By Sri.harisankar v. Menon

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU THURSDAY, THE 17TH DAY OF AUGUST 2017/26TH SRAVANA, 1939 WA.No. 1454 of 2017 IN WP(C).33522/2016 -------------------------------------------- AGAINST THE JUDGMENT IN WP(C) 33522/2016 of HIGH COURT OF KERALADATED 01-06-2017 ---------- APPELLANTS/RESPONDENTS IN WPC: ----------------------------------------- 1. AGRICULTURAL INCOME TAX & COMMERCIAL TAX OFFICER ALATHUR-678541 ALATHUR-678541 2. DEPUTY COMMISSIONER DEPARTMENT OF COMMERCIAL TAXES, SALES TAX COMPLEX,PALAKKAD- 678 001PALAKKAD- 678 001 BY SR. GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ RESPONDENT/PETITIONER IN WPC: ---------------------------------------- M/S.SOBHA GOLD IV/814, CHANTHAPURA, KUZHALMANNAM, PALAKKAD, REP. BY ITSMANAGING PARTNER, OUSEPH JOY. BY SRI.HARISANKAR V. MENON THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 17-08-2017, ALONG WITH WA. 1459/2017, WA. 1485/2017, THE COURT ONTHE SAME DAY DELIVERED THE FOLLOWING: ANTONY DOMINIC, & DAMA SESHADRI NAIDU, JJ. ------------------------------------------------ W. A. Nos.1454, 1459 & 1485 of 2017 ------------------------------------------------Dated this the 17[th ]day of August, 2017 JUDGMENT Antony Dominic, J. 1. aThese appeals arise from the common judgment ofthe learned single Judge in W.P.(C) Nos.24958/15 and33522 of 2016. Among the three appeals, W.A. No.1459 of2017 is filed by the assessee and W.A. Nos.1454 and 1485of 2017 are filed by the State. 2. Briefly stated, the case is that, a proprietorship, theappellant in W.A. No.1459 of 2017, obtained registrationunder the KVAT Act in October, 2013 to commence businessin gold jewellery. In December, 2013, by Exts.P1 and P1(a)in W.P.(C) No.24958 of 2015, they acquired certain quantityof gold. However, in the return concerning the month ofDecember, 2013, the stock was not declared. Subsequently, the registration itself was got cancelled on the application of the assessee with effect from 31.03.2014. Thereafter, by itsletter dated 16.05.2014 to the Assessing Officer, theassessee declared the discrepancy in his return forDecember, 2013 caused on account of his omission todeclare the stock of gold. However, without permitting theassessee to revise the return, the Assessing Officer issuednotice to complete assessment including the gold for theAssessment Year 2013-14. Simultaneously, penalty noticewas also issued. Although the assessee filed his reply noticeand contested the matter, by Exts.P5 and P5(a) in W.P.(C)No.24958 of 2015, assessment was completed and penaltywas also levied. It was, in these circumstances, theassessee filed W.P.(C) No.24958 of 2015 seeking to quashExts.P5 and P5(a) mentioned above. 3. In the meantime, with effect from 01.04.2014, theassessee commenced business of gold in partnership and the stock of gold acquired by him in December, 2013 was brought in as his contribution to the capital of the firm. Hereagain, the firm omitted to indicate stock of gold in its returnfor the month of April, 2014. Almost one and a half yearsthereafter, on 24.08.2015, Assessing Officer issued notice toproduce books on 08.09.2015. Subsequently, assessee byits letter dated 14.10.2015, disclosed the Assessing Officertheir omission to indicate the stock of gold in their returnand requested to allow them to revise their returns. Thatrequest was rejected and thereafter, pre-assessment noticeas well as notice of penalty was issued. Accordingly, videExts.P6 and P6(a) in W.P.(C) No.33522 of 2016, assessmentwas completed and penalty of double the amount of tax wasalso levied. It was challenging these proceedings, theassessee filed W.P.(C) No.33522 of 2016. 4. By the judgment under appeal, the learned singleJudge allowed W.P.(C) No.24958 of 2015 and quashed the W. A. Nos.1454, 1459 & 1485 of 2017 4. By the judgment under appeal, the learned singleJudge allowed W.P.(C) No.24958 of 2015 and quashed the W. A. Nos.1454, 1459 & 1485 of 2017 impugned proceedings and directed that the assessee bepermitted to revise his return and on that basis to completethe assessment. 5. Insofar as W.P.(C) No.33522 of 2016 is concerned, the learned single Judge upheld Ext.P6 order of assessment,but interfered with the penalty order by reducing the sameto `1 lakh. 6. In W.A. Nos.1454 and 1485 of 2017, the State ischallenging the judgment of the learned single Judge whilein W.A. No.1459 of 2017, the assessee is challenging thejudgment of the learned single Judge in W.P.(C) No.33522of 2016 to the extent assessment order has been upheld by the learned single Judge. 7. We heard the learned Government Pleaderappearing for the State and the learned counsel appearingfor the Revenue. 8. Insofar as the judgment in W.P.