Padam Raj Bhandari v. Union Of India

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 4252/2017 Padam Raj Bhandari S/o Shri Ajit Raj Bhandari, R/o 42, Gali No.3, Shyam Nagar, Pal Link Road, Jodhpur - 342008. ----Petitioner Versus 1. Union of India through the Secretary, Ministry of Finance,North Block, New Delhi – 110001.North Block, New Delhi – 110001. 2. Pr. Commissioner Of Income Tax-2, Paota C Road,Jodhpur - 342010.Jodhpur - 342010. 3.Income Tax Officer, Ward-34, Paota C-Road, Jodhpur-342010-342010 ----Respondents For Petitioner(s) : Mr. T.C. Gupta (through VC).For Respondent(s): Mr. Sunil Bhandari.For Respondent(s): Mr. Sunil Bhandari. HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE MUNNURI LAXMAN Order Reportable 01/07/2024 1.This writ petition under Article 226 & 227 of the Constitution of India has been preferred claiming the following reliefs: “1. In view of the facts and grounds enumerated above, itis most respectfully prayed that by an appropriate writ,order or direction in the nature of certiorari, order dated27.02.2017 passed by the CIT may kindly be quashed andset aside and the respondents may be directed to condonethe delay and allow refund as claimed.is most respectfully prayed that by an appropriate writ,order or direction in the nature of certiorari, order dated27.02.2017 passed by the CIT may kindly be quashed andset aside and the respondents may be directed to condonethe delay and allow refund as claimed. 2. Any other appropriate writ, order or direction, whichmay be considered just and proper in the facts andcircumstances of the case, may be issued in favour of thepetitioner.” 2.The petitioner, who is an Insurance Surveyor, filed an application on 12.05.2016 seeking condonation of delay under Section 119(2)(b) of the Income Tax Act in order to claim a refundfor the assessment year 2009-10 to 2014-15. However, therespondents rejected the application for condonation of delay on27.02.2017. 3.Mr. T.C. Gupta, learned counsel appearing on behalf of thepetitioner, submits that the petitioner, a senior citizen now agedabout 72 years, faced genuine hardship, and thus, ought to havebeen granted benefit under Section 119(2)(b) of the Income TaxAct read with CBDT Circular dealing with the relaxation/delaycondonation dated 09.06.2015 (Annexure-3). 3.1Mr. Gupta, learned counsel has relied upon the precedent lawlaid down by the Hon’ble Apex Court in the matter of B.M. MalaniVs. Commissioner of Income Tax & Anr. : Civil AppealNo.5950 of 2008 (Arising out of SLP (C) No.4091 of 2007), the relevant excerpt whereof is reproduced hereunder: 8. The term `genuine' as per the New Collins ConciseEnglish Dictionary is defined as under:`Genuine' means not fake or counterfeit, real, notpretending (not bogus or merely a ruse)" English Dictionary is defined as under:`Genuine' means not fake or counterfeit, real, notpretending (not bogus or merely a ruse)" For interpretation of the aforementioned provision, theprinciple of purposive construction should be resorted to.Levy of interest although is statutory in nature, inter alia forre-compensating the revenue from loss suffered by non-deposit of tax by the assessee within the time specifiedtherefor. The said principle should also be applied for thepurpose of determining as to whether any hardship hadbeen caused or not. A genuine hardship would, inter alia,mean a genuine difficulty. That per se would not lead to aconclusion that a person having large assets would never bein difficulty as he can sell those assets and pay the amountof interest levied. For interpretation of the aforementioned provision, theprinciple of purposive construction should be resorted to.Levy of interest although is statutory in nature, inter alia forre-compensating the revenue from loss suffered by non-deposit of tax by the assessee within the time specifiedtherefor. The said principle should also be applied for thepurpose of determining as to whether any hardship hadbeen caused or not. A genuine hardship would, inter alia,mean a genuine difficulty. That per se would not lead to aconclusion that a person having large assets would never bein difficulty as he can sell those assets and pay the amountof interest levied. The ingredients of genuine hardship must be determinedkeeping in view the dictionary meaning thereof and thelegal conspectus attending thereto. For the said purpose,another well--known principle, namely, a person cannottake advantage of his own wrong, may also have to beborne in mind. The said principle, it is conceded, has not been applied by the courts below in this case, but we maytake note of a few precedents operating in the field tohighlight the aforementioned proposition of law. [SeePriyanka Overseas Pvt. Ltd. & Anr. v. Union of India & ors.1991 Suppl. (1) SCC 102, para 39, Union of India & ors. v.Major General Madan Lal Yadav (Retd.) (1996) 4 SCC 127 at142, paras 28 and 29, Ashok Kapil v. Sana Ullah (dead) &ors. (1996) 6 SCC 342 at 345, para 7, Sushil Kumar v.Rakesh Kumar (2003) 8 SCC 673 at 692, para 65, firstsentence, Kusheshwar Prasad Singh v. State of Bihar & ors.