Sri.harisankar v. Menon

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 31ST AUGUST 2010 / 9TH BHADRA 1932 WP(C).No. 12494 of 2004(K) -------------------------------- PETITIONER: -------------- T.L. OUSEPH, PROPRIETOR, M/S LAVISH ELECTRICALS AND SANITARIES, KUNNAMKULAM, REPRESENTED BY POWER OF ATTORNEY HOLDER V.V. JOSEPH. BY ADV. SRI.ARIKKAT VIJAYAN MENON SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENTS: ----------------- 1. ASST. COMMISSIONER OF INCOME TAX, INVESTIGATION CIRCLE-I, DIVISION-I, THRISSUR. 2. CHIEF COMMISSIONER OF INCOME TAX, CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, ERNAKULAM, KOCHI-18. BY ADV. SRI.P.K.R.MENON, SENIOR ADVOCATE SRI.JOSE JOSEPH, SC FOR IT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 31/08/2010, ALONG WITH WPC NO. 12610 OF 2004 & WPC NO. 12653 OF 2004 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.12494 of 2004-K APPENDIX PETITIONER'S EXHIBITS: EXT.P1 COPY OF THE ASSESSMENT ORDER PASSED BY FIRST RESPONDENT FOR THE YEAR 89-90FOR THE YEAR 89-90 EXT.P2 COPY OF THE ASSESSMENT ORDER PASSED BY 1ST RESPONDENT FOR THE YEAR 90-91FOR THE YEAR 90-91 EXT.P3 COPY OF THE ASSESSMENT ORDER PASSED BY 1ST RESPONDENTFOR THE YEAR 91-92FOR THE YEAR 91-92 EXT.P4 COPY OF THE ASSESSMENT ORDER PASSED BY 1ST RESPONDENT FOR THE YEAR 92-93FOR THE YEAR 92-93 EXT.P5 COPY OF THE ASSESSMENT ORDER PASSED BY 1ST RESPONDENT FOR THE YEAR 93-94FOR THE YEAR 93-94 EXT.P6 COPY OF THE ASSESSMENT ORDER PASSED BY 1ST RESPONDENTFOR THE YEAR 94095FOR THE YEAR 94095 EXT.P7 COPY OF THE ORDER PASSED BY THE 2ND RESPONDENT EXT.P8 COPY OF THE NOTICE ISSUED BY THE 2ND RESPONDENT EXT.P9 COPY OF THE ORDER ISSUED BY THE 2ND RESPONDENT / TRUE COPY / P.R. RAMACHANDRA MENON, J. - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - W.P.(C)Nos.12494, 12610 and 12653 of 2004 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 31[st] day of August, 2010 JUDGMENT The petitioner in W.P.(C) No.12494 of 2004 is the partner of different establishments being run under the name and style‘M/s.Lavish Electricals and Sanitaries’-who has filed W.P.(C)No.12610 of 2004 and of another establishment under the nameand style ‘M/s.Link line Enterprises'-who has filed W.P.(C)No.12653 of 2004. The issue projected in all these writpetitions is mainly with regard to the sustainability of the powerinvoked by the 2[nd] respondent under Section 154 of the IncomeTax Act seeking to rectify the mistake allegedly apparent on theface of the records and passing Ext.P10 order, virtuallyreversing the effect of Ext.P8 order passed by the very sameofficer who had passed the said order granting benefits to thepetitioner concerned, earlier. 2. With regard to the facts in detail, the learned counsel for the petitioners submits that the assessee was a non-residentIndian for nearly 4 decades, who came back to the State of WP(C) Nos.12494, 12610 and 12653 of 2004. Kerala and got himself engaged in different trades and wassubmitting returns, paying the tax before the Income Taxauthorities in accordance with the relevant provisions of law.However, there was a search on the premises of the petitionerunder Section 132 of the Income Tax Act on 20.07.94. For thepurpose of convenience, since there is no factual controversywith regard to the issue projected in the different writ petitions,reference is made mainly to W.P.(C) No.12653 of 2004, takingthe same as the leading case. 2. With regard to the facts in detail, the learned counsel for the petitioners submits that the assessee was a non-residentIndian for nearly 4 decades, who came back to the State of WP(C) Nos.12494, 12610 and 12653 of 2004. Kerala and got himself engaged in different trades and wassubmitting returns, paying the tax before the Income Taxauthorities in accordance with the relevant provisions of law.However, there was a search on the premises of the petitionerunder Section 132 of the Income Tax Act on 20.07.94. For thepurpose of convenience, since there is no factual controversywith regard to the issue projected in the different writ petitions,reference is made mainly to W.P.(C) No.12653 of 2004, takingthe same as the leading case. 3. The learned counsel for the petitioner in W.P.