Reliance Is Placed On The Judgment Of The Apexcourt In The Case Ofll, Hirday Narain v. Income [Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU|DATED THIS THE 8 DAY OF OCTOBER, 2021BEFORE THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV%WRIT PETITION No. 52305/2018 (TIT) Between Sri. Devendra PaliS/o. Late Narasimha PaiNo. 1012, Udaya,2[nd]Cross, Vivekananda Circle,Mysore - 23. .. Petitioner (By Sri. S. Snankar, Senior Advocate as Amicus Curiae ~Sri. S. Partnasarathi, Advocate) And 1.The Assistant Commissioner of Income Tax, Circle 1(2) Aayakar Bhavan, Mysore - LO. 2.The Pr. Commissioner of. Income Tax, No.21/16,| Aayakar Bnavan, | Residency Road, Nazarbad, Mysore - 5/70 O10. .. Respondents (By Sri. E. I. Sanmathi, Advocate) This Writ Petition ts filed under Articles 276 and 2727/7 of tConstitution of India, praying to quash the order passed byrespondent No.2 dated 17.02.2017 vide Annexure-G and direct|respondent No.2 to consider the application filed by petitionerunder Section 264 of the Act and condone the delay in filing the| Same bDefore him and grant exemption under Section 10(10C) oftne Act as prayed for by petitioner vide Annexure-F. | This Writ Petition coming on for preliminary hearing in ‘B’.group this day, the Court, made the following: ORDER At the hearing of the petition, tne Court felt that the)equity of facts require assistance. Accordingly, Sri. S.|Shankar, learned Senior counsel was requested to assist theCourt. — 2.Petitioner is a retired ICICI Bank employee andnad availed of the Reserve Bank’s Optional Early Retirement|Scnemeand.WaS|paidsuperannuationpenetfitofRs.5,00,000/-. The certificate reflecting benefit made out tothe petitioner as per the scheme is enclosed at Annexure-A. ‘3Petitioner submits that return of Income for the.assessment year 2004-2005 was filed and in the return|filed, petitioner did not claim the benefit of exemption as|was available under Section 10(10C) of the Income Tax Act,1961 (for short ‘the Act’). The respondent issued intimationunder Section 143(1) of tne Act accepting the return filed. by the petitioner. The assessment order came to be passed,copy of whicn is enclosed at Annexure-D which reads|follows: “ThedSSCSSCECfiledreturn|of.Income OP)O7.05.7005aeclaringtotalIncomeof.Rs.14,12,000/-. In response to notice u/s 143(2)theaGSSCSSCEappeared|and|theCa SCISaiscussed. Tne assessee Nas salary and ERSpayments from ICICI Bank in adaition to interest|on aeposits. No exemption u/s 10(10CC) Is|claimed but only relief u/s 89(1) Is claimed.” 4Petitioner, it is stated made a representation tothe Assessing Officer by a letter dated 18.03.2008 whichreads as follows: “With reference to the above subject as per the)I.T. Appellate Tribunal Bangalore Bench ‘A’ The|order is given on ERS and Voluntary Retirement|Scneme U/S 10(10C) First 5 Lakns or maximum5 Lakns amount Exempted from tne Income Tex.But as per your order 5 Lakns amount not takeninto consideration of tax exemption. Once againI enciosed my tax calculation and order copy|similarbenefitedtakenfromincome.taxagepartment,Bangalore.PleaseONnceagain scrutinize the matter and issue the fresh order|with refund of Rs.1,26,065/- aiong with the|interest expected from your end.” 5.Subsequently, the petitioner has sought to file arevised return. Copy of the application seeking condonationof delay under Section 119(2)(bD) of the Act is enciosed atAnnexure-F. 6.Tne respondent —- Authority by its order atAnnexure-G has rejected the application for condonation otfdelay as time barred as return of income could not becondoned after 6 years from the end of the assessmentyear and thereby foreclosing tne processing of revised|return. | 7]Petitioner has filed the present writ petition andNas cnallenged the validity of the order passed. It is furtner|contended that the letter dated 18.03.2008 which was filed,in effect, is an application for rectification and could have|been considered by the Assessing Officer while pointing out|that the Assessing Officer in the Assessment Order has. 5.Subsequently, the petitioner has sought to file arevised return. Copy of the application seeking condonationof delay under Section 119(2)(bD) of the Act is enciosed atAnnexure-F. 6.Tne respondent —- Authority by its order atAnnexure-G has rejected the application for condonation otfdelay as time barred as return of income could not becondoned after 6 years from the end of the assessmentyear and thereby foreclosing tne processing of revised|return. | 7]Petitioner has filed the present writ petition andNas cnallenged the validity of the order passed. It is furtner|contended that the letter dated 18.03.2008 which was filed,in effect, is an application for rectification and could have|been considered by the Assessing Officer while pointing out|that the Assessing Officer in the Assessment Order has. clearly opined that the exemption under Section 10(10C) ofthe Act could not be granted as no exemption was claimed.It is submitted that such observation in the assessmentorder could be construed to be an error apparent insofar as the Assessing Officer has declined the exemption that couldNave been availed of on the sole ground that exemptionunder Section 10(10C) was not available. — 8.Reliance is placed on the judgment of the ApexCourt in the case ofLL, HIRDAY NARAIN vs. INCOME [TAX OFFICER - (1970) 78 ITR 26and attention is drawn to.the observation of the Apex Court wherein the Apex CourtNas opserved as follows: “Exercise of power to rectify an error apparent|from the record is conferred upon the Income|Tax Officer in aid of enforcement of a rignt. Tne|income tax officer is an officer concerned with|assessment and collection of revenue and the.power to rectify