Wa/4066/2003 Of M/S.rayala Corporation Pvt Ltd v. The Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 19.11.2008 CORAM THE HONOURABLE MR.JUSTICE D.MURUGESANANDTHE HONOURABLE MR.JUSTICE V.PERIYA KARUPPIAH W.A.No.4066 & 4067 of 2003 M/s Rayala Corporation Pvt.Ltd.,144/7, Old Mahabalipuram RoadKottivakkamChennai 600 041 Appellant in both the..Writ Appeals-Vs- The Commissioner of Income TaxChennai-III121, Mahatma Gandhi RoadChennai 600 034 Respondent in both the..Writ Appeals Appeals filed under Clause 15 of the Letters Patent against theorder dated 18.09.2003 made in W.P.Nos.12408 and 12409 of 2003 petitionsfiled under Article 226 of the Constitution of India to issue a Writ ofCertiorarified Mandamus to call for the records on the file of therespondent in the proceedings in C.No.3032/19/III/2001-02 and inC.No.3032/1 4/M/III/2001-02 for the Assessment years 1978-79 and 1980-81respectively dated 21.03.2003 and quash the same and further direct therespondent to consider the Revision Petitions filed by the petitionercompany under section 264 of the Income-Tax Act, 1961 on merit and inthe light of the directions of this Court in its orders in WP.Nos.21111to 21113 of 1994 dated 22.12.2000. JUDGMENT The appellant-M/s Rayala Corporation Private Limited is engaged inthe business of manufacture and sale of typewriters and manufacture andhttps://hcservices.ecourts.gov.in/hcservices/supply of defence equipments/components to various defenceestablishments in the country. In respect of levy of interest underSection 216 of the Income Tax Act and for waiver for the assessment years 1978-79 and 1980-81, the matter landed before the SettlementCommissioner who, by order dated 30.12.92, remitted the matter to theassessing authority, and the assessments were completed on 6.12.93 and21.2.94 respectively. 2. In terms of sub-section (3) of Section 264 of the Income TaxAct, the assessee is entitled to prefer a revision within a period ofone year from the date of the assessment order. However, withoutavailing the remedy of filing revision petition, the appellant-assesseeapproached this Court by filing W.P.Nos.21111 to 21113 of 1994. By orderdated 22.12.2000, this Court, while dismissing W.P.No.21111 of 1994 asinfructuous, disposed the remaining two writ petitions with thefollowing directions:- "However, the petitioner is given liberty toapproach the Commissioner of Income Tax for waiver ofinterest under section 264 of the Act. The petitioner isalso permitted to prefer revision petition within aperiod of one month from this date. I am of the viewthat since the writ petition was entertained by thisCourt and the matter has been pending from the date offiling of the writ petition, the Commissioner of IncomeTax is directed to take the revision petition that maybe filed under section 264 of the Act by the petitioner,if the application is filed within one month from thedate without raising any objection as to limitation andthe Commissioner is directed to consider the saidpetition on merits and in the light of my judgment ofeven date rendered in W.P.No.21120 of 1994. The writpetition is accordingly disposed of." 3. By the said order, the appellant-assessee ought to havepreferred the revision petitions within a period of one month from22.12.2000 i.e., on or before 21.1.2001. However, the revisionpetitions were filed only on 7.5.2001 and the same were dismissed by therevisional authority on 21.3.2003 on the ground that they were filedbeyond a period of one month as prescribed by this Court. The saidorders were questioned by the appellant-assessee in W.P.Nos.12408 and12409 of 2003, which were dismissed by a common order dated 18.9.2003.Hence the present appeals are filed by the appellant-assessee. 4. We have heard Mr.V.Ramachandran, learned senior counsel for theappellant and Mr.Arun Kurian Joseph, learned junior standing counsel forthe Income Tax Department. 3. By the said order, the appellant-assessee ought to havepreferred the revision petitions within a period of one month from22.12.2000 i.e., on or before 21.1.2001. However, the revisionpetitions were filed only on 7.5.2001 and the same were dismissed by therevisional authority on 21.3.2003 on the ground that they were filedbeyond a period of one month as prescribed by this Court. The saidorders were questioned by the appellant-assessee in W.P.Nos.12408 and12409 of 2003, which were dismissed by a common order dated 18.9.2003.Hence the present appeals are filed by the appellant-assessee. 4. We have heard Mr.V.Ramachandran, learned senior counsel for theappellant and Mr.Arun Kurian Joseph, learned junior standing counsel forthe Income Tax Department. 