IMPORTANT POINT
Errors apparent on the record, including mistakes of law, must be rectified to prevent unlawful taxation, as mandated by Article 265 of the Constitution.

ORDER :

Sujoy Paul, J.

1. This petition filed under Article 226 of the Constitution of India takes exception to the order dated 23.12.2021 in F.No.DCIT-1(1)/AAACB8316K/A.Y.2015-16/2021-22, whereby the application preferred by the petitioner under Section 154 of the Income Tax Act, 1961 (Act), was dismissed by assigning certain reasons.

2. The pivotal question before us is that when an assessee erroneously or as a mistake of law, admittedly paid tax on more than one occasion, and claims its refund under Section 154 of the Act, whether such application can be rejected by holding that such mistake does not fall within the ambit of ‘error apparent on the face of record’.

Background facts:

3. The admitted facts between the parties are that the petitioner filed his returns for Assessment Year 2015-16. In the said return, he has paid tax relating to ‘retention money’, which money was actually paid to him by the Government in the Assessment Years 2016-17, 2017-18 and 2018-19. The petitioner as an oversight again paid the tax on that ‘retention money’ in the Assessment Years 2016-17, 2017-18 and 2018-19. After having realised that he has paid tax twice, he preferred an application under Section 154 of the Act, for rectification of mistake before respondent No.2. The said application came to be dismissed by order dated 23.12.2021.

Contention of the petitioner:

4. Criticising the impugned order, the learned counsel for the petitioner submits that Article 265 of the Constitution of India, in no uncertain terms makes it clear that tax cannot be levied or collected beyond authority of law. The law permits levy of tax once on ‘retention money’, which has been admittedly collected in the year 2015-16. The subsequent payment of the tax for the years 2016-17, 2017-18 and 2018-19 was inconsonance with law because the income from retention money was relating to those years. The previous payment of tax in the year 2015-16 was by mistake and said amount should have been refunded by invoking power under Section 154 of the Act. Respondent No.2 committed an error in rejecting the same. In support of this submission, he placed reliance on the judgments of Bombay High Court in the case of National Rayon Corporation Ltd vs. G.R.Bahmani, Income Tax Officer, Companies Circle I (3), Bombay, (1965) 56 ITR 114 (Bom) and Delhi High Court in the case of Vijay Gupta vs. Commissioner of Income-Tax, (2016) 386 ITR 643 (Del). It is argued that although, the judgment of the Delhi High Court deals with scope and ambit of Section 264 of the Act, it is based on the fundamental principle that a person cannot be subjected to double taxation or imposition of tax beyond authority of law. When the levy/deposit of tax is beyond authority of law, delay and technicalities etc., cannot strangulate the assessee and the excess amount so paid must be refunded.

Stand of Revenue:

5. Sri Vijhay K Punna, the learned counsel for the respondents opposed prayer of the petitioner and placed reliance on the judgment passed by Division Bench of this Court in the case of MS Educational and Welfare Trust vs. Assistant Commissioner of Income Tax, (2022) 444 ITR 310. He raised two fold submissions. The first is that the error pointed out by the petitioner does not fall within the ambit of Section 154 of the Act. Secondly, the petitioner has a statutory remedy of appeal, where he can raise all these points.

6. No other points were pressed by learned counsel for both the parties.

7. We have heard the parties at length and perused the record.

Findings:-

8. Before dealing with rival contentions, it is apt to refer to Article 265 of the Constitution of India, which reads as under:

“Article 265: Taxes not to be imposed save by authority of law:- No tax shall be levied or collected except by authority of law.

9. During the course of hearing, the learned counsel for parties fairly submitted that the Bombay High Court in case of National Rayon Corporation Ltd (supra) was dealing with Section 35 of the Income Tax Act,