Op/13513/1998 Of Issac C.roy (Minor) v. The Commr. Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 8TH JANUARY 2007 / 18TH PAUSHA 1928 OP.No. 13513 of 1998(H) PETITIONERS: 1.ISSAC C. ROY (MINOR) SON OF ROY PETER, PALAL, JAWAHAR NAGAR,TRIVANDRUM.TRIVANDRUM. 2.PETER C. ROY (MINOR), S/O. ROY PETER DO. DO. 3.ROY PETER, PALAL, JAWAHAR NAGAR, TRIVANDRUM. 4.MRS. PREETHA ROY,W/O. ROY PETER, DO. DO. MINOR PETITIONERS 1 AND 2 ARE REPRESENTED BYO NEXT FRIEND-MOTHER,THE 4TH PETITIONER.THE 4TH PETITIONER. BY ADV. SRI.TKM.UNNITHAN SRI.MATHEW UMMEN RESPONDENTS: 1.THE COMMISSIONER OF INCOME TAX, TRIVANDRUM 2.THE ASSISTANT COMMISSIONER OF INCOME TAX (H), OFFICE OFTHE COMMISSIONER OF INCOME TAX, TRIVANDRUM.THE COMMISSIONER OF INCOME TAX, TRIVANDRUM. 3.THE INCOME TAX OFFICER, WARD-I, TRIVANDRUM. 4.UNION OF INDIA, REP. BY FINANCE SECRETARY, GOVT. OF INDIA,NEW DELHI.NEW DELHI. BY ADV. SRI.P.K.RAVINDRANATHA MENON (SR.) SRI.NRK.NAYAR THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 08/01/2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PETITIONERS' EXHIBITS: ----------------------------------- EXT.P1 TRUE COPY OF DECLARATION OF 1ST PETITIONER RELATING TOASSESSMENT YEARS 1995-96 AND 1996-97.ASSESSMENT YEARS 1995-96 AND 1996-97. EXT.P2 DECLARATION OF 2ND PETITIONER DO. DO.EXT.P3 ACKNOWLEDGE DT. 30-12-1997.EXT.P4 DO. DT. 30-12-1997.EXT.P5 DO. DT. 30-12-1997.EXT.P6 DO. DT. 30-12-1997.EXT.P7 COMMUNICATION DT. 9-3-1998.EXT.P8 DO. DT. 9-3-1998.EXT.P9 REVISED STATEMENT OF INCOME FOR 1995-96.EXT.P10 DO. FOR 1996-97.EXT.P11 APPLICATION DT. 11-5-1998.EXT.P12 DO. DT. 11-5-1998EXT.P13 PETITION DT. 11-5-1998.EXT.P14 ORDER DT. 19-5-1998.RESPONDENTS' EXHIBITS:------------------------------------- EXT. R2(A) COPY OF CIRCULAR NO. 754. P.S TO JUDGE. S. Siri Jagan, J. =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Petitioners 3 and 4 are father and mother respectively ofpetitioners 1 and 2 who are minors. These minors also derive incometaxable under the Income Tax Act. Apparently, some income soderived by the minors were not disclosed in the returns for therelevant period. Government brought into force by the Finance Act,1997, the Voluntary Disclosure of Income Scheme, 1997 (for short'the Scheme') by which on declaration of income, which were earliernot disclosed, no penalty would be attracted and the assessee wasallowed to pay the tax at 30% of the income disclosed. The 3[rd]petitioner-father filed a declaration under the Scheme on behalf of theminors on 30-12-1997. On 31-12-1997, the last date fixed for filingreturn under the Scheme expired. The tax due on the income wasalso paid. Subsequently, the return was rejected as invalid on theground that a minor was not entitled to file a return under theScheme subsequent to the assessment year 1993-1994. In the abovecircumstances, the 4[th] petitioner-mother filed a return including thesaid income in her return and sought for adjustment of the tax paid atthe time of filing return under the Scheme. This was rejected on theground that as per the Scheme, tax once paid would not be refunded.The request of the 4[th] petitioner to adjust the tax paid against the taxpayable under her return was also rejected by Ext. P14 order. This isunder challenge in this original petition. The contention of the petitioners is that since the intention ofthe petitioners was bona fide and the mistake occurred on account ofthe circumstances beyond the control of the petitioners although theymay not be entitled to the benefit of the Scheme, certainly, therespondents cannot deny the benefit of adjustment of the amountalready paid towards tax payable on the 4[th] petitioner's return. The OP. 13513/1998. The contention of the petitioners is that since the intention ofthe petitioners was bona fide and the mistake occurred on account ofthe circumstances beyond the control of the petitioners although theymay not be entitled to the benefit of the Scheme, certainly, therespondents cannot deny the benefit of adjustment of the amountalready paid towards tax payable on the 4[th] petitioner's return. The OP. 13513/1998. petitioners rely on a decision of the Supreme Court in HemalathaGargyav. Commissioner of Income-tax and another, reported in[2003] 259 ITR 1. In that case, return under the Scheme was delayedby one day. The tax paid pursuant thereto was refused to be adjustedor refunded to the assessee. Although, in that decision the SupremeCourt denied the assessee the benefit of the Scheme, it held thus: “As a consequence, in our view, the appeals preferred by theassessees must be and are hereby dismissed whereas the appealspreferred by the Revenue authorities must be and are herebyallowed. However, having held that the assessees are not entitled tothe benefit of the Scheme since the payments made by them werenot in terms of the Scheme, we direct the Revenue authorities torefund or adjust the amounts already deposited by the assessees inpurported compliance with the provisions of the Scheme to theconcerned assessee in accordance with law. All the appeals areaccordingly disposed of without any order as to costs.” I am of opinion that the said direction of the Supreme Court squarelyapplies to the petitioners' case. In the above circumstances, I direct the respondents to adjustthe tax paid by the petitioners at the time of filing the return underthe Voluntary Disclosure of Income Scheme, 1997 in respect of thepending demands from the petitioners under the Income-tax Act. Theoriginal petition is allowed as above. Tds/ Sd/- S. Siri Jagan, Judge.