the order of assessmentconferred upon nim is to ensure that injustice to tne assessee or to the revenue may be avoided.It is implicit in the nature of the power and its| entrustment to the authority invested with|quasi-judicial functions under the Act, that to do|justice it snail be exercised when a mistake|apparent from tne record is Drougnt to his notice|DY a person concerned with or interested in tne|proceeding.The|HighCourtWads,In|OUTjudgment, in error in assuming that exercise of the power was discretionary and the income-tax|officer could, even if the conditions for its|exercise were shown to exist, decline to exercise|the power. Q Reliance is also placed on the judgment of theMadras Hign Court in the case ofRAMCO CEMENT|DISTRIBUTIONCo¢.PVT.LTD,VS,DEPUTYCOMMERCIAL TAX OFFICER —- 1974 33 STC 180 Mato contend that under similar factual matrix, the Madras|High Court has granted relief after noticing the judgment inthe case ofL. HIRDAY(Supra) 10.Learned counsel for the Department submits thattne case under Section 154 Is not made out and tne!question of processing the revised return requires hurdle of limitation to pe crossed. 11.Learned Senior counsel! for the petitioner submitsthat insofar as the letter dated 18.03.2008 is concerned,|prima facie the same does nave the ingredients of|rectification application. 1).Heard potn sides. 13.Tne fact that tne assessment order opservesregarding exemption under Section 10(10C) of the Act,|which indicates that the Assessing Officer was aware otfnon-claiming of the exemption. If the judgment of the ApexCourt in the case ot LL. HIRDAY(Supra) and the decision ofthe Madras High Court in the case of|RAMCO CEMENT(Supra) are taken note of, prima facie an order to considerthe letter of 18.03.2008 as the rectification application and|to pass an order appears to be a legally justifiable order.|However, learned counsel for the respondent would pointout that no case Is made out for rectification as the mistakerelates to a mistake in non-claiming of an exemption, which. is a mistake at the end of the assessee and has nothing to.do with the passing of the assessment order. 1).Heard potn sides. 13.Tne fact that tne assessment order opservesregarding exemption under Section 10(10C) of the Act,|which indicates that the Assessing Officer was aware otfnon-claiming of the exemption. If the judgment of the ApexCourt in the case ot LL. HIRDAY(Supra) and the decision ofthe Madras High Court in the case of|RAMCO CEMENT(Supra) are taken note of, prima facie an order to considerthe letter of 18.03.2008 as the rectification application and|to pass an order appears to be a legally justifiable order.|However, learned counsel for the respondent would pointout that no case Is made out for rectification as the mistakerelates to a mistake in non-claiming of an exemption, which. is a mistake at the end of the assessee and has nothing to.do with the passing of the assessment order. 14.Taking note of the peculiar facts of the case, tne|fact remains that the entitlement of exemption underSection 10(10C) of the Act was noticed by the AssessingOfficer. In fact the petitioner nad also sought relief of rectification Dy way of letter dated 18.03.2008. As no orderappears to have been passed on the letter of 18.03.2008,|the petitioner decided to seek for condonation of delay tofile a revised return by an application under Section119(2)(b) of the Act. If an order nad been passed asregards the rectification application, the assessee may Navegot relief at that end itself. AS no order was passed, the|assessee tnen decided to explore the possibility of filing arevised return. 15,Unfortunately, the assessee’s application underSection 119(2)(b) has been rejected on the ground that theSame was filed beyond the period of 6 years, while| observing that the Circular 9/2015 dated 09.06.2015 doesnot permit condoning the delay beyond 6 years. 16.Tne Circular No.014 (XL-35) dated 11.04.1955)provides as follows:-| “The intention of this circular is not that tax duesnouid not be cnarged or that any favour snouldbe|shownTO anybody In)thematterofassessment, or where investigations are calledfor, they snould not be made. Whatever the|legitimate tax it must be assessed and must be|collected.The purpose of this circular_is merelyto empnasise that we snouid not take advantageof an assesseeSs ignorance to collect _more taout of him than is legitimately due from himu empnasis supplied 1/.Keeping in mind the above and the peculiar factsof the case, including that letter that could be construed tobe a rectification application is not decided, noticing themerits of the claim for exemption, a fit case is made out forconsideration of the revised return on its merits. 18.Accordingly, it would be appropriate to set aside|the order of 119(2)(b) and condone the delay. It is also tobe noticed that the reasons assigned while seeking|condonation of delay are also satisfactory. © 19.Accordingly, the impugned order at Annexure-G|dated 17.02.2017 is set aside, the delay is condoned andthe application under Section 119(2)(b) of the Act is|allowed. It is however clarified that as regards to the grant|of refund, eventually in light of the delay, there would beexclusion of interest on the amount of refund. I[t Is alsoclarified that the order is passed taking note of the peculiarfacts and circumstances of the case and accordingly, may|not be considered to have laid down the law as regards the|aspect of condonation of delay under Section 119(2)(bD) oftne Act or on other issues dealt with herein. 20.Tne Court places on record the appreciation of|assistance by the Amicus Curiae. ��� ���������"�������������������������������������� ���� �������������������