Wp/5235/2008 Of Shri Hingulambika Co Operative v. The Commissioner Of Income Tax

IN THB HIGH COURT OF KARNATAKAKALABURAGI BENCH DATED THIS THE 2 DAY OF MARCH 2017 BEFORE THR HON’BLE MRS..JUSTICKH RATHNAKA mWRIT PETITION NO.5235/2008 (TIT) Between: ohri Hingulambika Co-operativeHousing Society LimitedTilak RoadByapur-586 101Rep. by its Secretaryorl Sripathi RaoAged about 43 yearsSon of Sri Hanumantha Rao Sarat. _.. Petitione (By Sri.V.K.Gurunathan &eri.G.B.Yadav, Advs. Forsri.S.Parthasarathi, Adv.) And: 1.The Commissioner of Income-taxOpp.Civil HospitalDr.Ambedkar RoadBelgaum-3590 OO1 2.The Chief Commissioner of Income-taxAayakar Bhavan, Plot No.5EDC Complex, Patto PlazaPanaji-403 OO1.Aayakar Bhavan, Plot No.5EDC Complex, Patto PlazaPanaji-403 OO1. 3.The Income-tax OfficerWard-lWard-l Aayakar Bhavan, Near All India Radio Athani RoadByapur-5386 101, ... Respondent (By Sri.Ameetkumar Deshpande, Adv.) This Writ Petition is filed under Article 226 of theConstitution of India, praying to quash the order of respondentNo.1 dt.3.10.2006 under Section 264 of the Act for theassessment years 1991-92, 1993-94, 1997-98 and 1998-99 videAnnex.F, etc, This Petition having been heard and reserved for orders on22.2.2017 and coming on for pronouncement of order this day,the court made the following: ORDER Petitioner/a Co-operative Society registered underthe Co-operative Societies Act, 1978, is aggrieved by therejection of its claim for refund of excess Tax paid/ waiveof interest under Section 234A, 234B and 234C of theIncome Tax Act, 1961 (‘the Act’ for brevity) by therespondent/ Authorities 2. Facts relevant for the present case is, after asurvey under Section 133A of the Act on 12.1.2001, thepetitioner filed its returns for the assessment years 1991-92 to 1998-99 and paid tax on self-assessment under section 140A of the Act; on 8.2.2006, revised returns wasfiled claiming refund of excess tax paid. The thirdrespondent/Assessing Officer vide his letter Annexure-Ddeclined to consider the claim on the ground that originalreturns of income and revised returns were filed belatedly.The revision filed under Section 264 of the Act thereonbefore the first respondent/Commissioner of Income Taxwas rejected on the sole ground that no order is passed byAssessing Officer on the prayer of the petitioner for refundof excess of tax paid. The petitioner made another eftiortbefore 2[nd]respondent/Chief Commissioner of Income Tax!seeking waiver of interest levied under Sections 234A,234B and 234C of the Act. After enquiry, said applicationwas rejected vide Annexure-H. The reason assigned forrejection was, the returns was not voluntarily filed by thepetitioner but consequent upon survey conducted undersection 133A of the Act; though the income was chargeableto tax, it was not paid well in advance on due dates and itwas seli-assessment; the interest is rightly charged for not having filed returns voluntarily qua detecting by theDepartment and for not paying tax in advance on the duedate. 3. Sri.V.K.Gurunathan, learned Counsel for thepetitioner assailing the above three orders of theAuthorities submits that the Assessing Officer gravelyerred in rejecting refund on the ground of delayed returnsand delayed revised returns. since the AssessingAuthority had accepted that the returns were belated, thenthere is no returns, thus there is no tax. The tax paid bythe petitioner, since is wrongly withheld by the Revenue,same is liable to be refunded to the petitioner. Theendorsement.aT|Annexure-1Ssuedby|AssessingAuthority/3["2]respondent, declining the prayer of thepetitioner for refund of excess of Tax collected is thereforean order under the Act amenable for revision undersection 264 of the Act. The Revisional Authority failed toexercise his jurisdiction over the order of Assessing Authority, which is prejudicial to the interest of theassessee/petitioner. The payment made by the assesseewas not self-assessment Tax and there were no validproceedings under the Act. Authority, which is prejudicial to the interest of theassessee/petitioner. The payment made by the assesseewas not self-assessment Tax and there were no validproceedings under the Act. The calculation of interest by the assessee was wrongand the second respondent by appreciating the said factshould have directed the Authorities to refund the interestas prayed by petitioner. Without verifying the error orotherwise of calculation of interest, the second respondenthas rejected waiver of interest for extraneous reasons,thus, the orders at Annexures-F and H be quasheddirecting Authorities to waive interest/refund the excesstax paid to the petitioner. 