the case. It highlighted the requirement for relief under Section 89 and the obligation of the Assessing Officer to grant such relief. The court also emphasized the need for the petitioner to avail the statutory remedy under Section 89 before seeking a writ petition.
Fact of the Case:
The petitioner sought a writ of mandamus to direct the State Bank of India and the Income Tax Department to act under Section 89(1) and 192(2A) of the Income Tax Act, 1961, regarding the spread over/distribution of arrears of pension and refund of illegally deducted income tax. The petitioner's retirement and pension benefits were withheld, and upon receiving the pension in 2016, income tax was deducted, leading to the present dispute.
Finding of the Court:
The court found that the petitioner failed to approach the Assessing Officer for relief under Section 89 before filing the writ petition. It held that the statutory remedy under Section 89 should be availed before seeking relief through a writ petition. The court also noted the petitioner's failure to follow the procedure for claiming exemption under Section 207 of the I-T Act.
Issues: The issues revolved around the deduction of income tax from the petitioner's pension, the applicability of relief under Section 89, and the petitioner's failure to avail the statutory remedy before seeking a writ petition.
Ratio Decidendi: The court emphasized the requirement for the petitioner to avail the statutory remedy under Section 89 before seeking relief through a writ petition. It highlighted the obligation of the Assessing Officer to grant relief under Section 89 and the petitioner's failure to follow the procedure for claiming exemption under Section 207 of the I-T Act.
Final Decision: The court directed the petitioner to make a required application to the Assessing Officer for the grant of relief under Section 89 and instructed the State Bank of India to extend assistance to the petitioner. It also expected the Assessing Officer to dispose of the matter expeditiously within three months.
JUDGMENT
Sanjay Karol, C.J. - By way of the present writ petition, the petitioner seeks an issue of a writ of mandamus in the form of directions to the respondent nos. 1-4, State Bank of India (SBI) and/or the respondent no. 5, Income Tax Department (I-T Department), to:
(i) act under Section 89(1) and 192(2A) of the Income Tax Act, 1961 and spread over/ distribution of arrears of pension amount paid in a lump sum to the petitioner and not treat them as payable in May 2016;
(ii) refund the illegally deducted income tax from the pension of the petitioner with interest @ 18%;
(iii) not deduct advance income tax every month from the pension of the petitioner as he is a senior citizen and is enjoying exemption of Section 207 of the I-T Act;
(iv) allow costs of litigation at Rs 50,000/- to the petitioner.
2. The facts of the case are as follows.
Facts
3. The petitioner was supposed to retire from the Railway Authorities with effect from November 8, 2007. However, on account of proceedings pending against the petitioner before the Railway Authority, his retirement and pension benefits were withheld. After protracted litigation of several years, in 2016, the petitioner was allowed his pension (less 20% forfeited amount) back-dated with effect from November 8, 2007. Accordingly, Pension Payment Order (PPO) was issued in favour of the petitioner by the Finance Advisor and Chief Accounts Officer and forwarded to the Central Pension Processing Centre (CPPC) of the State Bank of India, Patna.
4. Subsequently, on March 14, 2016, the petitioner submitted an application to the Branch Manager of SBI Chandwara Branch to commence the petitioner''s pension and pay the arrears in pension. The petitioner also submitted a request to not deduct income tax on the amount by treating it as income of the current year, to spread over/ distribute the payment over the period, under Section 89 of the I-T Act read with Rule 21A (2)(d) of the I-T Rules. This was done to ensure that the income tax on the arrears of pension is not deducted by treating the amount as taxable income of the current year and is spread over in the relevant years from 2007 to 2016.
5. On March 30, 2016, the petitioner made a similar application and requested to the CPPC, Patna. The petitioner, further, furnished before the CPPC, all necessary details and calculation sheet for pension as required under with Section 192(2A) of the I-T Act as well as Form 10E of the I-T Department, for claiming relief under Section 89(1) of the I-T Act.
6. It is the petitioner''s case that despite repeated requests, when the arrears of pension were released on June 18, 2016, the income tax was deducted from his pension treating the entire amount as his income for the current year. Thereinafter, the petitioner made more applications to SBI demanding refund of the illegally deducted income tax, but with no avail. The petitioner also applied for the Right to Information Act, 2005 seeking information on the basis for deductions made, from the CPPC, Patna. However, in reply, the petitioner was informed that deductions made were on a prorata basis month-wise in terms of the I-T Act, and the petitioner directed to approach the I-T Department for a refund.
7. The petitioner argues that this deduction of income tax constitutes an illegal deduction from his pension as it is without regard to the statutory provisions, which allow a spread over/distribution of pension amount. If the spread over of amount were followed, the petitioner''s total income would not be falling within taxable limits and as such no income tax would be deductible at source. Therefore, making the deduction of pension by SBI as arbitrary, without jurisdiction and unconstitutional.
8. The petitioner argued that it invoked operation of Section 192 (2A) by submitting the required details and forms and therefore in making a deduction of tax at source under Section 192, SBI was duty-bound to act under the statutory provision to spread over/distribute
