Wp/28432/2018 Of Lakshmi Muthukrishnan v. The Principal Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR.JUSTICE M.SUNDAR The Principal Commissioner of Income Tax-5Room No.701, VII Floor, New BlockNo.121, Uthamar Gandhi RoadChennai – 600 034 .. Respondent in W.P.No.28432 of 2018 The Principal Commissioner of Income Tax-5528, 5[th] Floor, Wanaparthy BlockNo.121, M.G.RoadChennai – 600 034 .. Respondent in W.P.No.4754 of 2019 Prayer in W.P.No.28432 of 2018: Writ Petition is filed underArticle 226 of the Constitution of India, seeking for a Writ ofCertiorarified Mandamus to call for the records on the files ofthe Respondent herein in culminating in the impugned orderC.No.205/Pr.CIT-1/2017-18 dated 10.08.2018 passed by theRespondent rejecting the refund of Rs.10,02,751/- (Rupees TenLakhs Two Thousand Seven Hundred and Fifty one only) and quashthe same and direct the Respondent to make the payment of Refundof Rs.10,02,751/- (Rupees Ten Lakhs Two Thousand Seven Hundredand Fifty one only) to the petitioner. Prayer in W.P.No.4754 of 2019: Writ Petition is filed underArticle 226 of the Constitution of India, seeking for a Writ ofCertiorarified Mandamus to call for the records on the files ofthe Respondent herein in culminating in the impugned orderNo.PCIT-5/ITO (HQ)/VB/10(2)(b)/2/2018-19 dated 26.12.2018 passedby the Respondent as the extent of rejecting the refund of https://hcservices.ecourts.gov.in/hcservices/ Rs.7,24,381/- (Rupees Seven Lakhs Twenty Four Thousand ThreeHundred and Eighty one only) for the Assessment years 2003-04 to2010-11 and quash the same and direct the respondent to make thepayment of refund of Rs.7,24,381/- (Rupees Seven Lakhs TwentyFour Thousand Three Hundred and Eighty one only) along withinterest to the petitioner. For Petitioner : Ms.Gayathri in both W.Ps For Respondents : Mr.D.Prabhu Mukunth Arun Kumar in both W.Ps Ms.Gayathri, learned counsel on record for writ petitionerin both these writ petitions and Mr.Prabu Mukunth Arunkumar onbehalf of sole respondent in both these writ petitions arebefore this Court. 2.With consent of learned counsel on both sides, main writpetitions are taken up, heard out and are being disposed of. 3. Subject matter of instant writ petitions arise under'Wealth Tax Act, 1957 (27 of 1957)', hereinafter 'said Act' forbrevity, clarity and convenience. 4.Suffice to say that certain proceedings under said Actwere sought to be revised by the writ petitioners by resortingto Section 25 of said Act which vests revisional powers inCommissioner. 5.Assessment years which these two writ petitions pertain toare Assessment years 2003-2004 to 2012-13 (10 Assessment years),which shall hereinafter be referred to as 'said AYs' for brevity. 6.Circumstances under which writ petitioners resorted torevision under Section 25 of said Act, briefly stated are thatwrit petitioners had wrongly included commercial establishmentsand residential house properties in their Wealth Tax returns quasaid AYs though the said properties were let out for a minimumperiod of 300 days during the relevant previous AYs, that thiserror was committed as the writ petitioners were unaware of theexemption under Section 2(ea)(i)(4) of said Act. It is the caseof the writ petitioners that they gained knowledge about this https://hcservices.ecourts.gov.in/hcservices/ error only in the year 2015 and this aspect of the matter i.e.,gaining knowledge is not disputed. 7. To be noted, writ petitioners have paid Wealth Tax on theaforesaid erroneous returns and therefore, this is clearly acase of over reporting of wealth. To put it differently, it isnot a case of under reporting of wealth or non-filing of returnsof wealth. https://hcservices.ecourts.gov.in/hcservices/ error only in the year 2015 and this aspect of the matter i.e.,gaining knowledge is not disputed. 7. To be noted, writ petitioners have paid Wealth Tax on theaforesaid erroneous returns and therefore, this is clearly acase of over reporting of wealth. To put it differently, it isnot a case of under reporting of wealth or non-filing of returnsof wealth. 8.Having set out the circumstances under which writpetitioners resorted to revision under Section 25 of said Actbriefly, it is to be noted that there was delay in the writpetitioners approaching the sole respondent, who is theRevisional Authority. 