Itr/53/2000 Of The Commissioner Of Incometax v. K.j. Marykutty

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN MONDAY, THE 2ND MARCH 2009 / 11TH PHALGUNA 1930 ITR.No. 53 of 2000() -------------------- (AGAINST THE ORDER IN R.A.NO.71/COCH//1998 IN ITA.402/COCH/96 of I.T.A.TRIBUNAL,COCHIN BENCH ) .................... APPLICANT(S): -------------- THE COMMISSIONER OF INCOME TAX, COCHIN BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI. JOSE JOSEPH, SC FOR IT RESPONDENT(S): --------------- SMT.K.J.MARYKUTTY, KOITHARA HOUSE, KADAVANTHARA, COCHIN 20 (DIED) ADDL. 2. SEBI JOSEPH, LEGAL HEIR AND EXECUTOR, KOITHARA HOUSE (WEST) KOITHARA ROAD, KOCHUKADAVANTHARA , KOCHI 36 ADDL. 3. SABU JOSEPH, KOITHARA HOUSE (WEST), DO.DO. ADDL. 4. SAJAN JOSEPH, DO.DO. ADDL. 5. SINDHU JOSEPH, KOITHARA HOUSE (WEST), DO.DO. ADDL. R2 TO R5 ARE IMPLEADED AS SUCH AS PER ORDER DATED 23.7.2004ON I.A.NO. 219 OF2004 BY ADV. SRI.K.VINOD CHANDRAN FOR R2 TO 5 THIS TAX REFERENCE HAVING BEEN FINALLY HEARD ON 02/03/2009, ALONG WITH ITR NO. 54 OF 2000 ITR NO. 55 OF 2000 THE COURT ON THE SAME DAY DELIVERED THE ON 02/03/2009, ALONG WITH ITR NO. 54 OF 2000 ITR NO. 55 OF 2000 FOLLOWING: C .N. RAMACHANDRAN NAIR &K. SURENDRA MOHAN, JJ.--------------------------------------------I.T.R. Nos. 53,54 & 55 OF 2000 -------------------------------------------- Dated this the 3rd day of March, 2009 JUDGMENT Ramachandran Nair,J. In the connected reference cases, the question raised is whetherthe Tribunal was justified in cancelling an order issued by theCommissioner under Section 263 of the Income Tax Act pertaining toassessments made in respect of one Smt. Marykutty, who is no more,for the assessment years 1985-86 to 1988-89. Even thoughassessments pertain to four years, reference cases before us are only forthree years, except the assessment for 1985-86. After filing the originalreturns, the late assessee filed revised returns declaring interest incomereceived on enhancement of compensation received in land acquisitionproceedings. The tax was also paid along with revised returns. Sincethe revised returns filed were beyond time, the assessing officer did notact upon the same. However, taking the information available from therevised returns, the assessing officer issued notice under Section 148 proposing to make income escaping assessment under Section 147 ofthe Act. However, the assessing officer passed orders on 7.2.1994dropping the proceedings to reopen the assessment. This order was notcommunicated to the late assessee. Later, the Commissioner invokedpower under Section 263 of the Act and set aside the proceedings of theassessing officer dropping Section 147 proceedings initiated by him.The late assessee questioned the order of the Commissioner underSection 263 before the Tribunal on the ground that an order notcommunicated to the assessee cannot be revised under Section 263proceedings. The Tribunal allowed the case of the late assessee. It isagainst this common order of the Tribunal that the above threereference cases are filed by the revenue. 2. We have heard senior counsel appearing for the revenue andcounsel appearing for one of the legal heirs, who got impleaded afterthe death of the assessee. Counsel appearing for the legal heir who isalready on record submitted that the deceased assessee has left otherlegal heirs also to be impleaded before proceeding with the case. Ongoing through the orders and after hearing counsel on both sides, we do not propose to answer the questions for the following reasons. 2. We have heard senior counsel appearing for the revenue andcounsel appearing for one of the legal heirs, who got impleaded afterthe death of the assessee. Counsel appearing for the legal heir who isalready on record submitted that the deceased assessee has left otherlegal heirs also to be impleaded before proceeding with the case. Ongoing through the orders and after hearing counsel on both sides, we do not propose to answer the questions for the following reasons. 3. The assessee is no more and assessments pertain to the periodmore than 20 years back. Along with revised returns the assessee hadin fact remitted tax due and even though revised returns were notaccepted or revised assessments made, the late assessee has not madeany application for refund of the tax paid. In other words, tax on theadditional income sought to be assessed under Section 147 proceedingsinitiated by the assessing officer has already been remitted to thedepartment. The balance grievance of the department is that indropping the proceedings the assessing officer failed to charge interestfor non-payment of advance tax and tax due along with revised returns.In fact assessing officer has power to waive interest under theseprovisions if the assessee submits grounds in accordance with rules. Itis not known whether the assessing officer has dropped Section 147proceedings by taking into account these aspects of the matter. At thisdistance of time, we feel even if we answer the questions in favour ofthe revenue, the matter will go back to the Tribunal for disposal of the ;appeals and thereafter the Officer will have to revise the assessments giving credit for the tax already paid and charging interest or grantwaiver of interest, if the legal heirs file application for waiver. Ifinterest is partially or fully waived, Revenue gets no benefit in thecontinued litigation to be initiated pursuant to our judgment as tax isalready paid. In the circumstances, and since more than 20 years haveelapsed and original assessee is no more, and tax is already paid, we donot find any justification to issue notice in respect of opening of amatter which does not involve any sizable stakes towards interest forthe revenue. We therefore dispose of the reference cases by decliningto answer the questions referred. (C.N.RAMACHANDRAN NAIR)Judge. (K. SURENDRA MOHAN) Judge. kk