Available Under Section 120 Of The Income Tax Act, Empoweredthe 2[Nd] Respondent To Exercise His Powers Which Is Permissible Inlaw v. It Is True That The 1[St] Respondent Is The Assessing Officer.but, When The Notification Is Issued By The Central Board Of Directtaxes Conferring The Power In R

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH WEDNESDAY, THE 1ST APRIL 2009 / 11TH CHAITHRA 1931 WP(C).No. 6858 of 2009(B) ------------------------- PETITIONER(S): --------------- COCHIN INTERNATIONAL AIRPORT LIMITED, HAVING ITS REGISTERED OFFICE AT NO.35, 4TH FLOOR, GCDA COMMERCIAL COMPLEX, MARINE DRIVE, KOCHI-31, REPRESENTED BY ITS GENERAL MANAGER (FINANCES) R. SURESH KUMAR BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.ANIL D. NAIR RESPONDENT(S): --------------- 1. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 (1) RANGE I, C.R. BUILDINGS, I.S. PRESS ROAD, KOCHI -18. 2. DEPUTY COMMISSIONER OF INCOME TAX (TDS),C.R. BUILDINGS, I.S. PRESS ROAD, KOCHI -18. 3. THE COMMISSIONER OF INCOME TAX (TDS), C.R. BUILDINGS, I.S. PRESS ROAD, KOCHI-18. 4. CENTRAL BOARD OF DIRECT TAXES, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NEW DELHI. ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01/04/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M. JOSEPH, J. ```````````````````````````````````````````````````` W.P.(C) No. 6858 OF 2009 B ```````````````````````````````````````````````````` Dated this the 1[st] day of April, 2009 J U D G M E N T Petitioner applied for the grant of certificate under section 197 of the Income Tax Act, 1961. Under section 197, it isopen to the authority to certify that assessee is entitled to paymentwithout deducting tax at source. Accordingly, on the basis of theapplication, petitioner obtained Ext.P2 series. Subsequently, afterserving notice on him and affording an opportunity for hearing tothe petitioner, the impugned order has been passed, namelyExt.P4. The certificate is withdrawn with effect from the date ofissuance. The only reason is that the jurisdiction for issuance ofcertificate under section 197(1) is stated to be rest with theCommissioner of Income Tax(TDS). The certificates were issuedby the Deputy Commissioner of Income Tax, Circle-I(respondentNo.1). It is pointed out that such certificates are withoutjurisdiction. 2.I heard learned counsel for the petitioner and learnedstanding counsel. Learned counsel for the petitioner points out WPC.6858/09 : 2 : that under the Act, the Deputy Commissioner is the assessingofficer. The petitioner has filed an application before theassessing officer. After considering the same, the certificateswere issued. They have been acted upon and the third partieshave made payments on the strength of these certificates. Hewould further contend that at any rate, the revocation of the earliercertificates with retrospective effect is unsustainable. Learnedcounsel for the petitioner points out that the certificates werewithdrawn by the 2[nd] respondent even though the power is vestedwith the Commissioner. 3.Per contra, learned standing counsel would contendthat though the 1[st] respondent is assessing officer, Ext.P5notification is issued by the Central Board of Direct Taxes bywhich power is conferred on the Commissioner of Income Tax(TDS), Cochin. This notification is issued prior to the date of theapplication filed by the petitioner and, therefore, it is not open tothe petitioner to contend that even after the issuance of thenotification, the 1[st] respondent had power in the matter. It ispointed out that the Commissioner has, acting under the powers WPC.6858/09 : 3 : available under section 120 of the Income Tax Act, empoweredthe 2[nd] respondent to exercise his powers which is permissible inlaw. 3.Per contra, learned standing counsel would contendthat though the 1[st] respondent is assessing officer, Ext.P5notification is issued by the Central Board of Direct Taxes bywhich power is conferred on the Commissioner of Income Tax(TDS), Cochin. This notification is issued prior to the date of theapplication filed by the petitioner and, therefore, it is not open tothe petitioner to contend that even after the issuance of thenotification, the 1[st] respondent had power in the matter. It ispointed out that the Commissioner has, acting under the powers WPC.6858/09 : 3 : available under section 120 of the Income Tax Act, empoweredthe 2[nd] respondent to exercise his powers which is permissible inlaw. 4.Learned counsel for the petitioner, of course, relied onthe decisions of the Apex court relating to the principle of de factodoctrine in Pushpadevi M. Jatia Vs. M.L. Wadhawan, AdditionalSecretary, Government of India and others [1987 (3) SCC 367],M/s.Beopar Sahayak (P) Ltd. and others Vs. Vishwa Nath andothers [1987 (3) SCC 693] and Central Bank of India Vs.C.Bernard [1991 (1) SCC 319]. Learned standing counsel wouldpoint out that the decisions may not apply as the 1[st] respondentwas fully aware at the time he was acting that there was no powerwith him. So also, ignorance of law cannot be excused. When thenotification is issued by the 4[th] respondent and the petitioner filedthe application after the notification, there was no basis forgranting certificate by an unauthorized person, it is submitted. 5.It is true that the 1[st] respondent is the assessing officer.But, when the notification is issued by the Central Board of DirectTaxes conferring the power in relation to issuance of certificate under section 197 on the Commissioner of Income Tax(TDS), whoI find is the authority empowered in all the States, it may not beopen to the petitioner to contend that the 1[st] respondent continuedto retain the authority in law to issue the certificate. Likewise, it isnot open to the petitioner also to dispute the authority of the 2[nd]respondent as a statutory delegate of power under section 120deriving his power from the authorization given by theCommissioner. Therefore, there may not be any doubt that theorder was issued initially by the 1[st] respondent without theauthority of law. So also, there is no merit in the contention thatthe 2[nd] respondent was not empowered to withdraw it. However,having regard to the sequence of facts and the passage of time,which took place after the grant of certificates and the paymentswhich are effected on the strength of the certificates, it is not fair toallow the retrospective cancellation of the certificates. Obviously,everybody acted on the basis of the certificates. Payments weremade without deduction on the strength of the certificates. The 1[st]respondent cannot be said to be a person who is totallyunconnected with the administration of the Income Tax Act. In WPC.6858/09 such circumstances, while I repel the contention of the petitionerabout the absence of authority with the 2[nd] respondent or thepresence of the authority with the 1[st] respondent after thenotification is issued, I would think that it would be equitable if Isustain the impugned order but with prospective effect. I do so. Writ petition is partially allowed as above. aks Sd/-(K.M.JOSEPH, JUDGE) // TRUE COPY // P.A. TO JUDGE