Op/24567/2000 Of Dr.k.m.nawaz, Calicut v. Asst.commissioner Of Income Tax,Calicut

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN TUESDAY, THE 29TH SEPTEMBER 2009 / 7TH ASWINA 1931 OP.No. 24567 of 2000(Y) ------------------------------------ PETITIONER(S): ------------------------ 1.DR. K.M.NAWAZ, 2.DR.K.M.MEHABOOB, 3.DR.K.M.ASHIK AND 4.SMT. AMINA MOIDU, ALL ARE RESIDING AT C/O. MOIDU'S MEDICARE (P) LTD., INDIRA GANDHI ROAD, CALICUT - “SHADE” MALABAR CHRISTIAN COLLEGE, CROSS ROAD, CALICUT. BY ADV. SRI.ANIL K.NARENDRAN RESPONDENT(S): --------------------------- 1.ASSISTANT COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE, CALICUT.CENTRAL CIRCLE, CALICUT. 2.COMMISSIONER OF INCOME TAX (CENTRAL -I),DESIGNATED AUTHORITY, 108. UTHAMAR GANDHI SALAI,CHENNAI - 600 034. BY ADVS. MR.P.K.R.MENON,SR.COUNSEL, GOI(TAXES), SRI.GEORGE K. GEORGE, SC FOR IT THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 29/09/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss ORDER ON C.M.P.NO.41467/2000 IN O.P.NO.24567/2000 Y CLOSED 29/09/2009SD/- S.SIRI JAGAN, JUDGE APPENDIX PETITIONER'S EXHIBITS: P1:COPY OF THE DECLARATION FILED BY THE FIRM M/S.WESTERN HOSPITAL AND NURSING HOME UNDER KAR VIVAD SAMADHAN SCHEME, 1998 DTD. 22/10/1998.HOSPITAL AND NURSING HOME UNDER KAR VIVAD SAMADHAN SCHEME, 1998 DTD. 22/10/1998. P2:COPY OF THE FORM OF DECLARATION UNDER SEC.9 OF THE FINANCE (NO.2)ACT. 1998 FILED BY THE FIRST PETITIONER DTD. 23/10/1998.(NO.2)ACT. 1998 FILED BY THE FIRST PETITIONER DTD. 23/10/1998. P3:COPY OF THE FORM OF DECLARATION UNDER SEC.89 OF THE FINANCE (NO.2) ACT, 1998 FILED BY THE SECOND PETITIONER DTD. 17/11/1998.(NO.2) ACT, 1998 FILED BY THE SECOND PETITIONER DTD. 17/11/1998. P4:COPY OF THE FORM OF DECLARATION UNDER SEC.89 OF THE FINANCE (NO.2) ACT, 1998 FILED BY THE THIRD PETITIONER DTD. 29/10/1998.(NO.2) ACT, 1998 FILED BY THE THIRD PETITIONER DTD. 29/10/1998. P5:COPY OF THE FORM OF DECLARATION UNDER SEC.89 OF THE FINANCE (NO.2) ACT, 1998 FILED BY THE FOURTH PETITIONER DTD.06/01/1999. (NO.2) ACT, 1998 FILED BY THE FOURTH PETITIONER DTD.06/01/1999. P6:COPY OF THE ORDER U/S.155 OF THE I.T.ACT PASSED BY THE FIRST RESPONDENT ASSTMT.YEAR 1990-91 OF 1ST PETITIONER DTD.31/03/1998.RESPONDENT ASSTMT.YEAR 1990-91 OF 1ST PETITIONER DTD.31/03/1998. P7:COPY OF THE ORDER U/S.155 OF THE I.T.ACT PASSED BY THE FIRST RESPONDENT ASSTMT.YEAR 1991-92 OF 1ST PETITIONER DTD.31/03/1998.RESPONDENT ASSTMT.YEAR 1991-92 OF 1ST PETITIONER DTD.31/03/1998. P8:COPY OF THE ORDER U/S.155 OF THE I.T.ACT PASSED BY THE FIRST RESPONDENT ASSTMT.YEAR 1990-91 OF 2ND PETITIONER DTD.31/03/1998.RESPONDENT ASSTMT.YEAR 1990-91 OF 2ND PETITIONER DTD.31/03/1998. P9:COPY OF THE ORDER U/S.155 OF THE I.T.ACT PASSED BY THE FIRST RESPONDENT ASSTMT.YEAR 1991-92 OF 2ND PETITIONER DTD.31/03/1998.RESPONDENT ASSTMT.YEAR 1991-92 OF 2ND PETITIONER DTD.31/03/1998. P10:COPY OF THE ORDER U/S.155 OF THE I.T.ACT PASSED BY THE FIRST RESPONDENT ASSTMT.YEAR 1991-92 OF 3RD PETITIONER DTD.30/03/1998.RESPONDENT ASSTMT.YEAR 1991-92 OF 3RD PETITIONER DTD.30/03/1998. P11:COPY OF THE ORDER U/S.155 OF THE I.T.ACT PASSED BY THE FIRST RESPONDENT ASSTMT.YEAR 1990-91 OF 4TH PETITIONER DTD.30/03/1998.RESPONDENT ASSTMT.YEAR 1990-91 OF 4TH PETITIONER DTD.30/03/1998. Kss O.P.NO.24567/2000Y P12:COPY OF THE ORDER U/S.155 OF THE I.T.ACT PASSED BY THE FIRST RESPONDENT ASSTMT.YEAR 1991-92 