(C)No.12653 of 2004 submits that Exts.P1 to P7 assessment orderswere passed under Section 143(3) of the Income Tax Act,whereby the liability of the petitioner to satisfy the tax dues wasfinalised, also fixing the interest payable under the differentprovisions of Section 234A, 234B and 234C which pertain toimposition of liability to pay interest, when no return is filed; orif default in payment of the advance tax/short payment is there,or in respect of the failure to pay the tax before the cut off date, WP(C) Nos.12494, 12610 and 12653 of 2004. respectively. The case of the petitioner is that pursuant to theassessment made as per Exts.P1 to P7 orders, full tax liabilitywas cleared by the petitioner and thereafter an applicationdated 06.03.97 was preferred before the 2[nd] respondent seekingfor the benefit of 'waiver of interest' under all the above threeheads. The learned counsel for the petitioner submits that suchan application was preferred seeking for the benefit of theCircular/ Notification F No.400/234/95-IT(B) (as given at thebottom, though omitted to be given at the top) dated 23.05.96.The learned counsel submits that by virtue of the mandateunder Clause 2 (e) of the said Circular/Scheme, the petitioner isentitled to get the benefit of waiver and after considering theapplications interest payable in respect of three different headsunder Section 234A, 234B and 234C of the Income Tax Act waswaived by the 2[nd] respondent in respect of all the relevantassessment orders, except 1988-89, vide Ext.P8 order passedon 26.11.99. However, nearly 4 years after passing of Ext.P8order, another officer assumed charge of the office of the 2[nd] WP(C) Nos.12494, 12610 and 12653 of 2004. -:4:- respondent, who issued Ext.P9 notice to the petitioner on26.12.2003 proposing to reconsider the matter, allegedlybecause of some errors apparent on the face of records,invoking the power of rectification. On receipt of Ext.P9 notice,the petitioner sought to explain the position by filing a detailedstatement of objections. However, the objection was notproperly considered and Ext.P10 order was passed by the 2[nd]respondent on 25.02.04, which is under challenge in this writpetition. 4. The learned counsel for the petitioner submits that thecourse pursued by the 2[nd] respondent in passing Ext.P10 orderis not correct or sustainable, mainly on two different grounds.The reason stated by the concerned authority for passingExt.P10 order is mainly that the returns filed by the petitionerwere much after the search and seizure conducted on 20.07.94and this being the position, the benefit of the Circular/Schemewas not liable to be extended to the petitioner under anycircumstances. The learned counsel submits that, as discernible WP(C) Nos.12494, 12610 and 12653 of 2004. from the very opening sentence in the assessment orders, it 4. The learned counsel for the petitioner submits that thecourse pursued by the 2[nd] respondent in passing Ext.P10 orderis not correct or sustainable, mainly on two different grounds.The reason stated by the concerned authority for passingExt.P10 order is mainly that the returns filed by the petitionerwere much after the search and seizure conducted on 20.07.94and this being the position, the benefit of the Circular/Schemewas not liable to be extended to the petitioner under anycircumstances. The learned counsel submits that, as discernible WP(C) Nos.12494, 12610 and 12653 of 2004. from the very opening sentence in the assessment orders, it has been clearly stated that the assessment of the petitionerhad been finalised earlier, also giving the relevant dates, whichclearly show that returns were filed by the petitioner muchprior to the search conducted on 20.07.94. This being theposition, the contention/stand taken by the concernedrespondent, stating that the petitioner is not eligible to have thebenefit of the Scheme/Circular is quite wrong and misconceived.There is another contention that, in so far as Clause 2(e) of theCircular is concerned, the authority was very much at liberty tohave had the benefit extended to the petitioner as borne byExt.P8, since the stipulation in the said Clause clearly takes careof the petitioner as well, if the assessee was prevented to havefiled the return due to unavoidable circumstances. 