The Bombay High Court on January 24, 2025, disposed of the Public Interest Litigation (PIL) filed by the Chamber of Tax Consultants concerning the eligibility of the rebate under Section 87A of the Income Tax Act, 1961. The bench, comprising Justice M. S. Sonak and Justice Jitendra Jain, ruled that the issue of eligibility for claiming the rebate is within the purview of the authorities under the Income Tax Act, who assess such claims during the processing of returns.
The PIL was initiated by the Chamber of Tax Consultants, a society representing over 3,800 members, including Advocates, Chartered Accountants, and tax professionals. The matter came to light on July 5, 2024, when taxpayers found themselves unable to claim the rebate under Section 87A for the assessment year 2024-25 while filing their online returns. Prior to this date, the utility provided by the department had allowed assessees to make such claims. The petitioners, along with various other associations, made multiple representations to the respondents, seeking a resolution, but upon receiving no response, approached the Court for redressal.
The primary issue raised was whether the modification to the online utility by the department, which blocked taxpayers from claiming the Section 87A rebate while uploading their returns, was justifiable. The petitioners contended that such a restriction at the threshold stage was unjust.
The bench opined that the department could not prevent an assessee from making a claim under Section 87A simply by modifying the utility. The Court observed that any claim made, regardless of its eligibility, should be reviewed during the assessment process, specifically under Sections 143(1) and 143(3) of the Income Tax Act. The Court further highlighted that an assessee should not be barred from making a claim, even if the claim is debatable or arguable.
In its ruling, the Court emphasized that the mere volume of returns processed or the limited number of returns selected for scrutiny could not serve as justification for prohibiting the filing of such claims. Furthermore, the Court reaffirmed that the department has the authority to examine any claims made by assessees according to the provisions of the Act.
The bench also clarified that it refrained from passing any judgment on the correctness of the petitioners' arguments, as this was a matter for the quasi-judicial authorities to decide during the regular assessment process.
The Court's decision is seen as a reaffirmation of the taxpayer's right to make legitimate claims, even when such claims are later subject to scrutiny by the tax authorities.
Case Details:
- Case Title: The Chamber of Tax Consultants Versus Director General of Income Tax (Systems)
- Case No.: PUBLIC INTEREST LITIGATION (L) NO. 32465 OF 2024
- Date: January 24, 2025
- Counsel for Petitioner: Percy J. Pardiwala, Senior Advocate, a/w Mr. Dharan V. Gandhi
- Counsel for Respondent: N. Venkatraman ASG (through VC), a/w Mr. Akhileshwar Sharma, a/w Mr. Abhishek Mishra
Official copy of the judgment has been attached
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