OF 4TH PETITIONER DTD.30/03/1998.RESPONDENT ASSTMT.YEAR 1991-92 OF 4TH PETITIONER DTD.30/03/1998. P13:COPY OF THE CERTIFICATE ISSUED TO THE FIRM M/S.WESTERN HOSPITAL AND NURSING HOME DTD. 17/03/1999.AND NURSING HOME DTD. 17/03/1999. P14(A):COPY OF THE PETITION FILED BY THE 1ST PETITIONER BEFORE THE SECOND RESPONDENT DTD. 26/05/2000.SECOND RESPONDENT DTD. 26/05/2000. P14(B):COPY OF THE PETITION FILED BY THE 1ST PETITIONER BEFORE THE SECOND RESPONDENT DTD. 26/05/2000.SECOND RESPONDENT DTD. 26/05/2000. Kss O.P.NO.24567/2000Y P12:COPY OF THE ORDER U/S.155 OF THE I.T.ACT PASSED BY THE FIRST RESPONDENT ASSTMT.YEAR 1991-92 OF 4TH PETITIONER DTD.30/03/1998.RESPONDENT ASSTMT.YEAR 1991-92 OF 4TH PETITIONER DTD.30/03/1998. P13:COPY OF THE CERTIFICATE ISSUED TO THE FIRM M/S.WESTERN HOSPITAL AND NURSING HOME DTD. 17/03/1999.AND NURSING HOME DTD. 17/03/1999. P14(A):COPY OF THE PETITION FILED BY THE 1ST PETITIONER BEFORE THE SECOND RESPONDENT DTD. 26/05/2000.SECOND RESPONDENT DTD. 26/05/2000. P14(B):COPY OF THE PETITION FILED BY THE 1ST PETITIONER BEFORE THE SECOND RESPONDENT DTD. 26/05/2000.SECOND RESPONDENT DTD. 26/05/2000. P14(C):COPY OF THE PETITION FILED BY THE 2ND PETITIONER BEFORE THE SECOND RESPONDENT DTD. 26/05/2000.SECOND RESPONDENT DTD. 26/05/2000. P14(D):COPY OF THE PETITION FILED BY THE 2ND PETITIONER BEFORE THE SECOND RESPONDENT DTD. 26/05/2000.SECOND RESPONDENT DTD. 26/05/2000. P14(E):COPY OF THE PETITION FILED BY THE 3RD PETITIONER BEFORE THE SECOND RESPONDENT DTD. 26/05/2000.SECOND RESPONDENT DTD. 26/05/2000. P14(F):COPY OF THE PETITION FILED BY THE 4TH PETITIONER BEFORE THE SECOND RESPONDENT DTD. 26/05/2000.SECOND RESPONDENT DTD. 26/05/2000. P14(G):COPY OF THE PETITION FILED BY THE 4TH PETITIONER BEFORE THE SECOND RESPONDENT DTD. 26/05/2000.SECOND RESPONDENT DTD. 26/05/2000. P15(A):COPY OF THE ORDER OF THE SECOND RESPONDENT TO THE FIRST PETITIONER, CHENNAI DTD. 21/06/2000.PETITIONER, CHENNAI DTD. 21/06/2000. P15(B):COPY OF THE ORDER OF THE SECOND RESPONDENT TO THE SECOND PETITIONER, CHENNAI DTD. 21/06/2000.PETITIONER, CHENNAI DTD. 21/06/2000. P15(C):COPY OF THE ORDER OF THE SECOND RESPONDENT TO THE THIRD PETITIONER, CHENNAI DTD. 21/06/2000. PETITIONER, CHENNAI DTD. 21/06/2000. P15(D):COPY OF THE ORDER OF THE SECOND RESPONDENT TO THE 4TH PETITIONER, CHENNAI DTD. 21/06/2000.PETITIONER, CHENNAI DTD. 21/06/2000. P16:COPY OF THE PRESS RELEASE DTD. 17/12/1998. RESPONDENT'S EXHIBITS:N I L /TRUE COPY/ Kss P.S.TO JUDGE ================== O.P.No. 24567 of 2000 ================== Dated this the 29[th] day of September, 2009 J U D G M E N T In this original petition the petitioners are partners of a firm byname, “Western Hospital and Nursing Home”. By the Finance Act(No.2 of 1998), the Parliament brought in a Scheme, the Kar VivadSamadhan Scheme 1998, as per which, the assessees submittingdeclarations in accordance with the Scheme, are permitted to pay taxat a specific rate fixed in Section 88 of the Act. Pursuant thereto, thefirm filed declaration, Ext.P1, on 22.10.1998 and paid tax as per thethe Scheme. Ext.P13 certificate was also issued to the firm in respectof payment of tax in accordance with the Scheme. Individual partnersalso filed Exts.P2, P3, P4 and P5 declarations on 23.10.1998,17.11.1998, 29.10.1998 and 6.1.1999 respectively. They were alsoissued certificates. But unfortunately for the petitioners, although