Wa/1420/2023 Of Daisy v. The Principal Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH TUESDAY, THE 26 DAY OF SEPTEMBER 2023 / 4TH ASWINA, 1945WA NO. 1420 OF 2023 AGAINST THE JUDGMENT DATED 24.7.2023 IN WP(C) 32420/2017 OFHIGH COURT OF KERALA APPELLANT/PETITIONER: DAISY, AGED 61 YEARSANIZHAM HOUSE, KURUVITHOTTAM, KOTTUKAL,TRIVANDRUM,PIN - 695501 BY ADVS.S.KRISHNAMOORTHYSNEHA ROSE, P.S.ARUNA RESPONDENTS/RESPONDENTS: 1THE PRINCIPAL COMMISSIONER OF INCOME TAXOFFICE OF THE COMMISSIONER OF INCOME TAX AYYAKHAR KAWDIAR, TRIVANDRUM, PIN - 695103 2THE ASSISTANT COMMISSIONER OF INCOME TAXOFFICE OFF THE COMMISSIONER OF INCOME TAX AYYAKHARKAWDIAR, TRIVANDRUM, PIN - 695103 BY ADV CHRISTOPHER ABRAHAM, SC THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON26.09.2023, THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: -:2:- J U D G M E N T Dr.A.K.Jayasankaran Nambiar, J. The unsuccessful writ petitioner in W.P.(C).No.32420 of 2017 isthe appellant before us, aggrieved by the judgment dated 24.7.2023 ofthe learned Single Judge in the writ petition. 2.The brief facts necessary for the disposal of this writappeal are as follows: The appellant had approached this Court through the writpetition aforementioned impugning the order dated 26.5.2017 of thePrincipal Commissioner of Income Tax, Thiruvananthapuram, wherebyan application preferred by the appellant under Section 119(2)(b) ofthe Income Tax Act (for short 'the Act') was rejected. It would appearthat the appellant had filed a return of income for the assessment year2012-2013 on 19.8.2015, showing 'nil' total income. The due date forfiling the return was 31.7.2012 and the return was filed belatedly,since it was basically a return filed by the appellant on behalf of herlate husband who had received compensation amount for the landacquired by the State under the Land Acquisition laws. The acquisition of the land was during the assessment year 2005-2006 andat the time of releasing the initial compensation amount, an amount of5% was deducted towards the tax deducted at source (TDS) by theawarding authority. The appellant's husband had then filed a returnof income for the said assessment year in which he had claimedrefund of the TDS amount deducted from payments made to him bythe Land Acquisition Authority. It is not in dispute that the saidamount was refunded to him on 31.7.2006. 3.While the appellant's husband had challenged the LandAcquisition Award in further proceedings and stood to get enhancedcompensation for the land acquired from him in an amount of₹29,92,708/-, he had omitted to file a return for the assessment year2012-2013 since by the said time he was hospitalised with cancer andsubsequently died in December, 2014. The appellant was not awareof the requirement of filing return for claiming refund of the TDSamounts deducted from the enhanced compensation amountdisbursed to her husband. She came to know of the said requirementonly on 19.8.2015 on which date she filed a 'nil' return on behalf ofher husband with an application for condonation of delay in terms ofSection 119(2)(b) of the Act. The delay sought to be condoned was for W.A.No.1420 of 2023 -:4:- W.A.No.1420 of 2023 -:4:- the period from 31.7.2012 which was the last date for filing the returnon behalf of the husband, till 19.8.2015 which was the date on which a'nil' return was actually filed seeking a refund of the TDS amount inquestion. The application under Section 119 (2)(b) came to beconsidered by the Principal Commissioner of Income Tax, who, by theorder dated 26.5.2017 impugned in the writ petition, rejected theapplication inter alia on the ground that the appellant had notestablished that the land in question was agricultural and further, hadnot produced clear evidence of the fulfillment of the conditionsspecified under Section 10(37)(ii) of the Act. As already noticed, thisorder of the Principal Commissioner was impugned by the appellant inthe writ petition wherein the contention taken was that the PrincipalCommissioner had travelled beyond the powers conferred on himunder Section 119(2)(b) of the Act while rejecting the applicationpreferred by the appellant for condonation of delay in filing the returnand seeking refund of the TDS amounts deducted from paymentsdisbursed to the appellant's husband by way of enhancedcompensation. In particular, it was pointed out that the PrincipalCommissioner was required only to consider whether the delay inpreferring the return together with the refund claim was justified and if so, he had to condone the delay and send the refund application forconsideration on merits to the assessing authority concerned. 