5. In terms of sub-section (3) of Section 264 of the Income TaxAct, as against the order of the assessing authority, a revision ismaintainable and could be filed within a period of one year from thedate of the order. A proviso has been added to the said section,wherein a power has been conferred on the Commissioner to admit anapplication made after the expiry of the said period, if he is satisfiedhttps://hcservices.ecourts.gov.in/hcservices/that the assessee was prevented by sufficient cause for making theapplication within that period. Hence it is not as if the revisionfiled beyond a period of one year would be automatically rejected and even a revision filed beyond that period could be entertained for goodand sufficient reasons. This Court, while permitting the appellant-assessee to file the revision petitions taking into note of the saidproviso, directed the appellant-assessee to prefer the revisionpetitions within a period of one month from the said date and also madeit clear that the revisional authority should consider the revisionpetitions on merit in the event they are filed within the said periodwithout raising any objection as to the limitation. Only in view ofthe period prescribed by this Court, the revisional authority, thoughhad power to entertain the revision petitions even beyond a period ofone year for good and sufficient reasons, had rejected the revisionpetitions solely on the ground that they were not filed as directed bythis Court within the prescribed period. 6. This takes us to the only question as to whether the appellant-assessee is justified in not preferring the revision petitions asdirected by this Court within a period of one month. Immediately afterthe revision petitions were filed on 7.5.2001, a doubt was entertainedas to whether the revision petitions could be entertained forconsideration on merit, as they were filed beyond a period of one monthas directed by this Court. In fact, in the revision petitions as to theearliest opportunity available to the appellant-assessee, it is statedas follows in paragraph-2:- "2. The final portion of the above order waspronounced in the open court on 22.12.2000 and onthe very same date our Counsel, M/s George Cheriyanand B Ravi Raja have applied for the order copy. Weunderstand from our Counsel that the saidapplication has been lost by the Court Registry andour Counsel have to reapply for the same. The re-application was made by our Counsel on 27.02.2001and the order was made available and delivered toour Counsel on 16.04.2001. We were informed by ourCounsel that only the final portion of the order waspronounced in the Open Court and not the entiretext. Hence, our Counsel is not aware of the factthat the Assessee/Petitioner has to submit thePetition u/s 264 within the time stipulated therein.This fact we came to know only when the order copywas received i.e., on 16.04.2001." Even then, as the clarification was required, the appellant-assesseefiled two miscellaneous petitions in W.P.M.P.Nos.15409 and 15410 of 2002in W.P.Nos.21112 & 21113 of 1994 before this Court seeking forclarification and direction to the Commissioner of Income Tax to take onfile the revision petitions and to dispose of the same as per thedirections of this Court dated 22.12.2000. In support of the saidpetitions, in paragraph-6, it is averred as follows:- "6.I submit that however, this Hon'ble Court in itscommon order dt.22.12.2000 in W.P.Nos.21111 to 21113 ofhttps://hcservices.ecourts.gov.in/hcservices/1994, has given the liberty to the Petitioner to filethe Petition u/s 264 of the Income Tax Act, 1961 for the Asst.Years 1978-79 and 80-81 in W.P.Nos.21112 and21113 within one month from the date of the order.Further this Hon'ble High Court has directed theCommissioner of Income Tax, to take the revisionpetition that may be filed by the Petitioner u/s 264 ofthe Income Tax Act, 1961 within one month from the datewithout raising any objection as to the limitation.Further, this Hon'ble High Court has also directed theCommissioner to consider the petition on merit in thelight of the judgment of this Hon'ble Courtdt.22.12.2000 in W.P.No.21120 of 1994." 7. In the meantime, as the revision petitions were not entertained,W.P.Nos.12408 & 12409 of 2003 were filed and in support of the saidpetitions, an affidavit of the counsel was also filed and in the saidaffidavit, it is averred as follows:- "1. I submit that I am one of the counsel of thepetitioner in W.P.Nos.21111 to 21113 of 1994, I amfiling this affidavit in support of the writ petitionfiled by the petitioner in the above matter. 