4. sSri.Ameetkumar Deshpande, learned Counseappearing for the respondents while seeking to sustain theorders under challenge submits that the petitioner havingnot filed returns within stipulated period by its ownconduct prevented the Assessing Authority from assessing its returns for yesteryears. The revised returns was stillmore belated. When there is no assessment of returns,thus there is no order under the Act, which was amenablefor revisional jurisdiction. Likewise waiver of interest inrespect of non-est proceedings cannot be allowed and thispetition 1s misconceived. Very filing of the returns by thepetitioner indicates that it admits its liability to pay tax. Itis its self-serving statement that tax paid is excess despitethere being no order by the Assessing Officer. S. With the above rival submissions, the shortquestion that arises for consideration is on the legality olthe order passed by Revisional Authority and ChiefCommissioner of Income Tax in rejecting the prayer ofaSSECSSFC 6. The respondent/Authorities are in agreement onone fact that belated returns cannot be revisited. Butunder Section 14/7 of the Act, the Assessing Officer iauthorizedTO aSS€ESSreasonableincomeescaping assessment within a period of four years of returns. Thatbeing so, the returns filed by the petitioner which waswithin the limitation of four years was within the proprietyoft Assessing Officer, which was overlooked by him. Then itfollows that the Revisional Authority had every authorityover the returns and revised returns of the petitioner,though was not assessed by the Assessing Officer. Insteadof disposing off the revision petition on its merits, it isdisposed with a sweeping remark that no order is passedby the Assessing Officer. 7. This Court in the matter otA.Balakrishnan —-vsGeneral Manager, Hindustan Machine Tools Ltd. &Anr. ({2007/ 290 ITR 227 |Kar])held that the Income-taxauthorities are duty bound to process a return claimingrefund even though filed beyond the period prescribedunder Sections 139(1) and 139(4) of the Income Tax Act,1961, said finding was upheld by the Division Bench ofthis Court. The Apex Court in|Commissioner of Income Tax -vs- Shelly Products and Another ([2003/ 261 ITR367(SC}CSCommissioner of Income Tax -vs- VatikaTownship P.Ltd. |((2014) 367 ITR 466 (SC)/observedthus: “13.2 Further, where the assessment had beenannulled in appeal, say for want ofjurisdiction orforanyothertechnicalreason, andsuchannulmentbecamefinal,thejudicialpronouncement did not permit retention of eventhe tax due on the basis of the returned income,several High Courts had held that in such a caseeven the tax paid by way of tax deducted atsource or advance tax and the tax which was queon the basis of the returned income had to berefunded to the assessee. Equity demanded thateven where an assessment was annulled for anyreason, the liability of the assessee, at least to theextent of tax payable on the basis of the incomedeclared in the return, should remain. To overcome this difficulty and to make theposition clear, the proviso to section 240, insertedby the Amending Act, 1987, provides that wherethe assessment is annulled, the refund shallbecome due only in respect of the amount, lf any, paid in excess of the tax chargeable on the totalincome returned by the assessee.” That explains the onus of the authorities under the Actwhen a refund is claimed. To overcome this difficulty and to make theposition clear, the proviso to section 240, insertedby the Amending Act, 1987, provides that wherethe assessment is annulled, the refund shallbecome due only in respect of the amount, lf any, paid in excess of the tax chargeable on the totalincome returned by the assessee.” That explains the onus of the authorities under the Actwhen a refund is claimed. 8. With regard to the submission that Annexure-D isnot an order amenable for revisional jurisdiction, it isworthwhile to recall the observation of the Apex Court inDwarka Nath -vs- Income Tax Officer & Anr. [(1965)97 ITR 349]|wherein it is held thus: “8&...... Lhat apart, on the assumption that theorder of the CIT under s.33A of the Act was anadministrative one, the respondent would not bein a_ better position. What the appellantcomplains is that the ITO in terms of s.29 of theAct is under an obligation to issue a demandnotice. If the said contention was correct, he didnot discharge the duty imposed on him by theStatute. If the CIT only made an administrativeorder in refusing to give any direction to the ITO,it would not exonerate the said officer fromdischarging his statutory duty. In that event the assessee would certainly be entitled to approachthe High Court under Art.226 of the Constitutionfor the issue of a writ of mandamus or otherappropriate direction to the ITO to discharge hisStatutoryduty. We,therefore,reject|thepreliminary objection of the respondents." OQ InSmt.MohammadtiBegumasAnr.—DS-Commissioner ofIncome Tax ([1985]/ 49 CTR Q9O(AP),theargument advanced on behalf of the assessee that therevisional powers of the CIT under Section 264 of the ITAct should be exercised within the period of limitation fixedby the statute for the ITO to complete his assessment wasnot appreciated. But in the matrix on hand, the revisionalauthority contained from exercising its jurisdiction for thesole reason that there was no assessment of thereturns/revised returns by the Assessing Officer and thesame was not proper and it needs to be quashed andmatter has to be considered on merits, For the discussion made supra, the petition isallowed. The order of the 1[st]respondent dated 3.10.2006as at Annexure-F and the order of 2[nd]respondent dated21.1.2008 as at Annexure-H are hereby quashed. The second respondent is directed to re-consider theapplication of the petitioner at Annexure-G afresh inaccordance with law after giving opportunity to both sides. Sd/-JUDGE KNM/-