5. Referring to the contents of Ext.P8, the learned counselfor the petitioner submits that the circumstances under whichthe petitioner was prevented from filing the return has beenexplained, the petitioner being an NRI, that the management WP(C) Nos.12494, 12610 and 12653 of 2004. was being done by the concerned persons in an impropermanner and such other particulars which have been taken noteof in paragraph 3 and it was accordingly, that the benefit ofwaiver was extended invoking the powers under Clause 2(e) ofthe concerned Circular, in respect of the assessment years1989-90 to 1995-96 waving the interest under all the threeheads of Section 234A, 234B and 234C in full. With regard tothe assessment year 1988-89, as observed in paragraph 5 ofExt.P8, it was outside the purview of the Circular and as such,the benefit was not extended to the petitioner. The actionpursued by the officer who assumed charge of the 2[nd]respondent subsequently, issuing Ext.P9 notice seeking torectify the alleged error under Section 154 of the Income TaxAct, 1961 nearly after 4 years, culminating in Ext.P10 order,cancelling the waiver and restoring the liability as perExts.P1 to P7 assessment orders is sought to be interfered bythis Court. Reliance is also placed on the decision rendered bythe Hon'ble Supreme Court as reported in T.S. Balaram v. WP(C) Nos.12494, 12610 and 12653 of 2004. -:7:- Volkart Brothers, Bombay explaining thescope of interference under Section 154 stating that it is notintended or to be pursued in the course by a long drawn processand that the power is exercisable only in respect of such errorswhich are apparent on the face of the records and nothingbeyond. 6. The learned Standing Counsel appearing for the respondents submits that there is absolutely no merit orbonafides in the writ petition and that the petitioner wasallowed to enjoy some benefits by virtue of Ext.P8 order passedby the then officer without due regard to the contents of therelevant Circular and when the concerned officer who assumedcharge, as a prudent officer, he pursued the relevant recordsand found that the course pursued by the earlier officer was notin conformity with the contents of the Circular. AccordinglyExt.P9 notice was issued and it was after considering theobjections, that Ext.P10 order was passed, which is perfectlywithin the four walls of the law and is not assailable under any WP(C) Nos.12494, 12610 and 12653 of 2004. 6. The learned Standing Counsel appearing for the respondents submits that there is absolutely no merit orbonafides in the writ petition and that the petitioner wasallowed to enjoy some benefits by virtue of Ext.P8 order passedby the then officer without due regard to the contents of therelevant Circular and when the concerned officer who assumedcharge, as a prudent officer, he pursued the relevant recordsand found that the course pursued by the earlier officer was notin conformity with the contents of the Circular. AccordinglyExt.P9 notice was issued and it was after considering theobjections, that Ext.P10 order was passed, which is perfectlywithin the four walls of the law and is not assailable under any WP(C) Nos.12494, 12610 and 12653 of 2004. circumstances. The learned Standing Counsel also submits thatthe contention of the petitioner that the returns filed by thepetitioner earlier as stated in Exts.P1 to P4 (however, withoutany dispute with regard to the late filing of the returns after thesearch, as shown in Exts.P5 to P7) were 'not voluntary' in viewof the fact that the search conducted on 20.07.94 and thesubsequent issuance of notice under Section 148 are notdisputed. It was pursuant to the notice issued under Section148 of the Income Tax Act, that the petitioner chose to file'fresh returns' and it was on the basis of the proceedings asabove, that Exts.P1 to P7 assessment orders were passed. Thisbeing the position, the course pursued by the petitioner cannever be considered as a case of voluntary filing of returns andthe petitioner is not entitled to get the benefit of the Schemewhich has been notified by the CBDT only to deal with genuinecases and to help persons who are having genuine reasons. Thelearned Standing Counsel also submits that the exercise of thepower under Section 154 is really intended to remedy such a WP(C) Nos.12494, 12610 and 12653 of 2004. situation and if any particular provision has been omitted to be taken note of by the concerned authority or wrongly referred towhile passing the order, it is very much open to invoke thepower of rectification, as made clear by a Division Bench of thisCourt in Commissioner of Income Tax (Kerala) v. QuilonMarine Products Company[157 ITR 448]. It is also assertedthat, none of the requirements as specified in the relevantparagraphs or Clause of the concerned Circular/Scheme hasbeen adverted to by the concerned officer who passed Ext.P8order before he extended the benefits to the petitioner inrespect of the concerned assessment years and this being theposition, the issuance of Ext.P9 notice leading to Ext.P10 order,with specific reference to the Scheme/Circular, is not liable to beinterfered by this Court. 