2. I state that our court clerk, afterverification with the Registry had informed us that acopy application filed for issue of certified copy ofthe order dated 22.12.2000 passed by this Hon'ble HighCourt in W.P.Nos.21111 to 21113 of 1994 made on thesame date of the order was misplaced and therefore weas the counsel were called upon to make a freshapplication. Accordingly a fresh copy application wasmade on 27.02.2001 in C.D.No.3205 of 2001 on 2001 andthe same was processed and the order copy made ready on16.04.2001 and delivered on the same day. I state thatwithin 30 days of obtaining the order copy of thisHon'ble Court, the petitioner has filed on 07.05.2001petition under Section 264 of the Income Tax Act asdirected by this Hon'ble Court. 3. I state that the respondent required aclarification to be obtained from the Hon'ble HighCourt regarding the prescribed limitation stated in theorder for filing petition under Section 264 of theIncome Tax Act. I further state that accordinglyW.M.P.Nos.15409 & 15410 of 2002 in W.P.Nos.21111 to21113 of 1994 were filed seeking for clarification fromthis Hon'ble Court as required by the respondent. Inspite of the best efforts by us and in spite of havingthe W.M.Ps. numbered seeking clarification of thisHon'ble Court, the matter was not listed as we wereinformed by the Registry that the main writ bundlecould not be located. In the meantime the respondenthas dismissed the petition filed by the petitionerunder Section 264 of the Income Tax Act on account ofhttps://hcservices.ecourts.gov.in/hcservices/non-compliance of the Court direction namely"viz.filing of petition within 30 days from the date ofthe order". 4. I state the delay in filing the petition by thepetitioner before the respondent was not due to anywillful default of the petitioner but due tocircumstances beyond the control of the petitionerwhereby our office was not in a position to makeavailable the order copy to the petitioner earlier dueto the circumstances mentioned hereinabove. 4. I state the delay in filing the petition by thepetitioner before the respondent was not due to anywillful default of the petitioner but due tocircumstances beyond the control of the petitionerwhereby our office was not in a position to makeavailable the order copy to the petitioner earlier dueto the circumstances mentioned hereinabove. 5. I further submit that I am filing thisaffidavit in support of the affidavit of the petitionerto enable the petitioner to obtain suitable redress interms of the orders passed by this Hon'ble Court dated22.12.2000." 8. Keeping the above explanation offered by not only the appellant-assessee, but also the counsel for the appellant-assessee, it has to benow considered whether the failure on the part of the assessee in notpreferring the revision petitions within the period stipulated by thisCourt is wanton and only to drag on the proceedings. While consideringthe issue in question, it must be kept in mind that as against theassessment orders put against the assessee, the assessee could havefiled revision petitions straight-away invoking sub-section (3) ofSection 264 of the Income Tax Act. But the assessee had chosen a wrongforum by filing writ petitions before this Court, which were ultimatelydismissed directing the appellant to file the revision petitions. As,in the meantime, the period of limitation prescribed under sub-section(3) of Section 264 was over, this Court taking into consideration of thefact that the assessee should not be deprived of the right to file therevision petitions, merely because it has chosen a wrong forum,permitted the assessee to file the revision petitions, of course,prescribing a period of 30 days. From the explanation offered by thecounsel appearing for the appellant through his affidavit, it is seenthat the order was passed on the last working day before the Courtclosed for Christmas holidays i.e., 22.12.2000 and the Court onlypronounced the operative portion of the order, the explanation offeredby the counsel that he was not aware of the period prescribed by theCourt could be accepted and we have no reason to discard the same.Further, immediately copy application was made and since the same wasmisplaced in the Registry, another copy application was made on27.2.2001 and thereafter the copy was obtained on 16.4.2001 and therevision petitions were filed within a period of one month prescribed bythe Court. There is no delay on the part of the appellant-assessee inpreferring the revision petitions within a period of 30 days from thedate when the copy was obtained. Of course, the learned counsel whorepresented the appellant should have intimated the orders of this Courtto prefer the revision petitions at least when he came to know that theapplication was misplaced in the Registry and another application wasfiled and, in the meantime, his failure to ascertain the actual orderpassed by this Court. Nevertheless, the question is whether a litigantshould be prejudiced due to the fault of the advocate. In our opinion,when the fault of the