9. Vide 'order dated 10.08.2018 bearing referenceC.No.205/Pr.CIT-1/2017-18' (hereinafter 'Impugned order I' forbrevity), respondent rejected the writ petitioner's request forcondonation of delay with regard to all AYs i.e., said AYs or inother words for the 10 AYs 2003-04 to 2012-13. Vide 'order dated26.12.2018 bearing reference No.PCIT-5/ITO (HQ)/VB/10(2)(b)/2/2018-19 ' ('Impugned order II' for brevity), respondentrejected the assessee's request for condonation of delay withregard to AYs 2003-04 to 2010-2011, but allowed the assessee'srequest for condonation of delay with regard to AYs 2011-12 and2012-13. 'Impugned order I and Impugned order II' shallcollectively be referred to as 'impugned orders' in plural and'impugned order' in singular wherever it is appropriate.Assailing the impugned orders instant writ petitions have beenfiled. 10. To be noted, Impugned order I has been assailed inW.P.No.28432 of 2018 and Impugned order II has been assailed inW.P.No.4754 of 2019. 11. Caption to impugned order I says that it has beenpassed under Section 119(2)(b) of Income Tax Act, 1961 andCaption to impugned order II says that it has been passed underSection 10(2)(b) of said Act. In the hearing, it is submittedthat impugned orders have been made under Section 25(1)(c)(ii)of said Act. 12. There is no disputation or disagreement that therespondent has powers to make the impugned orders albeit under adifferent provision of law i.e., provision of law other thanthose mentioned in the captions of the impugned orders.Therefore, this Court proceeds to deal with the impugned ordersby construing the impugned orders to have been made by the lonerespondent in both writ petitions under Section 25(1)(c)(ii) ofsaid Act. https://hcservices.ecourts.gov.in/hcservices/ 13. Notwithstanding several averments made, contentionsraised and grounds urged in the affidavits filed in support ofthe writ petitions and the counter filed by the lone respondent,the entire matter was projected and argued by both sides on onepoint and that is with regard to whether the respondent wasjustified in refusing to condone delay for said AYs videimpugned order I and refusing to condone delay for some of saidAYs vide impugned order II. A perusal of the provision underwhich impugned orders have been made, viz., Section 25(1)(c)(ii)of said Act makes it clear that the respondent does have powersto condone delay and most importantly, there is no cap qua timeperiod with regard to condonation of delay. It is also not indisputation that the provisions of Section 25(1) of said Act isakin to Section 264 of IT Act. To be noted, Section 264 of ITAct deals with revisional powers of Principal Commissioner andCommissioner of Income Tax. 14. Be that as it may, a perusal of impugned orders, moreparticularly, impugned order II makes it clear that writpetitioners have only erroneously overstated the returns and itis not a case of under statement of wealth or non-filing ofreturns. This is articulated in Paragraph 4 of impugned orderII, which reads as follows: 14. Be that as it may, a perusal of impugned orders, moreparticularly, impugned order II makes it clear that writpetitioners have only erroneously overstated the returns and itis not a case of under statement of wealth or non-filing ofreturns. This is articulated in Paragraph 4 of impugned orderII, which reads as follows: '4.Decision-I have carefully considered theassessee's petition, the AR's oral and writtensubmissions, the WTO's report and the Range Head'sforwarding remarks. The assessee has quite clearly andmistakenly included as assets in her wealth tax returnsthe commercial establishments and the residential houseproperty which had been let out for a minimum period of300 days during the relevant previous year. Suchassets are exempt in terms of provisions of section 2(ea)(1) of the Act. The reason proffered is the lackof familiarity with the legal provisions. The overallclaim of refund of Rs.11,13,973/- spans ten assessmentyears for AYs 2003-04 to 2012-13. At the outset, I amabsolutely in agreement with the contention of the WTOthat no condonation can be entertained beyond a periodof six years from the end of the assessment year forwhich the petition for condonation has been made. Asthe petition has been made by the assessee on 25thJanuary 2018, the only claims which can be consideredin her case relate to AYs 2011-12 and 2012-13, theclaims of refund for which are seen to be Rs.1,63,927/-and Rs.2,67,619/- totalling Rs.3,89,592/-. Beforeproceeding further, it needs to be understood that wehave an assessee here who has filed her returns ofwealth and over-reported her wealth due to her lack offamiliarity with the provisions of the law. It is important to note that this is not a case of eitherunder reporting