theywere not liable to do so, they included their share income from thefirm also for the purpose of declaration. But the Scheme did notcontemplate payment of tax in respect of the share income of thepartners, once the firm settles the dispute regarding tax by paying thepercentage, fixed under Section 88, of the disputed income as tax.Subsequently, Ext.P16 clarification was issued by the Central Board ofDirect Taxes, wherein it was clarified that partners of a registered firm, under the provisions of the Scheme, are exempted from payment oftax further tax on their share income once the firm settles the disputepaying 35 per cent of the disputed income. By Ext.P16, those partnersof a firm who had other income also who had filed declarationswherein the share income from the firm was also included for thepurpose of declaration under the Scheme, were permitted to filerevised declarations excluding such share income for the purpose ofdeclaration under the Scheme. The petitioners came to know aboutExt.P16 clarification only after the proceedings under the Scheme werecompleted by issue of certificates as envisaged under the Scheme.Thereafter, they filed Ext.P14 series of applications stating that suchpayment of tax under the Scheme on the share income of thepetitioners in the firm was under a mistake and, therefore, the excesstax paid may be adjusted towards the tax dues of the petitioners. Thatwas on 26.5.2000. However, by Ext.P15 series of orders dated21.6.2000, the petitioners were informed that their applications wererejected on the ground that they had not filed revised declarations inaccordance with Ext.P16 clarification dated 9.12.1998. The petitionersare challenging Ext.P15 series orders and seeking the followingreliefs: “a)to issue a writ of certiorari or any other appropriate writ, order ordirection to quash Exhibits P15 (series),direction to quash Exhibits P15 (series), b)to issue a writ of mandamus or any other appropriate writ, order or direction directing the respondents herein to refund/adjust the tax asprayed in Exhibit P14 (series). c)to direct the respondents to adjust the excess payment towardsthe tax dues, if any, from the petitioners.” 2. The counsel for the petitioners submits that in so far as the Scheme did not contemplate inclusion of the share income from thefirm in the individual declaration of the partners of the firm, thedesignated authority had a duty to consider the declarations inaccordance with the provisions of the Scheme. According to him, oncethe designated authority found that the inclusion of the share incomefrom the firm of the partners of the firm in their individual declarationwas wrong, he had a duty to exclude that share income from thedeclaration for the purpose of issue of certificate. Having failed to doso, the respondents are liable to refund the excess tax paid by mistakeby the petitioners is his contention. The counsel for the petitionersrelies on two decisions in support of his contention that application forrefund of tax paid under a mistake can be submitted within three yearsfrom the date when the mistake came to knowledge of the petitioners,viz,South India Corporation v. Asst. Commr. Of Salestax [1994(1) KLT 937] andCORPORATION BANK v. SARASWATIABHARANSALA AND ANOTHER[(2009) 1 SCC 540]. 