Which Relief Under Section 89(1) Was Denied To Him. This Application Undersection 264 Was Rejected By Ext.p1 Order Dated 31-01-2005. While Matterstood Thus, On v. Wa

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE & THE HONOURABLE MR. JUSTICE GOPINATH P. TUESDAY, THE 05TH DAY OF JANUARY 2021 / 15TH POUSHA, 1942 WA.No.1713 OF 2020 AGAINST THE JUDGMENT DATED 23-11-2020 IN WP(C) 16955/2013(T) OFHIGH COURT OF KERALA APPELLANT/PETITIONER: V.GOPALANAGED 73 YEARS S/O.V.PAIDAL NAIR, SUBU NIVAS, PANNIYANNUR P.O., THALASSERY 670 679 BY ADV. SRI.LEEJOY MATHEW.V. RESPONDENTS/RESPONDENTS: 1CHIEF COMMISSIONER OF INCOME TAXKERALA, ERNAKULAM 680 018KERALA, ERNAKULAM 680 0182COMMISSIONER OF INCOME TAXMELE CHOVA, KANNUR 670 006MELE CHOVA, KANNUR 670 006 THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 05.01.2021,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J U D G M E N T 'C.R.' DATED THIS THE 5[th] DAY OF JANUARY, 2021 Gopinath, J: This writ appeal has been filed challenging the judgment dated23-11-2020 in W.P (C) No.16955/2013. The appellant was the WritPetitioner. The brief facts are that the appellant had received certainamounts from his employer (the erstwhile State Bank of Travancore) undera Voluntary Retirement Scheme (VRS). The appellant filed his return ofincome for the assessment year 2001-2002 claiming deduction underSection 10 (10C) (viii) of the Income Tax Act as well as under the provisionsof Section 89 (1) of the Income Tax Act (as it stood then) r/w Section 17 (3)of that Act. 2.The assessing officer appears to have initiated proceedings onthe premise that the appellant was not entitled to claim deduction underSection 10 (10 C) (viii) and also under Section 89 (1) of the Act in respect ofamounts received as part of VRS. Though it is stated that intimations underSections 143(1)/154 were issued to the appellant, they are not on record inthis Court. The appellant approached the 2[nd] respondent under Section 264of the Income Tax Act seeking revision of the orders/intimations through which relief under Section 89(1) was denied to him. This application underSection 264 was rejected by Ext.P1 order dated 31-01-2005. While matterstood thus, on 08-12-2005, a Division Bench of this court in the decisionreported as State Bank of India v. Central Board of Direct Taxes;2006 (1) KLT 258 held that amounts received by employees under aVoluntary Retirement Scheme are entitled to relief under Section 89 (1) inaddition to the exemption granted under Section 10 (10C) (viii) andquashed letter/circular No.E.174/5/2001-ITA-I dated 23-04-2001 issuedby the Central Boards of Direct Taxes, which held to the contrary. Oncoming to know of the judgment of the Division Bench the appellant filedan application before the 2[nd] respondent seeking to rectify Ext.P1 order.Facing recovery proceedings the appellant also paid certain amounts to theDepartment to satisfy the demand arising out of the denial of relief underSection 89 (1). This court through judgment dated 01-10-2009 in WP(C)No. 26055/2009 directed the 2[nd] respondent to hear and dispose of thepetition filed seeking rectification of Ext.P1 order within a time frame. 3.The 2[nd] respondent thereafter issued an order rejecting thepetition for rectification of Ext.P.1 order finding that though a similar issuearose for adjudication in State Bank of India (supra) the same was nota ground for rectification and also on the ground that the Voluntary Retirement Scheme of the State Bank of India which was considered by this 3.The 2[nd] respondent thereafter issued an order rejecting thepetition for rectification of Ext.P.1 order finding that though a similar issuearose for adjudication in State Bank of India (supra) the same was nota ground for rectification and also on the ground that the Voluntary Retirement Scheme of the State Bank of India which was considered by this court in State Bank of India (supra) may be different from thevoluntary retirement scheme of the State Bank of Travancore from whoseservice the appellant took voluntary retirement. On being served withExt.P6 raising a further demand (issued on 22-03-2013) the appellantpreferred W.P (C) No.16955/2013. The learned Single Judge afterconsidering the facts and circumstances of the case held that the remedyopen to the appellant was to prefer an appeal before the Commissioner ofIncome Tax (Appeals) under Section 246A of the Income Tax Act anddisposed of the writ petition permitting the appellant to file such an appealand further ordered that if the appeal is filed within a period of 3 weeksfrom the date of the judgment, the same shall be treated as an appeal filedin time. The appeal, if filed, was directed to be heard and disposed of onmerits. Aggrieved by the judgment of the learned Single Judge theappellant has filed the present appeal. 4.We have heard Sri. Leejoy Mathew, the learned counselappearing for the appellant and Sri. Jose Joseph, learned Standing Counselappearing for the Income Tax Department. We have heard Sri. Leejoy Mathew, the learned counsel 5.The learned counsel for the appellant would contend that this isa case where the issue stands decided in favour of the appellant by the judgment of a Division Bench of this Court in State Bank of India(supra). He would therefore contend that this Court should exercisejurisdiction under Article 226 of the Constitution of India to quash theproceedings initiated against him on the premise that he was not entitled toclaim deduction under Section 10 (10C) (viii) and relief under Section 89 ofthe Income Tax Act simultaneously. He submitted that the appellant shouldnot have been relegated to avail the remedy of statutory appeal especiallyconsidering the fact that the appellant is a senior citizen aged 73 years andsince the issue was anyhow covered in his favour by the judgment of theDivision Bench of this Court in State Bank of India (supra). 