(2007) 11 scc 447, paras 13, 14 and 16). Thus, the said principle, in our opinion, should be appliedeven in a case of this nature. A statutory authority despitereceipt of such a request could have kept mum. It shouldhave taken some action. It should have responded to theprayer of the appellant. However, another principle should also be borne in mind,namely, that a statutory authority must act within the fourcorners of the statute. Indisputably, the Commissioner hasthe discretion not to accede to the request of the assessee,but that discretion must be judiciously exercised. He has toarrive at a satisfaction that the three conditions laid downtherein have been fulfilled before passing an order waivinginterest. Compulsion to pay any unjust dues per se would causehardship. But a question, however, would further arise as towhether the default in payment of the amount was due tocircumstances beyond the control of the assessee. Unfortunately, this aspect of the matter has not beenconsidered by the learned Commissioner and the High Courtin its proper perspective. The Department had taken theplea that unless the amount of tax due was ascertainable,the securities could not have been sold and the demanddraft could not have been encashed. The same logic wouldapply to the case of the assessee in regard to levy ofinterest also. It is one thing to say that the levy of intereston the ground of non-payment of correct amount of tax byitself can be a ground for non-acceding to the request of theassessee as the levy is a statutory one but it is anotherthing to say that the said factor shall not be taken intoconsideration at all for the purpose of exercise of thediscretionary jurisdiction on the part of the Commissioner.Appellant volunteered that the securities be sold. Why thesaid request of the appellant could not be acceded to hasnot been explained. It was a voluntary act on the part of theappellant. It was not even a case where sub-Section (3) of Section226 of the Act was resorted to. As the offer was voluntary,the authorities of the Department subject to any statutoryinterdict could have considered the request of the appellant.It was probably in the interest of the revenue itself torealize its dues. Whether this could be done in law or nothas not been gone into. It was not even a case where sub-Section (3) of Section226 of the Act was resorted to. As the offer was voluntary,the authorities of the Department subject to any statutoryinterdict could have considered the request of the appellant.It was probably in the interest of the revenue itself torealize its dues. Whether this could be done in law or nothas not been gone into. 9. The same ground, however, was not available to theappellant in respect of the demand draft, as in relationthereto no such request was made. The demand draft wasin the name of a Company. It may be true that when anydocument is seized, a presumption is raised that the samebelongs to the person from whose possession or control itwas seized as is laid down in sub-Section (4A) of Section132 of the Act, but such a presumption is a rebuttable one.In the absence of any request made by the Assesseehimself, probably at that point of time, the same could nothave been encashed. Appellant did not own the same inlaw. He did not make any request for its enchashment. Whether such a presumption should be raised or not wasthe subject matter of consideration by the Assessing Officerat the time of making its final assessment as the appellanthimself filed an application before the SettlementCommission in terms of Section 245C(1) of the Act. 10. We are, therefore, of the opinion that interests of justicewould be subserved if the impugned judgment is set asideand the matter is remitted to the Commissioner of IncomeTax for consideration of the matter afresh.” 4.Mr. Sunil Bhandari, learned counsel for the respondentssubmits that the ambit of Section 119(2)(b) of the Income Tax Actcould have been considered only if there was a genuine hardshipand that too only for a period of six years, which is stipulated inthe CBDT Circular No.09/2015 dated 09.06.2015 in pursuance ofSection 119(2)(b) of the Income Tax Act, which prescribes for sixyears of maximum power to the authority to condone the delay. 