3.The learned Standing Counsel for the Income TaxDepartment stoutly opposes the prayers of the petitioners. According to him, Ext.P15 series of orders are perfectly valid and proper. Hecontends that once a certificate is issued under the Kar VivadSamadhan Scheme considering the declarations filed by the parties,unless the parties file revised declarations in respect of inclusion of anyincome which ought not to have been included under a mistake,before the certificate was issued as contemplated under Ext.P16, thepetitioners cannot as of right claim refund of tax on the ground thattax was paid under a mistake. 4.I have considered the rival contentions in detail. 3.The learned Standing Counsel for the Income TaxDepartment stoutly opposes the prayers of the petitioners. According to him, Ext.P15 series of orders are perfectly valid and proper. Hecontends that once a certificate is issued under the Kar VivadSamadhan Scheme considering the declarations filed by the parties,unless the parties file revised declarations in respect of inclusion of anyincome which ought not to have been included under a mistake,before the certificate was issued as contemplated under Ext.P16, thepetitioners cannot as of right claim refund of tax on the ground thattax was paid under a mistake. 4.I have considered the rival contentions in detail. 5.At the outset I note that the respondents do not disputethe fact that as per the Scheme, the individual partners of the firm arenot liable to include their share income from the firm in their separateindividual declarations. That being so, the inclusion of the shareincome in the petitioners' separate declarations was clearly notnecessary and therefore, payment of tax by the petitioners in respectof their share income from the firm was in excess of the requirementof the scheme. Ext.P16 permitted individual partners to file reviseddeclarations excluding the share income from the firm for the purposeof their individual declaration. Ext.P16 does not state that suchrevised declaration has to be before the issue of the certificate ascontemplated under the Scheme. That being so, I do not think that thepetitioners are disabled from filing a declaration even now, in so far as the petitioners were diligently prosecuting the matter before thisCourt. In the above circumstances, this original petition is disposed ofwith the following directions: The petitioners shall file revised declarations as contemplatedunder Ext.P16 in respect of their share income from the firm within aperiod of one month from the date of receipt of a certified copy of thisjudgment. If the same is so filed, the 2[nd] respondent shall consider thesame in terms of Ext.P16 notwithstanding the fact that the same hasbeen filed after issue of the certificate. I make it clear that I aminclined to permit the petitioners to file such declarations at this pointof time, only because the petitioners had approached this Court withina reasonable time after passing of Ext.P15 series orders and thisoriginal petition was pending in this Court all this while. On filing ofsuch revised declarations, the 2[nd] respondent shall consider and passorders on the same in accordance with the Scheme and Ext.P16clarification, within a further period of one month from the date ofreceipt of the declarations. sdk+ ///True copy/// S.SIRI JAGAN, J. ==================O.P.No. 24567 of 2000-Y================== J U D G M E N T 29[th] September, 2009