of wealth or of non-filing of returnsof wealth. On this background, it is clear that theassessee's claim of Rs.3,89,592/- is substantial for itto cause genuine hardship to her. I may add thatthough her claim for the other eight assessment yearscannot be granted, that claim of Rs.7,24,381/- has alsoreally got to be considered for the genuine hardshipthat could be caused to her. Accordingly, after takinginto account the totality of circumstances, I am of theconsidered view that a case for genuine hardship hasbeen made out in the assessee's case. Accordingly, Iam inclined to accept her request for condonation ofdelay for AYs 2011-12 and 2012-13.' (underlining made by this Court to highlight andsupply emphasis) 15. The underlined portion in impugned order II will alsoreveal that respondent has even taken the view that theproperties included in the returns are clearly exempt.Therefore, writ petitioners are hit only by delay. 16. This takes us to the reason for the respondent notcondoning the delay wholly in impugned order I and partly inimpugned order II. The reason is Board Circular No.9/2015bearing reference F.No.312/22/15-OT dated 09.06.2015 made byCentral Board of Direct Taxes. Vide this Board circular it isinstructed that delay beyond six years from the relevantAssessment Year cannot be condoned. No doubt the BoardCirculars bind the respondent. Equally, there is no disputationbefore this Court that, it does not in any manner place fettersor come in the way of condoning the delay if this Courtconsiders this as a fit case for condonation of delay. 17. In this backdrop, as already alluded to supra, evenaccording to the impugned orders this is a case of overstatement of wealth and it is not a case of understatement ornon-filing of returns. More importantly, writ petitioners havealso paid the tax on wealth that has been overstated in thereturns. As already been alluded to supra that respondent haseven recorded in the impugned orders that the properties whichhave been erroneously included in the returns by the writpetitioners are clearly exempt under Section 2(ea)(i)(4) ofsaid Act. 17. In this backdrop, as already alluded to supra, evenaccording to the impugned orders this is a case of overstatement of wealth and it is not a case of understatement ornon-filing of returns. More importantly, writ petitioners havealso paid the tax on wealth that has been overstated in thereturns. As already been alluded to supra that respondent haseven recorded in the impugned orders that the properties whichhave been erroneously included in the returns by the writpetitioners are clearly exempt under Section 2(ea)(i)(4) ofsaid Act. 18. It is not completely forbidden to have a cursory lookand have a birds eye view qua merits of the matter while testingwhether delay in a given case deserves to be condoned. As thiscannot be the sole determinant, this Court has considered thesame as one of the buttressing features in search of an answer https://hcservices.ecourts.gov.in/hcservices/ to the question as to whether delay is condonable / can becondoned in the instant cases. 19. As already mentioned supra, Section 25 of said Act isakin to Section 261 of IT Act. This Court has already passed anorder dated 28.06.2019 in W.P.No.7630 of 2019 with regard tocondonation of delay in a matter pertaining to Section 264 of ITAct. This Court is informed that as of now there is no intra-court appeal against the said order and therefore, the saidorder is operating. 20. The circumstances and facts are also more or lesssimilar. The principle nonetheless applies. 21. Relevant portions of the aforesaid order dated28.06.2019 in W.P.No.7630 of 2019 being Ramupillai Kuppuraj Vs.The Income Tax Officer and others, are contained in Paragraphs19 to 30 and the same read as follows: '19This takes the discussion in this order to thenext case law, namely, Vinay Extraction Pvt. Limitedcase, which is a judgment rendered by a Hon'ble DivisionBench of High Court of Gujarat at Ahmedabad. This isalso a case arising out of a petition under section 264of IT Act. In this case, the order of Commissioner wasassailed in a writ petition which was heard by aDivision Bench of Gujarat High Court. A careful perusalof the factual matrix ov Vinay Extraction Pvt. Limitedcase reveals that it is a case where the assessee reliedon the principle that Government subsidy is an incentivenot for the specific purpose of meeting a portion of thecost of the assets, though quantified as a percentage ofsuch cost and that the subsidy does not partake thecharacter of