4.1Mr. Bhandari, learned counsel has also relied upon thejudgment rendered by the Hon’ble Patna High Court in the matter of Deep Narayan Gupta Vs. Central Board of Direct Taxesreported in 2003 264 ITR 251 Patna, in which, para 5 has beenreferred to, which reads as follows: “5. The only ground, on which the extension can begranted in genuine hardship. That has rightly not beendefined under the Act. Whether there is genuine hardshipor not depends upon the facts of each case and no fixedcriteria in the strait jacket formula can be laid down for thesaid purpose. In the given case, admittedly, the returnswere filed much beyond time. Nothing has been stated ongranted in genuine hardship. That has rightly not beendefined under the Act. Whether there is genuine hardshipor not depends upon the facts of each case and no fixedcriteria in the strait jacket formula can be laid down for thesaid purpose. In the given case, admittedly, the returnswere filed much beyond time. Nothing has been stated on behalf of the petitioner explaining the delay in filing thereturns, on the other hand, the Board has found that this isa very deliberate attempt on the part of the petitioner toescape the liability under the Act. Detailed reasons arestated in paragraph 4 of the order, the relevant partwhereof is quoted hereunder: “The due dates for filing the return were beforeMarch 31, 1995, and March 31, 1996. However,the returns were filed on October 9, 1998. It isfurther noted that the assessee has deliberatelyfiled his returns much after the due date onlyto escape the scrutiny assessment. Forexample for the assessment year 1993-94, thenet profit shown by the assessee is very low.There is no audit report enclosed with thereturn. In the balance-sheet, the assessee hasshown unsecured loans and other finance asliabilities. The late filing of return apparentlyindicates that the assessee has manipulated hisaccounts and has prevented scrutinyassessment by the Department.” “The due dates for filing the return were beforeMarch 31, 1995, and March 31, 1996. However,the returns were filed on October 9, 1998. It isfurther noted that the assessee has deliberatelyfiled his returns much after the due date onlyto escape the scrutiny assessment. Forexample for the assessment year 1993-94, thenet profit shown by the assessee is very low.There is no audit report enclosed with thereturn. In the balance-sheet, the assessee hasshown unsecured loans and other finance asliabilities. The late filing of return apparentlyindicates that the assessee has manipulated hisaccounts and has prevented scrutinyassessment by the Department.” 4.2Mr. Bhandari, learned counsel further submits that the assessee had earlier filed the tax returns and was also claimingrefunds. He also vehemently submits that the petitioner has notprovided any evidence regarding depression or illness. 5.After hearing learned counsel for the parties as well asperusing the record of the alongwith the precedent law cited atthe Bar, this Court finds that the petitioner is now 72 years of ageand works as an Insurance Surveyor and is seeking to file taxreturns for the assessment years 2009-10 to 2014-15. 6.Section 119(2)(b) of the Income Tax Act is reproducedhereunder: “119. Instructions to subordinate authorities.— (2) Without prejudice to the generality of the foregoingpower,— (b) the Board may, if it considers it desirable or expedientso to do for avoiding genuine hardship in any case or classof cases, by general or special order, authorise 11[anyincome-tax authority, not being a 12*** Commissioner (Appeals)] to admit an application or claim for anyexemption, deduction, refund or any other relief under thisAct after the expiry of the period specified by or under thisAct for making such application or claim and deal with thesame on merits in accordance with law;” 7.The relevant part of CBDT Circular, particularly, Paragraph 3 & 5 are reproduced hereunder: “3. No condonation application for claim of refund/loss shallbe entertained beyond six years from the end of theassessment year for which such application/claim is made.This limit of six years shall be applicable to all authoritieshaving powers to condone the delay as per the aboveprescribed monetary limits, including the Board. Acondonation application should be disposed of within sixmonths from the end of the month in which the applicationis received by the competent authority, as far as possible. 