Karnataka HC Lets Property Seller Seek Refund Over ₹9.01 Lakh TDS Mismatch, Leaves Decision To Tax Officer

The petitioner challenged an intimation under Section 143(1) of the Income Tax Act, 1961, for assessment year 2016–17.

She claimed TDS credit of ₹9,47,600 in connection with the sale of property for ₹46,00,000, but the intimation recognised only ₹46,000, leaving a mismatch of ₹9,01,600.

She asserted that the purchaser had deducted the claimed amount and sought a refund of approximately ₹3,10,870.

The respondents submitted that, because the petitioner was an NRI, the purchaser was required to report the deduction in Form 27Q, whereas Form 26QB permitted deduction at only 1%; they suggested that the mismatch may have arisen from this reporting discrepancy.

The petitioner had not first made a representation to the jurisdictional Assessing Officer.

The petitioner invoked Articles 226 and 227 of the Constitution to challenge the intimation issued under Section 143(1) of the Income Tax Act, 1961.

The Court did not determine the substantive rules governing the petitioner’s entitlement to TDS credit or refund.

It directed that the jurisdictional Assessing Officer examine the alleged reporting anomaly and decide whether a refund was permissible in law; if the petitioner’s claim was found acceptable, the officer was to report the matter to the Central Processing Unit for the admissible refund.

The Court noted the substantial difference between the TDS claimed and the amount matched, as well as the respondents’ explanation that the mismatch could have resulted from the use of Form 26QB instead of Form 27Q.

Because the petitioner had not first approached the jurisdictional Assessing Officer, and the alleged cause of the discrepancy required examination, the Court left the merits of the TDS claim and refund undecided and directed the petitioner to pursue that administrative review.

It granted liberty to the petitioner to submit a certified copy of the order and a representation to the first respondent by 6 November 2026.

The first respondent was directed to examine the matter and, if the claim was found acceptable, arrange for a report to the second respondent concerning any admissible refund; the petitioner was to be informed of that report within six weeks of receipt of the representation.