a payment intended either directly orindirectly to meet the actual cost of the assets. Moreimportantly, in this case, there has been no action onthe part of the assesee between the date of assessmentand the date of filing of a petition / application undersection 264 of IT Act unlike the instant case where theassessee has been relentlessly pursuing his effort. Inthe considered opinion of this court, in the case onhand, the writ petitioner has not only been relentlesslypursuing his case, but has even been pursuing in amanner which can be described as tenacious. Moreimportantly, the first step in this relentless effortwas taken well within the prescribed limitation period,i.e., on 05.08.2011 when a revised return was filedbefore one year elapsed on 22.10.2011. 20Be that as it may, further perusal of VinayExtraction Pvt. Limited case reveals that a judgmentrendered by another Hon'ble Division Bench of GujaratHigh Court in Karamchand Premchand Pvt. Ltd. Vs.Commissioner of Income Tax, Gujarat [(1975) 101 ITR 46(Guj)] was distinguished. While distinguishingKaramchand Premchand case, the Division Bench of GujaratHigh Court had also reiterated that whether sufficientcause is made out or not is always a question of factdepending upon the facts and circumstances of each caseand has to be established based on records of that case.This is articulated in paragraph 6 of the order and themost relevant portion of paragraph 6 reads as follows :“6.....However, it is equally well settled thata person invoking the decision of the appellateor revisional authority beyond the prescribedperiod of limitation is required to showsufficient cause which would include showingthat the petitioner/appellant was either bonafide pursuing his remedies or was prevented bysufficient cause from pursuing his remedies.Whether sufficient cause is made out or not isalways a question of fact depending upon thefacts and circumstances of each case and has tobe established on record. ....“21In this case, Division Bench of Gujarat HighCourt had gone a step further and held that thejudgments of Courts are not to be read as Euclid'stheorems nor the observations therein as provisions ofStatutes. The Division Bench has held that observationsin a judgment must be read in the context in which theyappear and that each case depends on its own facts and aclose similarity between one case and another is notenough because even a single significant detail mayalter the entire aspect. The Division Bench of GujaratHigh Court had quoted Cardozo and held that matching thecolour of one case against the colour of another cannotbe the basis for precedents. This is articulated inparagraph 9 of Vinay Extraction Pvt. Limited case andthis Court deems it appropriate to extract the entireparagraph 9 which reads as follows :“9.The decision in Karamchand Premchand'scase is, however, required to be read inlight of the facts of that case and thereasons given by this Court for holding thatthe petitioner had shown sufficient cause forcondonation of delay. As per the settledlegal position, the Courts should not placereliance on decisions without discussing as to how the factual situation fits in with thefact situation of the decision on whichreliance is placed. Judgments of Courts arenot to be read as Euclid's theorems nor theobservations therein as provisions of astatute. The observations in a judgment mustbe read in the context in which they appear.Each case depends on its own facts and aclose similarity between one case and anotheris not enough because even a singlesignificant detail may alter the entireaspect. In deciding such cases, one shouldavoid the temptation to decide cases (as saidby Cardozo) by matching the colour of onecase against the colour of another. Todecide, therefore, on which side of the linea case falls, the broad resemblance toanother case is not decisive.“ 22Therefore, this court has no difficulty inaccepting the submission of learned counsel for writpetitioner that Vinay Extraction Pvt. Limited case isclearly distinguishable. 23In this regard, this Court deems itappropriate to also refer to the celebrated PadmaSundara Rao case being Padma Sundara Rao Vs. State ofTamil Nadu case reported in (2002) 3 SCC 533 with regardto precedents and the most relevant paragraph isparagraph 9 and the same reads as follows : 22Therefore, this court has no difficulty inaccepting the submission of learned counsel for writpetitioner that Vinay Extraction Pvt. Limited case isclearly distinguishable. 