advocate is justified by giving sufficient reasonshttps://hcservices.ecourts.gov.in/hcservices/by way of filing an affidavit, the Court should normally entertain andaccept such explanation and pass orders. Yet another aspect which weighour mind as to the bona fide of the appellant/assessee is that the assessee has approached this Court by filing two miscellaneous petitionsfor clarifying the order on 13.3.2002 and those miscellaneous petitionshave not so far been disposed of and are kept pending. In the meantime,the revisional authority has passed the orders declining to entertainthe revision petitions on the ground that they were filed beyond theperiod prescribed by this Court. Had the said miscellaneous petitionsbeen disposed of as rejected, the consideration would be entirelydifferent. However, so long as those petitions are not rejected and arekept pending, merely because those petitions are pending, the revisionalauthority ought not to have rejected the revision petitions on theground that the period prescribed by this Court for filing the revisionpetitions was over. As already referred to, in terms of the proviso toSection 264(3), it is not as if there is a total bar for the revisionalauthority to reject any application which is filed beyond a period ofone year. On good and sufficient reasons, even the revisional authoritycould extend the time and the further period is also not restricted.After all, the right of a party to get a disposal on merits before therevisional authority has been defeated only on the sole ground that therevision petitions were not filed by the appellant-assessee as directedby this Court within a period of one month. When this Court has fixed aperiod of one month, it would have certainly considered extension by afurther period of one month if the miscellaneous petitions inW.P.M.P.Nos.15409 and 15410 of 2002 were taken up for hearing anddisposed of. 9. The prime consideration of this Court in matters like this wouldbe in the advancement of justice and the parties should get the disputesadjudicated on merits and not on the ground of failure to file therevision petitions within a period of one month which was prescribed bythis Court, when this Court would be competent to extend the said periodsubsequently. Further, we are at a loss to understand the purpose forwhich the assessee could drag on the matter, as the assessee would notbe gaining anything by dragging the matter, except keeping the entireassessment proceedings extended without any challenge. In the event therevisional authority is directed to consider the revision petitions onmerit, the respondent-department also would not be prejudiced. On theother hand, if the revision petitions are not restored to file, theassessee would be seriously prejudiced and the assessment orders whichwere completed on 6.12.93 and 21.2.94 respectively would become finalwithout there being any challenge. In order to meet the ends ofjustice, we accept the explanation offered by the learned counsel forthe appellant-assessee in his affidavit as to the furnishing of the copyapplication and the receipt of the copy of the order coupled with thefact that the very same stand was taken by the appellant-assessee beforethe revisional authority as well as this Court as to the filing of theclarification petitions. 10. For the foregoing reasons, without expressing any opinion onthe merits of the case, the orders passed by the respondent/revisionalauthority dated 21.3.2003 and the orders passed in W.P.Nos.12408 and12409 of 2003 are set aside and the revision petitions dated 7.5.2001https://hcservices.ecourts.gov.in/hcservices/are restored to file. The revisional authority/the Commissioner ofIncome Tax, Chennai-III is directed to consider the revision petitionson merit and dispose of the same as expeditiously as possible. It is needless to mention that the revisional authority will act in terms ofSection 264(3) to afford an opportunity to the appellant-assessee andwithout reference to the limitation as such. The writ appeals areallowed with the aforesaid directions. Consequently, W.A.M.P.Nos.6701 &6702 of 2003 are closed. No costs. needless to mention that the revisional authority will act in terms ofSection 264(3) to afford an opportunity to the appellant-assessee andwithout reference to the limitation as such. The writ appeals areallowed with the aforesaid directions. Consequently, W.A.M.P.Nos.6701 &6702 of 2003 are closed. No costs. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarssTo The Commissioner of Income TaxChennai-III121, Mahatma Gandhi RoadChennai 600 0341 cc To Mr.George Cheriyan, Advocate, SR.64635.1 cc To Mr.Pushya Sitaraman, Standing Counsel for I.T.Cases, SR.64953.W.A.Nos.4066 & 4067 of 2003 SSN(CO)RVL 08.12.2008