4.The learned Single Judge, however, found that inasmuchas the Principal Commissioner in the order impugned in the writpetition had merely exercised his power following Ext.P10 circulardated 9.6.2015 of Central Board of Direct Taxes (for short 'the Board')and in particular, paragraph '5' thereof, which required him to ensurethat the refund claim was correct and genuine and also that the casewas of genuine hardship on merits, the order of the PrincipalCommissioner on the merits of the claim for refund did not requireany interference by this Court. 5.Before us it is the submission of Sri. Krishnamoorthy, thelearned counsel for the appellant that the learned Single Judge wasnot correct in law in affirming the order of the PrincipalCommissioner, which had gone into the merits of the claim for refundwhen the application under Section 119(2)(b) of the Act was merelyfor condonation of delay in preferring the said refund claim. Percontra, it is the submission of Sri. Christopher Abraham, the learnedStanding Counsel for the Income Tax Department that the PrincipalCommissioner could not have been faulted for merely following the circular aforementioned while exercising his discretion in terms ofSection 119(2)(b) of the Act. 6.On a consideration of the rival submissions, we find forcein the submission of the learned counsel for the appellant Sri.Krishnamoorthy that Section 119(2)(b) only empowers the Board toadmit an application or claim for exemption, deduction, refund or anyother relief under the Act, after the expiry of the period specified byor under the Act for making such application or claim and deal withthe same on merits in accordance with law. No doubt, the Board mayauthorise the Principal Commissioner to exercise the said discretionon its behalf, but such authorisation cannot confer on the PrincipalCommissioner a greater discretion than what is contemplated underthe Act in favour of the Board. In the instant case, we find thatExt.P10 circular authorises the Principal Commissioner to considereven the merits of the refund claim while exercising the delegatedpower under Section 119(2)(b) of the Act. This is plainly illegal forthe mandate of the Act cannot be circumvented through anyadministrative circular issued by the Board. At any rate, we find thatthe principal question as to whether or not there was any justifiablereason for the delay in preferring the refund application was not considered by the Principal Commissioner on merits. We also findthat the finding of the Principal Commissioner on the merits of therefund claim is flawed since he has overlooked the fact that in respectof the same land, the assessee had, in 2006, obtained refund of the taxdeducted at source (Ext.P4) from the initial compensation amountsawarded to him for acquisition of his land. The present refund claimpreferred by the appellant, whose late husband was the earlierassessee, is in respect of the tax deducted at source from theenhanced compensation amount pertaining to the same land. Whenthe earlier refund was found admissible by considering the land inquestion as agricultural land, we fail to see how the very same landcan cease to be agricultural land when it comes to a claim for refundof the tax deducted at source from the enhanced compensationamount paid to the assessee. At any rate, we feel that the issue onmerits is something that has to be considered by the assessingauthority to whom the matter must necessarily be relegated if thePrincipal Commissioner finds that there are justifiable reasons offeredby the appellant for the delay in preferring the claim for refund.Since a decision on the merits of the delay condonation applicationunder Section 119(2)(b) has not been taken by the Principal W.A.No.1420 of 2023 -:8:- Commissioner, we are compelled to remit this matter to the saidauthority for fresh consideration, strictly in accordance with Section119(2)(b) of the Act. We therefore allow this writ appeal by setting aside theimpugned judgment of the learned single Judge as also Ext.P6 orderthat was impugned in the writ petition and direct the 1[st] respondentPrincipal Commissioner to consider the application under Section119(2)(b) of the Act preferred by the appellant afresh, solely for thepurpose of determining whether or not justifiable reasons have beenmade out for condoning the delay in preferring the refund application.The 1[st] respondent shall pass fresh orders in the matter after hearingthe appellant within an outer time limit of two months from the dateof receipt of a copy of this judgment. Sd/- DR. A.K.JAYASANKARAN NAMBIAR JUDGE sd/- DR. KAUSER EDAPPAGATH JUDGE kp