5. The powers of acceptance/rejection of the applicationwithin the monetary limits delegated to thePr.CcsIT/CcsIT/Pr.CsIT/CsIT in case of such claim will besubject to following conditions: At the time of considering the case under Section I 19(2)(b), it shall be ensure that the income/loss declared and/orrefund claimed is correct and genuine and also that thecase is of genuine hardship on merits. ThePr.CCIT/CCIT/Pr.CIT/CIT dealing with the case shall beempowered to direct the jurisdictional assessing officer tomake necessary inquiries or scrutinize the case inaccordance with the provisions of the Act to ascertain thecorrectness of the claim.” 8.This Court has examined the reason given by the petitionerbefore the authority was that he is a senior citizen with a limitedincome from survey fee payments from an Insurance Company. Asa result, he was unable to file his income tax returns for therelevant assessment years on time. The impugned order alsotakes notice of the fact that the assessee has deposed that he wasunder depression during that period, which was coupled by the oldage. 9.This Court considered the vehement opposition of therespondents that no genuine hardship reason has been 8.This Court has examined the reason given by the petitionerbefore the authority was that he is a senior citizen with a limitedincome from survey fee payments from an Insurance Company. Asa result, he was unable to file his income tax returns for therelevant assessment years on time. The impugned order alsotakes notice of the fact that the assessee has deposed that he wasunder depression during that period, which was coupled by the oldage. 9.This Court considered the vehement opposition of therespondents that no genuine hardship reason has been established in the instant case, and thus, once the key word of thelegislation i.e. the genuine hardship does not operate, then theprovisions of Section 119(2)(b) of the Income Tax Act would notapply, but this Court does not agree with such proposition. 10.This Court also finds that judgment rendered by the Hon’blePatna High Court in the case of Deep Narayan Gupta (supra) dealswith an assessee, who is trying to escape the scrutiny assessmentand was on the wrong side of the revenue collection, and thus, astrict viewtaken by the Court stands on a different factualpedestal. 11.Another judgment, which has been brought to the notice ofthis Court by counsel for the petitioner is of Hon’ble Gujarat HighCourt in the matter of Gujarat Electric Co. Ltd. Vs.Commissioner of Income Tax reported in 2002 255 ITR 396Guj., in which, paragraph 6 has been emphasized, which is reproduced hereunder: “6. We have heard learned counsel for the parties andtaken into consideration the documents forming part of thepetition. We may state that the respondents have not filedany reply controverting the averments made in thepetition. From the record of the case, it is evident that theprincipal officer of the petitioner-company was bed-riddenaround June, 1991, as he was suffering from severetuberculosis and the doctor had advised him to takecomplete bed rest for about three months. As per theaverments made in the application dated October 1, 1999,the principal officer of the petitioner-company had takentreatment for tuberculosis which lasted for about seven toeight months. It is also clear from the averments made inthe said application that around April, 1992, again theprincipal officer of the company had fallen sick and thedoctor had diagnosed the disease to be typhoid and he wasonce again tied down to the bed. As there was no one tolook after taxation matters of the company, the returnscould not be filed in time in which refund was claimed.Section 119(2)(b)of the Act empowers the Board to authoriseany income-tax authority not being Commissioner(Appeals) to admit an application or claim for anyexemption, deduction, refund or any other relief under theAct, after the expiry of the period specified by or under theIncome-tax Act for making such application or claim and dealwith the same on the merits in accordance with law. It is an admitted position that in exercise of power conferred bythe above-referred to provision, the Board has issuedcircular dated October 12, 1993, enabling the income-taxauthority to condone delay caused in claiming refund. It isnot the case of the respondents that four conditionsmentioned in the said circular are not satisfied by thepetitioner, but the application for refund is rejected only onthe ground that the case of genuine hardship was not madeout by the petitioner. At this stage, it would beadvantageous to refer to the decision of the Madras HighCourt which is relied upon on behalf of the petitioner. TheMadras High Court