23In this regard, this Court deems itappropriate to also refer to the celebrated PadmaSundara Rao case being Padma Sundara Rao Vs. State ofTamil Nadu case reported in (2002) 3 SCC 533 with regardto precedents and the most relevant paragraph isparagraph 9 and the same reads as follows : “9.Courts should not place reliance on decisionswithout discussing as to how the factualsituation fits in with the fact situation of thedecision on which reliance is placed. There isalways peril in treating the words of a speechor judgment as though they are words in alegislative enactment, and it is to beremembered that judicial utterances are made inthe setting of the facts of a particular case,said Lord Morris in Herrington v. BritishRailways Board [(1972) 2 WLR 537 : 1972 AC 877(HL) [Sub nom British Railways Board v.Herrington, (1972) 1 All ER 749 (HL)]] .Circumstantial flexibility, one additional ordifferent fact may make a world of differencebetween conclusions in two cases.“ 24Drawing inspiration from Vinay Extraction Pvt.Limited case and Padma Sundara Rao case, this Court isof the considered view that such an exercise of applyingprecedents is neither an algorithms nor an alchemy quafactual matrix and legal principles. 25This takes us to the next case law, namely,H.Dohil Constructions Company Private Limited Vs. NaharExports Limited and another reported in (2015) 1 SCC680. Nahar Exports Limited case is a case wherein therewas nine days delay in filing, but there was 1727 daysin refiling. In this context, the issue of deficit courtfee was also inextricably dovetailed and an argument wasprojected that section 149 of 'The Code of CivilProcedure, 1908' ('CPC' for brevity) provides fordeficit court fee to be paid. It is in this context thatHon'ble Supreme Court held that condonation of delay isimpermissible obviously on the factual matrix of thatcase. Therefore, in the considered opinion of thisCourt, Nahar Exports Limited case is clearlydistinguishable on facts and is therefore, notapplicable to the instant case. 26This takes us to Rane (Madras) case renderedby Hon'ble Division Bench of this Court in Tax Case(Appeal) SR.No.91371 of 2010 dated 10.06.2016. This is acase of delay in filing a tax case before Division Benchof this Court. General principles have been adverted toand on the facts of that case, delay was not condoned.This Court has no difficulty in accepting the submissionof learned counsel for writ petitioner that even broadsimilarities referred to in Vinay Extraction Pvt.Limited case is not there between the case on hand andNahar Exports Limited case. This is more so as Rane(Madras) case (as placed before this Court, i.e.,MANU/TN/1936/2016), does not give elaboration of facts.More importantly, it is pointed out by learned counselfor writ petitioner that personal hearing was held on27.12.2018 and in the personal hearing, the chronicle ofevents and papers / documents forming part of recordswere highlighted to explain the delay and the bona fidesof writ petitioner in taking diligent and relentlessefforts qua exclusion / exemption. 27This takes us to one other aspect of thematter. Esha Bhattacharjee case being Esha BhattacharjeeVs. Raghunathpur Nafar Academy reported in (2013) 12 SCC649 has been referred to in more than one case law inthe aforesaid case laws which have been discussed thus far. Esha Bhattacharjee case is an authority for theprinciple that when there is delay condonationapplication, facts have to be articulated in detail andthat delay condonation application cannot be filedcasually in generic terms. There can be no disagreementon this principle and there is none before this Court. 27This takes us to one other aspect of thematter. Esha Bhattacharjee case being Esha BhattacharjeeVs. Raghunathpur Nafar Academy reported in (2013) 12 SCC649 has been referred to in more than one case law inthe aforesaid case laws which have been discussed thus far. Esha Bhattacharjee case is an authority for theprinciple that when there is delay condonationapplication, facts have to be articulated in detail andthat delay condonation application cannot be filedcasually in generic terms. There can be no disagreementon this principle and there is none before this Court. 