Antony Dominic, J v. Vasco Sales And Marketing Corporation

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC &THE HONOURABLE MR. JUSTICE SHAJI P.CHALY FRIDAY, THE 3RD DAY OF JULY 2015/12TH ASHADHA, 1937 WA.No. 1152 of 2013 () IN WP(C).24109/2005 -------------------------------------------- AGAINST THE JUDGMENT IN WP(C) 24109/2005 of HIGH COURT OF KERALA DATED 01-03-2013 APPELLANT(S)/RESPONDENTS: ---------------------------------------------- 1. DEPUTY COMMISSIONER OF INCOME TAX CRICLE-I, DIVISION-1, CALCUT. CRICLE-I, DIVISION-1, CALCUT. 2. THE COMMISSIONER OF INCOME TAX CALICUT 3. THE CHIEF COMMISSIONER OF INCOME TAX COCHIN. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): ---------------------------- VASCO SALES AND MARKETING CORPORATION REPRESENTED BY ITS MANAGING PARTNER, V.HAMEED 20/272-D, KALLAI HEIGHTS, KALLAI KOZHIZKODE-673 003. R BY SRI.K.P.BALASUBRAMANYAN THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 22-05-2015, THECOURT ON 03-07-2015 DELIVERED THE FOLLOWING: ANTONY DOMINIC & SHAJI P. CHALY, JJ.-----------------------------------W.A.No.1152 of 2013 ----------------------------------- Dated this the 3[rd] day of July, 2015 JUDGMENT Antony Dominic, J. 1.This writ appeal is filed by the respondents inW.P.(C)No.24109 of 2005. The writ petition was filedby the respondents herein challenging Ext.P13 orderby which their claim for refund was rejected on theground that return for the assessment years 1996-97and 1997-98 were filed belatedly and Ext.P16 order,declining to condone delay in filing the returns. Bythe judgment under appeal, relying on the judgment ofthis Court in Pala Marketing Co-op. Society Ltd.v.Union of India and Others[2008 (1) KLJ 561], thelearned Single Judge condoned the delay in applyingfor refund and remitted the case to the 3[rd] appellantto reconsider the application for refund afresh andpass orders thereon. It is this judgment which isimpugned before us.W.P.(C)No.24109 of 2005. The writ petition was filedby the respondents herein challenging Ext.P13 orderby which their claim for refund was rejected on theground that return for the assessment years 1996-97and 1997-98 were filed belatedly and Ext.P16 order,declining to condone delay in filing the returns. Bythe judgment under appeal, relying on the judgment ofthis Court in Pala Marketing Co-op. Society Ltd.v.Union of India and Others[2008 (1) KLJ 561], thelearned Single Judge condoned the delay in applyingfor refund and remitted the case to the 3[rd] appellantto reconsider the application for refund afresh andpass orders thereon. It is this judgment which isimpugned before us. 2.We heard the learned counsel for the appellants andthe learned counsel appearing for the respondent.the learned counsel appearing for the respondent. WA.1152/13 3.Admittedly, returns for the assessment years 1996-97and 1997-98 were filed belatedly on 30.06.1998 and29.02.2000 respectively. In these returns, theassessee claimed refund of the advance tax paid.Ext.P13 order was passed rejecting their claim forrefund on the ground that returns were filed afterthe due dates for both the assessment years and theclaim for refund cannot be entertained. It wasthereupon that the assessee filed Exts.P14 and P15applications before the 2[nd] appellant to condone thedelay in terms of Section 119 (2)(b) of the IncomeTax Act. On that application, Ext.P16 order waspassed. In that order, the 3[rd] appellant held thatthe returns were filed in response to notices issuedunder Section 148 and that in such a case, theassessee will not be entitled to claim refund ofadvance tax paid and relied on the judgment of theBombay High Court in K. Sudhakar S. Shanbhagv.Income Tax Officer[(2000) 241 ITR 865]. The 3[rd]appellant also held that the assessee has notproperly explained the delay. It is these orderswhich are set aside by the learned Single Judge. WA.1152/13 WA.1152/13 4.It is true that returns are to be filed before thedue date under Section 139(1) or (4) of the IncomeTax Act and in cases where returns are belatedlyfiled or refund claims are made beyond the timeprovided in Section 239 of the Act, refund cannot beclaimed. However, Section 119 (2)(b) of the Actempowers the Central Board of Directors to authorizeany income tax authority, not being a Commissioner(Appeals), to admit an application or claim for anyrefund after the expiry of the period specified by orunder this Act for making such application or claimand deal with the same on merits in accordance withlaw. As is evident from this Section, the purpose ofconferring such authority is for “avoiding genuinehardship”. 