in R, Seshammal's case [1999] 237 ITR185 has held as under (page 187) : an admitted position that in exercise of power conferred bythe above-referred to provision, the Board has issuedcircular dated October 12, 1993, enabling the income-taxauthority to condone delay caused in claiming refund. It isnot the case of the respondents that four conditionsmentioned in the said circular are not satisfied by thepetitioner, but the application for refund is rejected only onthe ground that the case of genuine hardship was not madeout by the petitioner. At this stage, it would beadvantageous to refer to the decision of the Madras HighCourt which is relied upon on behalf of the petitioner. TheMadras High Court in R, Seshammal's case [1999] 237 ITR185 has held as under (page 187) : "This is hardly the manner in which the State isexpected to deal with the citizens, who in theiranxiety to comply with all the requirements of theAct pay monies as advance tax to the State, eventhough the monies were not actually required tobe paid by them and thereafter seek refund of themonies so paid by mistake after the proceedingsunder the Act are dropped by the authoritiesconcerned. The State is not entitled to plead thehypertechnical plea of limitation in such a situationto avoid return of the amounts. Section 119of theAct vests ample power in the Board to renderjustice in such a situation. The Board has actedarbitrarily in rejecting the petitioner's request forrefund." 12.The respondents had opposed the application seekingcondonation of delay under Section 119(2)(b) of the Income TaxAct for claiming the refund, stating that the details of thetreatment etc. were provided and severe tuberculosis was thereason for leniency in that matter on the ground that such reasondoes not exist in the present case. However, this Court finds thatthe senior citizen/considerable age, depression, as mentionedcoupled with the fact that the petitioner is not on the wrong sideof the law/revenue collections as he is not facing any kind ofscrutiny or action by the respondents, and thus, he deserves to bedealt with leniently in this peculiar factual matrix. This Court hasalso heavily relied on the fact that the tenure of filing the returnssought to be filed in the present case begins about 15 years ago,the impugned order is of 2016, this writ petition is pending for last07 years and the age of the petitioner is around 72 years, which do not warrant complete remand of the matter. The core law ofSection 119(2)(b) of Income Tax Act read with CBDT CircularNo.09/2015 dated 09.06.2015, both reproduced above, clearlyreflect that if there is a genuine hardship, then a condonation ofupto six years can be permitted. 13.Considering the overall perspective and peculiar facts of thiscase, including the age of the petitioner, the Section 119(2)(b) ofIncome Tax Act read with CBDT Circular No.09/2015 dated09.06.2015, which prescribes 06 years delay condonation ongenuine hardship and the precedent law laid down by the Hon’bleApex Court in the matter on B.M. Malani’s case (supra), this Courtis of the firm opinion that the depression, old age, long pendency’-of the issue and the petitioners status as a smallscale surveyorwith no negativity in revenue collection by the tax authorities (likescrutiny) attached, have to be considered as genuine hardship. Thus, in these peculiar facts and circumstances, holding it to be acase of genuine hardship, the impugned order dated 27.02.2017 isquashed and set aside. The authority concerned shall accept thereturns and decide the claim of the petitioner, while strictlyadhering to the six years limit from the date of petitioner’sapplication as prescribed in the CBDT Circular No.09/2015 dated09.06.2015, while treating it to be a case of genuine hardship, inaccordance with law. 14.With the aforesaid observations and directions, the presentwrit petition is allowed. All pending applications, if any, standdisposed of. (MUNNURI LAXMAN),J Thus, in these peculiar facts and circumstances, holding it to be acase of genuine hardship, the impugned order dated 27.02.2017 isquashed and set aside. The authority concerned shall accept thereturns and decide the claim of the petitioner, while strictlyadhering to the six years limit from the date of petitioner’sapplication as prescribed in the CBDT Circular No.09/2015 dated09.06.2015, while treating it to be a case of genuine hardship, inaccordance with law. 14.With the aforesaid observations and directions, the presentwrit petition is allowed. All pending applications, if any, standdisposed of. (MUNNURI LAXMAN),J (DR.PUSHPENDRA SINGH BHATI),J 45-Zeeshan