28As already alluded to supra, learned counselfor writ petitioner at the very outset very fairlysubmitted that writ petitioner should have stated andarticulated the reasons for delay with specificity andclarity. Having said that, learned counsel for writpetitioner predicated his case on the ground that theentire chronicle of events alluded to supra bring intosharp focus trajectory of the consistent, relentless andrecurrent efforts that were taken by writ petitionerwith regard to getting Rs.19.84 lakhs income excluded /exempted qua returns erroneously filed for said AY. 29Therefore, while there is no disagreement withregard to Esha Bhattacharjee case principle, this is acase where the facts and chronicle of the same wereundisputably available as part of records before thirdrespondent who passed the impugned order. This is not acase where records did not speak for themselves withregard to relentless efforts taken by writ petitionerwhich in turn explained what is being construed asdelay. 30Besides the aforementioned five case laws setout supra, impugned order also refers to a Bombay HighCourt judgment being Manoj Kumar Kedia Vs. Pr.Commissioner of Income Tax [2016-LL-0811-29] inW.P.No.1616 of 2016. However, Revenue counsel fairlysubmitted that it is not traceable. Learned counsel forwrit petitioner submitted that his position is nodifferent. This Court was unable to find it in itsresearch also and therefore, this Court has not embarkedupon discussion on Manoj Kumar Kedia case as the entirecase law should be before this Court for any discussionon the same. Be that as it may, to be noted, being aBombay High Court citation with regard to precedents, itwould be of persuasive value.' 22. Besides Section 264 of IT Act being akin to Section 25of said Act, Section 8 of said Act is of relevance and the samereads as follows:'8.Wealth-tax authorities and their jurisdiction.The income-tax authorities specified in Section 116 https://hcservices.ecourts.gov.in/hcservices/ of the Income-tax Act shall be the wealth-tax authoritiesfor the purpose of the Act and every such authority shallexercise the powers and perform the functions of awealth-tax authority under this Act in respect of anyindividual, Hindu undivided family or company, and forthis purpose his jurisdiction under this Act shall be thesame as he has under the Income-tax Act by virtue oforders or directions issued under Section 120 of that Act (including orders or directionsassigning concurrent jurisdiction) or under any otherprovision of this Act. 23. From a perusal of Section 8 it comes to light thatexercise of powers of respondent under Section 25 of said Act isclearly comparable with exercise of powers of PrincipalCommissioner /commissioner under Section 264 of IT Act. 24. Owing to all that have been set out supra, it follows asa sequitur that this is a fit case to set aside Impugned OrderI. Impugned order I being order dated 10.08.2018 bearingreference C.No.205/Pr.CIT-1/2017-18 is set aside and WritPetition No.28432 of 2019 is allowed. Section 120 of that Act (including orders or directionsassigning concurrent jurisdiction) or under any otherprovision of this Act. 23. From a perusal of Section 8 it comes to light thatexercise of powers of respondent under Section 25 of said Act isclearly comparable with exercise of powers of PrincipalCommissioner /commissioner under Section 264 of IT Act. 24. Owing to all that have been set out supra, it follows asa sequitur that this is a fit case to set aside Impugned OrderI. Impugned order I being order dated 10.08.2018 bearingreference C.No.205/Pr.CIT-1/2017-18 is set aside and WritPetition No.28432 of 2019 is allowed. 25. With regard to Impugned Order II, the same is set asideinsofar as it rejects the writ petitioner's request forcondonation of delay for Assessment years 2003-04 to 2010-2011.The other part of impugned order II wherein prayer forcondonation of delay for Assessment Years 2011-12 and 2012-13was acceded to is sustained. Now that the delay has beencondoned, request of writ petitioner for refund shall beexamined on merits, in accordance with law and disposed of asexpeditiously as possible and in any event within 12 weeks fromthe date of receipt of a copy of this order. Writ petitions ordered on above terms. No costs. Sd/- Assistant Registrar(CS VI) //True Copy// Sub Assistant Registrar To 1. The Principal Commissioner of Income Tax-5 Room No.701, VII Floor, New Block No.121, Uthamar Gandhi Road Chennai – 600 034. Room No.701, VII Floor, New Block No.121, Uthamar Gandhi Road Chennai – 600 034. 2. The Principal Commissioner of Income Tax-5 528, 5[th] Floor, Wanaparthy Block No.121, M.G.Road Chennai – 600 034. 528, 5[th] Floor, Wanaparthy Block No.121, M.G.Road Chennai – 600 034. +1cc to M/s.S.Gayathri, Advocate Sr.68528+2cc to M/s.Hema Murali Krishnan, Advoate Sr.68368 and 18366 W.P.No.28432 of 2018 &W.P.No.4754 of 2019 ks[co]srg 16/09/2019