The department’s income tax payment software should be tailor-made as per taxpayer requirements: Delhi HC


In a landmark pro-tax ruling, the Delhi High Court observed that the Income Tax Department’s software for tax payment must be tailor-made as per the requirements of the taxpayer.

The Claimants, a group of companies, have approached the High Court to request Respondent No 2 to rectify the Forms 3 issued on 22 April 2021 and to issue the Forms 5 after the Forms 4 were filed under the Vivad se Vishwas law on direct taxation (‘DTVSV law’). The Claimants argued that on March 26, 2021, the Claimants filed returns in Forms 1 and 2 electronically, but inadvertently reported amounts paid by various challans excluding the interest component.

It has been submitted on behalf of the department that the Appraisal Officer (TDS) is taking steps to fix the Challans code but she is facing difficulties as the software does not allow for the correction of the challan code at the level of assessment officer and ask for assistance. of the CPC/Systems team. It was further stated that if the software did not allow the code to be corrected, then it would be difficult to give redress to the claimant.

Accepting the petitions, Judge Manmohan and Judge Manmeet Pritam Singh Arora observed that “in the opinion of this Court, as the petitioners have paid the taxes, they should be credited for the challans paid in Form 3 under the said law. The order/communication of April 7, 2022 rejecting the tax credit filed under the DTVSV law on the hyper-technical grounds that the challans were filed under the minor heading ‘200’ instead of ‘400’ is unfair, illegal and contrary to the purpose of enacting the DTVSV Act, 2020.”

Ordering the department to correct the payment headers, register the filed tax credit and issue the revised Form 3s within four weeks, the Court added that “if the only impediment to granting relief requested by the applicant is the software, the same must be suitably modified to accept applications from the applicants. One of us, (Manmohan, J) in Shalu Nigam & Anr. Versus. The Regional Passports & Anr. 2016 SCC OnLine Del 3023 stated, “In all cases, technology is intended to facilitate and facilitate transactions and cannot be relied upon to create and defeat anyone’s legal rights.” After all, the software should be tailor-made according to the needs, aspirations and legal rights of taxpayers and not that the legal rights of taxpayers should be tailor-made according to the software used by the Department of Taxation. »

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Counsel for the Appellant: Mr. Yogesh Jagia, Mr. Nitesh Jain and Mr. Rishabh Nangia

Counsel for the Respondent: Mr. Puneet Rai


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