6.Sri. Jose Joseph learned Standing Counsel appearing for theDepartment would, however, contend that Ext.P4 order issued by theCommissioner of Income Tax is perfectly justified as it is settled law thatthe officer cannot exercise his power of rectification only on the ground thatthe assessee was entitled to relief in terms of a decision renderedsubsequent to the issuance of the original order. He would submit that theappellant had an efficacious alternate remedy of filing an appeal underSection 246A of the Income Tax Act. He would urge that we should notexercise our jurisdiction under Article 226 of the Constitution of India toquash the impugned proceedings when the appellant had an effective 6.Sri. Jose Joseph learned Standing Counsel appearing for theDepartment would, however, contend that Ext.P4 order issued by theCommissioner of Income Tax is perfectly justified as it is settled law thatthe officer cannot exercise his power of rectification only on the ground thatthe assessee was entitled to relief in terms of a decision renderedsubsequent to the issuance of the original order. He would submit that theappellant had an efficacious alternate remedy of filing an appeal underSection 246A of the Income Tax Act. He would urge that we should notexercise our jurisdiction under Article 226 of the Constitution of India toquash the impugned proceedings when the appellant had an effective alternative remedy. He would however fairly concede that the legal positionfollowing the judgment of this Court in State Bank of India is that thefor the relevant year, the appellant was entitled to claim deduction underSection 10 (10C) (viii) and relief under Section 89 (1) of the Income Tax Actin respect of amounts received in terms of a Voluntary Retirement Scheme.7.Having considered the rival contentions, we are of the opinionthat in the totality of the facts and circumstances of the case the appellantneed not have been relegated to an alternative remedy of filing an appealunder Section 246A of the Income Tax Act. The appellant admittedly tookvoluntary retirement in the year 2001. He had also claimed deductionunder Section 10 (10C) (viii) and relief under Section 89 (1) of the IncomeTax Act while filing his return of income for the relevant assessment year.The claim came to be rejected on the basis of the instructions/letter issuedby the Central Board of Direct Taxes on 23-04-2001. It is not disputedbefore us that the said instructions/letter of the Central Board of DirectTaxes has been quashed by this Court in State Bank of India (supra).Still further this Court has, in the said decision, categorically declared thatamounts received by an employee under a VRS Scheme were entitled todeduction under Section 10 (10C) (viii) and relief under Section 89 (1) ofthe Income Tax Act, simultaneously. That being the position the entire proceedings initiated against the petitioner becomes one withoutjurisdiction. 8.In Calcutta Discount Company Ltd. v. Income Taxofficer; (1961) 41 ITR 191 it has been held: - “27. Mr Sastri mentioned more than once the fact that theCompany would have sufficient opportunity to raise thisquestion viz. whether the Income Tax Officer had reason tobelieve that underassessment had resulted from non-disclosure of material facts, before the Income Tax Officerhimself in the assessment proceedings and if unsuccessfulthere before the appellate officer or the Appellate Tribunalor in the High Court under Section 66(2) of the IndianIncome Tax Act. The existence of such alternative remedy isnot however always a sufficient reason for refusing aparty quick relief by a writ or order prohibiting anauthority acting without jurisdiction from continuing suchaction. 28. In the present case the Company contends that theconditions precedent for the assumption of jurisdictionunder Section 34 were not satisfied and come to the courtat the earliest opportunity. There is nothing in its conductwhich would justify the refusal of proper relief underArticle 226. When the Constitution confers on the HighCourts the power to give relief it becomes the duty of thecourts to give such relief in fit cases and the courts wouldbe failing to perform their duty if relief is refused without adequate reasons. In the present case we can find noreason for which relief should be refused. 29. We have therefore come to the conclusion that theCompany was entitled to an order directing the Income TaxOfficer not to take any action on the basis of the threeimpugned notices.” 9.Therefore, when the proceedings are found to be without adequate reasons. In the present case we can find noreason for which relief should be refused. 29. We have therefore come to the conclusion that theCompany was entitled to an order directing the Income TaxOfficer not to take any action on the basis of the threeimpugned notices.” 9.Therefore, when the proceedings are found to be without jurisdiction the existence of an alternative remedy is not a bar for grantingrelief under Article 226 of the Constitution of India. It becomes our duty togrant relief when we are convinced that the proceedings are withoutjurisdiction. We accordingly set aside the judgment of the learned SingleJudge. Applying the principle in Calcutta Discount Company(supra), we quash Exts.P1, P4 & P6 and hold that the appellant wasentitled to claim deduction under Section 10 (10C) (viii) of the Income TaxAct and relief under Section 89 (1) (as the provision stood at the relevantpoint of time) in respect of amounts received by him under the voluntaryretirement scheme. We direct that if any amounts have been paid by theappellant pursuant to demands which arose on account of denial ofdeduction under Section 10 (10C) (viii) and relief under Section 89 (1) ofthe Income Tax Act, such amounts shall be refunded to the appellant withina period of 2 months from the date of receipt of a copy of this judgment. Before parting with this case, we place on record our sincere appreciationfor the extremely fair submissions of the Learned Counsel for the IncomeTax Department. The writ appeal is allowed in the manner indicated above.No costs. (Sd/-)A.M. SHAFFIQUE, JUDGE. AMG (Sd/-)GOPINATH P., JUDGE.