M/S.lakshmistonecrushingindustries v. The Income Tax Officerpassedinitano.448/2009(D.d.3.2.2015)Industries Vs. The Income Tax Officerpassedinitano.448/2009(D.d.3.2.2015

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26 DAY OF NOVEMBER, 2019. BEFORE, THR HON’BLE MRS.JUSTICEK S.SUJATHA WRIT PETITION No.6644/2017 (TIT) BETWEEN : SHRI SHANKARLAL JAINAGED ABOUT 73 YEARS,R/AT NO.854,CHAMUNDESHWARI ROAD,MYSORE-570004_ PRHTITTIONBER. (BY SMT.JINITA CHATTERJEE, ADV. FORSRI S.PARTHASARATHI, ADV.) AND : THER CHIBF COMMISSIONBR OF INCOME-TAXC.R.BUIDLING, QUEENS ROAD,BBNGALURU-560001_. RESPONDENT. (BY SRI K.V.ARAVIND, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND22/ OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THEORDER DATED 26.09.2016 VIDE ANNBEXURE-J PASSED BY THERESPONDENT. THIS PETITION COMING ON FOR PRELIMINARY HEARING|IN ‘B’ GROUP3THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner though has challenged the ordersdated 26.9.2016 and 10.11.2016 passed by therespondent for the assessment years 2009-10 andYAO LO-1inter alia|seeking a direction to the respondent.to waive of the interest charged under sections 234A,234B and 234C of the Income Tax Act, 1961 (‘Act’ forshort), has now restricted the challenge only to theorders relating to the assessment year 2010-11. 2.The petitioner is an individual engaged inpawn broking business at Mysore. On 16.2.2010, theIncome Tax Department conducted a survey underSection 133A otf the Act and in the statements.recorded, the petitioner had admitted certain amountsas unaccounted. Assessments were concluded under|section 143(3) of the Act on 22.3.2013 relating to theassessment yearAQ 1VO-1levying interest under Section|234A, 234B and 234C of the Act. The petitioner had filedall application undertheBoard’sCircular.InF.No.400/29/2002-IT(B) for waiver of the interest beforethe Chief Commissioner of Income Tax, Bengaluru, on19.6.2013. The respondent-CCIT declined to waive ofthe interest. Further, the petitioner’s application dated43.9016 tor review and re-consideration of the order|dated 19.6.2013 was also rejected. Hence, the presentwrit petition. | 3.Learned|counselSmt.JinitaChatterjeeappearing for the petitioner would vehemently contendthat the respondent Authority has failed to appreciatethe tenor of the Circular instructions of the Central|Board of Direct Taxes (CBDT), dated 26.06.2006inasmuch as the survey conducted under Section 133Aof the Act in the business premises of the assesseepertaining to the assessment year in question vis-a-visfiling of the return by the assessee on 09.04.2011.Learnedcounsel submitted that|the.books|and documents were impounded during survey and thesame was not available to the petitioner despite severalrequests made which caused delay in filing the return ofincome. The same has to be construed as unavoidable|circumstances. The return of income was filed ons0.4.2011 voluntarily by the assessee without anydetection by the Assessing Officer. As such, the benefitof the Circular instructions dated 26.6.2006 has to be|extended to the petitioner. 4Learned counsel for the petitioner arguedthat the phrase “or otherwise” employed in Clause 2(a)of the CBDT Circular dated 26.06.2006 has to be givenQA wider connotation to extend the benefit of the circularinstructions keeping in mind the intent of the saidNotification to waive of the interest, in order to mitigatethe hardship caused to the assessee. Learned counselwould submit that the phrase “or otherwise” in clause2(a) of the instructions of CBDT requires to be applied -5- even to the proceedings of survey under Section 133 ofthe Act. Clause 2(d) of the said circular dated26.06.2006 was also referred to. Reliance is placed on the following judgments: 1.P.S.SeshadriVs.The|Chief)Commissioner of Income Tax passedin W.P.No.42424/2012 (D.D.2.7.2013)confirmedin|WritAppealNo. 5442/2013 (D.D.1.8.2014).Commissioner of Income Tax passedin W.P.No.42424/2012 (D.D.2.7.2013)confirmedin|WritAppealNo. 5442/2013 (D.D.1.8.2014). -5- even to the proceedings of survey under Section 133 ofthe Act. Clause 2(d) of the said circular dated26.06.2006 was also referred to. Reliance is placed on the following judgments: 1.P.S.SeshadriVs.The|Chief)Commissioner of Income Tax passedin W.P.No.42424/2012 (D.D.2.7.2013)confirmedin|WritAppealNo. 5442/2013 (D.D.1.8.2014).Commissioner of Income Tax passedin W.P.No.42424/2012 (D.D.2.7.2013)confirmedin|WritAppealNo. 5442/2013 (D.D.1.8.2014). 2.M/s.LakshmiStoneCrushingIndustries Vs. The Income Tax Officerpassedin|ITA|No.448/2009(D.D.3.2.2015)Industries Vs. The Income Tax Officerpassedin|ITA|No.448/2009(D.D.3.2.2015) 3.Bhanuben Panchal and ChandrikabelPanchal Vs. Chief Commissioner ofIncome Tax(Spl. Civil ApplicationNo.17705 of 2003)Panchal Vs. Chief Commissioner ofIncome Tax(Spl. Civil ApplicationNo.17705 of 2003) 5.