(C) No.24958 of W. A. Nos.1454, 1459 & 1485 of 2017 2015 is concerned, the complaint of the learnedGovernment Pleader is that the learned single Judge hasallowed the assessee to file his revised return long after theregistration itself has been cancelled. Therefore, accordingto the learned Government Pleader, the judgment of thelearned single Judge is illegal. Similarly, insofar as thejudgment in W.P.(C) No.33522 of 2016 is concerned, hiscomplaint is that the learned single Judge for no validreason has reduced the penalty from double the amount oftax to `1 lakh. 9. At the same time, learned counsel for the assesseecomplains that the assessee having made a request forrevising the return of the partnership firm, should have beenallowed to revise his return and for that reason, thejudgment of the learned single Judge to the extent theassessment order challenged in W.P.(C) No.33522 of 2016is illegal. W. A. Nos.1454, 1459 & 1485 of 2017 10. Having considered the rival submissions of bothsides, we confess our inability to accept the argumentsraised before us. As far as the permission given to theassessee, the proprietorship, to revise its return for themonth of December, 2013 in the judgment in W.P.(C)No.24958 of 2015 is concerned, as rightly found by thelearned single Judge, long before the notice was issued bythe Assessing Officer, the assessee himself had by its letterdated 16.05.2014 informed the Assessing Officer of thediscrepancy caused on account of his omission to include thestock of gold in the return for the month of December,2013. When such a request was made, as rightly found bythe learned single Judge, the Assessing Officer ought tohave given him an opportunity. True, the request was madelong after 31.03.2014 when the registration was gotcancelled by the assessee. But, however, as stated by thelearned single Judge, even in such a case, revision of W. A. Nos.1454, 1459 & 1485 of 2017 assessment pertaining to the period of which the assessee was carrying on the business on the strength of theregistration granted to him, was permissible in law and itwas therefore, the learned single Judge has taken the view. 11. Coming to the complaint of the learned Government Pleader that in the judgment in W.P.(C)No.33522 of 2016, the learned single Judge has erroneouslyreduced the penalty imposed to `1 lakh, is concerned,according to us, levy of penalty should always beproportionate to the gravity of the offence committed by theassessee. Insofar as this case is concerned, though at abelated stage, the assessee himself has confessed hismistake and sought an opportunity to revise his return,though such revision could not have been allowed, stilltaking into account such conduct of the assessee, we feelthat the learned single Judge was justified in taking the viewthat the penalty of double the amount of tax imposed, viz. `23,61,076/- was too disproportionate. Therefore, we do not Government Pleader that in the judgment in W.P.(C)No.33522 of 2016, the learned single Judge has erroneouslyreduced the penalty imposed to `1 lakh, is concerned,according to us, levy of penalty should always beproportionate to the gravity of the offence committed by theassessee. Insofar as this case is concerned, though at abelated stage, the assessee himself has confessed hismistake and sought an opportunity to revise his return,though such revision could not have been allowed, stilltaking into account such conduct of the assessee, we feelthat the learned single Judge was justified in taking the viewthat the penalty of double the amount of tax imposed, viz. `23,61,076/- was too disproportionate. Therefore, we do not find any reason to interfere with that relief granted by thelearned single Judge also. 12. Turning to W.A. No.1459 of 2017 filed by the assessee, the partnership firm, their grievance is to theextent that Ext.P6 order of assessment challenged wassustained by the learned single Judge. The contention raisedis that when they made a request for revision of the returnsthat ought to have been allowed. 13. We cannot ignore the fact that the omission inquestion had occurred in April, 2014. The Assessing Officerhad issued notice calling upon the assessee to produce thebooks of accounts on 24.08.2015. The date specified forappearance was 08.09.2015. It is still thereafter that on14.10.2015, the assessee made request for revision of theirreturns. In such a situation, when the request was rejectedand assessment is completed, we cannot say that the W. A. Nos.1454, 1459 & 1485 of 2017 Assessing Officer has committed an illegality in completingthe assessment. We, therefore, agree with the view takenby the learned single Judge in that regard also. 14. Resultantly, we do not find any merit in theseappeals. The appeals, therefore, fail and are accordinglydismissed. Sd/- ANTONY DOMINIC JUDGE Sd/- DAMA SESHADRI NAIDU JUDGE kns/- //TRUE COPY// P.S. TO JUDGE