7. Since there is no much controversy with regard to thefactual situation, the crucial question is whether the returnsfiled by the petitioner are liable to be accepted as voluntaryreturns. As mentioned herein before, there is also no dispute WP(C) Nos.12494, 12610 and 12653 of 2004. -:10:- with regard to the fact that there was a search in the premises on 20.07.94 and petitioner was confronted with Section 148notice and it was pursuant to the said notice that the petitionerchose to file the relevant returns, which were acted upon,leading to Exts.P1 to P7 assessment orders. In other words,but for the issuance of notice under Section 148, there was nochance to have filed the relevant returns and to have sufferedthe assessment as per Exts.P1 to P7. 8. With regard to the contents of the concerned Circular, WP(C) Nos.12494, 12610 and 12653 of 2004. -:10:- with regard to the fact that there was a search in the premises on 20.07.94 and petitioner was confronted with Section 148notice and it was pursuant to the said notice that the petitionerchose to file the relevant returns, which were acted upon,leading to Exts.P1 to P7 assessment orders. In other words,but for the issuance of notice under Section 148, there was nochance to have filed the relevant returns and to have sufferedthe assessment as per Exts.P1 to P7. 8. With regard to the contents of the concerned Circular, as mentioned in Clauses (a), (b), (c) and (d) of paragraph 2,they deal with different circumstances, to make the assesseeeligible for the benefit of waiver of interest under Section 234A,234B and 234C. The learned counsel for the petitioner fairlyconceded that the said circumstances are not attracted to thecase in hand and reliance is sought to be placed only withregard to the contents of 'Clause(e)'of paragraph 2. Paragraph2(e) reads as follows: “Where the return of income could not be filed by the WP(C) Nos.12494, 12610 and 12653 of 2004. assessee due to unavoidable circumstances and such return ofincome is filed voluntarily by the assessee of his legal heirswithout detection by the Assessing Officer.” 9. Going by the admitted/undisputed facts and figures it is evident that there was a 'Search' followed by notice issuedunder Section 148; pursuant to which the petitioner filed therelevant returns, in supersession of the returns filed earlier andtax was paid based on the assessment made as per Exts.P1 toP7 orders. In the said circumstances, it is not liable to be heldthat the filing of the returns by the assessee, leading to thepassing of Exts.P1 to P7 assessment orders, pursuant to thenotice under Section 148 is 'voluntary'. So also, since it waspursuant to the 'Search' conducted by the DepartmentalAuthorities, the second limb of Clause 2(e) i.e., “withoutdetection by the Assessing Officer” is also not satisfied. Inshort, the case of the petitioner does not come within thepurview of 'Clause 2(e)' of the Circular. 10. It is very much relevant to note that, no specificreference has been made by the concerned officer in Ext.P8, as WP(C) Nos.12494, 12610 and 12653 of 2004. to any of the different circumstances mentioned under the Circular and even the Circular/Scheme is not referred to.Presuming that Ext.P8 order was passed based on the saidCircular/Scheme, it has definitely to satisfy the requirementsspecified in the Circular/Scheme. When the claim is for thebenefit of a Scheme, there is no power for the Court to widenthe terms of the Scheme or to waive the stipulations, in view ofthe law declared by the Apex Court in {Commissioner ofIncome Tax v. Anju M.H.Ghaswala [ITR 252 Page 1 SC]}. 11. As mentioned herein before, different circumstancesare contemplated to invoke the relevant Clauses as providedunder Clauses (a) to (d) of paragraph 2 of the Circular; whilethe stipulation under paragraph '2 (e)' is only a residualprovision, which however does not come to the rescue of thepetitioner. When there is no dispute that the case of thepetitioner does not come within the purview of the aboveClauses, nothing remains further to be considered, but forholding that the petitioner is not entitled to get the benefits WP(C) Nos.12494, 12610 and 12653 of 2004. -:13:- under the Scheme. The action pursued by the respondents in passing Ext.P10 order, after issuing notice under Section 154and thus complying with the statutory formalities, does not callfor any interference by this Court. There is no merit in the Writ Petitions and they aredismissed accordingly. ttb P.R. RAMACHANDRA MENON, JUDGE