|Learned counsel for the revenue submitted|that the phrase “or otherwise” is consciously used toextend the benefit ot the circular instructions to the'seizure under Section 132-A which contemplates for requisition and seizure. It is submitted that on thesurvey conducted by the Department, the petitioner hasadmitted the taxes and filed the return of income on 0.4.2011. Thus, neither clause 2(a) nor 2(d) of CBDTinstructions dated 26.6.2006 are applicable to the factsof the present case. It was submitted that the interestlevied under Section 234A, 234B and 234C of the Act is)for the commitment of default in furnishing the returnof income, default in payment of advance tax,deferment of advance tax respectively. At the time ofconducting the survey on 16.2.2010, three quarterswere already over. No attempt was made by thepetitioner to file the return of income and to make theadvance tax in terms of the Act. In such conditions,|waiver of interest would not arise. 6.|Heard the learned counsel for the parties|and perused the material on record. | -~Tf- 7. Clause 2(a) and 2(d) of the CBDT instructions dated 276.6.2006 reads thus: “2(a)Where|during|theCOUTSEoT|proceedings for search and seizure underSection 132 of the Income Tax Act,OT|otherwise, the books of account and other|incriminating documents have been seized,and the assessee has been unable to furnishthe return of income for the previous year,during which the action under Section 132.has taken place, within the time specified in thisbehalf,andtheChietCommissioner/ Director General is satisfied,having regard to the facts and circumstances.of the case, that the delay in furnishing suchreturn of income cannot reasonably beattributed to the assessee.” “2(d) Where a return of income couldnot be filed by the assessee due _ tunavoidable circumstances and such return|of income is filed voluntarily by the assesseeor his legal heirs without detection by theassessing olficer. ”| 8.|The contents of paragraph 2(a) has to beread as a whole not in isolation. A comprehensivereading of the said clause 2(a) would indicate thatseizure of books of account and other incriminatingdocuments is mandatory to attract the same. Theproceedings for search and seizure under Section 132 orotherwise has to be construed with reference to such|seizure. As regards clause 2(d), two ingredients arenecessarily to be satisfied viz., (1) the assessee could not.file return of income due to unavoidable circumstances,(41) Such return of income was filed voluntarily withoutdetection by the Assessing Officers. QO It is not in dispute that after the surveyconducted on 16.10.2010, the petitioner has filed thereturn of income on 9.4.2011. The said filing of thereturn of income cannot be construed as the return otfincome filed voluntarily by the assessee withoutdetection by the Assessing Officer. Indeed, on the QO It is not in dispute that after the surveyconducted on 16.10.2010, the petitioner has filed thereturn of income on 9.4.2011. The said filing of thereturn of income cannot be construed as the return otfincome filed voluntarily by the assessee withoutdetection by the Assessing Officer. Indeed, on the detection made at the time of survey, the petitioner hasadmitted the tax liability and filed the return of income.Moreover, no advance tax was paid as required underthe Act for the three quarters on the admitted income. —Thus, the assessee cannot take shelter under the surveyproceedings to cover up the default committed in filingthe true and correct return of income within the'prescribed period. 10.|The judgments relied upon by the learnedcounsel for the petitioner would be of little assistance tothe petitioner for the reason that inP.S.Seshadri’sCase, supra, the provision relating to “capital gain” wasthe subject matter and the tax was levied in view ofretrospective amendment. In the case ofM/s Lakshmti Stone Crushing Industries, supra, the Division Bench|of this Court was dealing with the Circular No.7/2003—which is in a difterent context and the same is not!applicable to the facts of the present case. -10 - | 11.)In the case ofBhanuben Panchal andChandrikabel Panchal Vs. Chief Commissioner of Income Tax, supra, the High Court of Gujarat whileexamining the waiver of interest in the context of thedeath of the husband of the petitioner who was in asenile condition prior to his death, held that the delaycaused in filing the returns on account of the delay inarranging for funds, would also qualify to be consideredas unavoidable circumstances responsible for the delayin late payment of taxes and accordingly, waiver ofinterest would be granted to the extent of 75%. 12.In the circumstances, utmost, the delaycaused in filing the return if to be attributed to theimpounding|oT the documents|duringSuTVveyproceedings, the interest under section 234-A of the Actfor the default committed in filing the return of incomewould be waived of, but not the interest leviable under| -|]]-| sections 234B and 234C, the default in payment ofadvance tax and for deferment of advance tax. For the aforesaid reasons, writ petition standsdisposed of, with a direction to the respondent to waiveof the interest under Section 234A of the Act relating tothe assessment year 2010-11. The levy of interest underSection 234B and 234C 1s confirmed. Writ petition stands disposed of in terms of theabove. Dvr‘ Sd/-)JUDGE