5.Section 119(2)(b) reads thus: “119(2)(b): the Board may, if it considers itdesirable or expedient so to do for avoidinggenuine hardship in any case or class of cases, bygeneral or special order, authorize any income taxauthority, not being a Commissioner (Appeals) toadmit an application or claim for any exemption,deduction, refund or any other relief under this WA.1152/13 Act after the expiry of the period specified byor under this Act for making such application orclaim and deal with the same on merits inaccordance with law.” 6.In the light of the above provision, when Exts.P14and P15 applications were filed by the assessee, whatwas required to be examined was whether, to avoidgenuine hardship to the assessee, it was necessary tocondone the delay in making the application forrefund. Ext.P16 order does not show that theCommissioner has examined Exts.P14 and P15applications in the manner as required under Section119(2)(b). On the other hand, Commissioner hasdiscussed on the merits of the application and heldthat the delay has not been properly explained andthat when returns are filed in response to noticesissued under Section 148, assessee will not beentitled to claim refund of advance tax paid. In ourview, such an order does not reflect a properexercise of power under Section 119(2)(b) and forthat reason, Ext.P16 is unsustainable. WA.1152/13 7.It is true that the Bombay High Court in the judgmentin K.Sudhakar S.Shanbhag (supra) has held that whenreturn is filed in response to a notice under Section148, assessee is not entitled to claim refund.However, if the Commissioner condones the delay inexercise of his power under Section 119 (2)(b), thefact that return was filed in response to a noticeunder Section 148 would pale into insignificance. in K.Sudhakar S.Shanbhag (supra) has held that whenreturn is filed in response to a notice under Section148, assessee is not entitled to claim refund.However, if the Commissioner condones the delay inexercise of his power under Section 119 (2)(b), thefact that return was filed in response to a noticeunder Section 148 would pale into insignificance. 8.In this case, according to us, when Ext.P16 order waspassed in an improper manner, the learned SingleJudge ought to have directed reconsideration ofExts.P14 and P15 instead of condoning the delay byhimself. Therefore, while we are inclined to agreewith the learned Single Judge on the unsustainabilityof Exts.P13 and P16 orders, according to us, theproper consequential order to be passed is to directreconsideration of Exts.P14 and P15 with a directionto pass fresh orders in the matter. passed in an improper manner, the learned SingleJudge ought to have directed reconsideration ofExts.P14 and P15 instead of condoning the delay byhimself. Therefore, while we are inclined to agreewith the learned Single Judge on the unsustainabilityof Exts.P13 and P16 orders, according to us, theproper consequential order to be passed is to directreconsideration of Exts.P14 and P15 with a directionto pass fresh orders in the matter. 9.Therefore, we set aside the judgment of the learnedSingle Judge to the extent the delay is condoned anddispose of the writ appeal quashing Exts.P13 and P16Single Judge to the extent the delay is condoned anddispose of the writ appeal quashing Exts.P13 and P16 WA.1152/13 orders and directing the competent authority amongthe appellants to reconsider Exts.P14 and P15 andpass orders thereon in the light of Section 119(2)(b)of the Income Tax Act. This shall be done at anyrate within 2 months from the date of receipt of acopy of this judgment. Writ appeal is disposed of as above. Sd/- ANTONY DOMINIC, Judge. Sd/- SHAJI P. CHALY, Judge. kkb. /True copy/ PS to Judge