Wp(C)/11701/2008 Of Sabad v. Commissioner Of Income Tax,Kannur

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR THURSDAY, THE 18TH DAY OF DECEMBER 2014/27TH AGRAHAYANA, 1936 WP(C).No. 11701 of 2008 (R) ---------------------------- PETITIONER(S): -------------------------- SABAD, AGED 27 YEARS, S/O.LATE MUHAMMED HAJI, RESIDING AT KUKKAMKUYIL, ADHUR, KASARAGOD. BY ADVS.SRI.M.SASINDRAN SRI.M.V.BIPIN RESPONDENT(S): ---------------------------- 1. THE COMMISSIONER OF INCOME TAX, KANNUR. 2. THE INCOME TAX OFFICER-11, KASARAGOD. R BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX R BY SRI.GEORGE K. GEORGE, SC FOR IT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18-12-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 18-12-2014, THE COURT ON THE SAME DAY DELIVERED THE W.P.(C).NO.11701/2008 APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE INCOME TAX CLEARANCE CERTIFICATE ISSUED BY THE2ND RESPONDENT. EXT.P2: COPY OF THE TDS CERTIFICATE DATED 1.8.1998 ISSUED BY THEDIVISIONAL FOREST OFFICER. EXT.P1(A): COPY OF THE TDS CERTIFICATE DATED 1.8.1998 ISSUED BY THEDIVISIONAL FOREST OFFICER. EXT.P2(B): COPY OF THE TDS CERTIFICATE DATED 1.8.1998 ISSUED BY THEDIVISIONAL FOREST OFFICER. EXT.P2(C): COPY OF THE TDS CERTIFICATE DATED 1.8.1998 ISSUED BY THEDIVISIONAL FOREST OFFICER. EXT.P2(D): COPY OF THE TDS CERTIFICATE DATED 1.8.1998 ISSUED BY THEDIVISIONAL FOREST OFFICER. EXT.P3: COPY OF THE RETURN DATED 16.3.2003 FILED BY THE PETITIONER. EXT.P4: COPY OF THE APPLICATION DATED 16.8.2003. EXT.P5: COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONERBEFORE THE 1ST RESPONDENT. EXT.P6: COPY OF THE COMMUNICATION DATED 2.1.2006. EXT.P7: COPY OF THE JUDGMENT DATED 7.6.2007 IN W.P.(C).NO.18245 OF 2006. EXT.P8: COPY OF THE ARGUMENT NOTE SUBMITTED BY THE PETITIONER. EXT.P9: COPY OF THE JUDGMENT OF THE KARNATAKA HIGH COURT IN (2007)290 ITR 227. EXT.P10: COPY OF THE ORDER DATED 10.1.2008 ISSUED BY THE 1STRESPONDENT REJECTING THE APPLICATION FOR CONDONATION OF DELAY. RESPNDENTS EXHIBITS:NIL. //TRUE COPY// P.S. TO JUDGE A.K.JAYASANKARAN NAMBIAR, J.------------------------------- W.P.(C).NO.11701 OF 2008 (R) -----------------------------------Dated this the 18[th] day of December, 2014 J U D G M E N T The petitioner is a contractor engaged in the collection ofcashew from the plantations belonging to the Forest Department.While making payments to him for the work done, the respondentscollected tax at source and paid him only the balance amounts. Thetax clearance certificates evidencing the collection of tax at sourcefrom payments made to the contractors are normally prepared andhanded over to the contractors immediately on effecting thecollection. Thereafter, the contractors are expected to file returns tothe Income Tax Department together with copies of the certificateshowing collection of tax at source, so that credit can be given in theirassessments, for the amounts so collected from the payments due tothe contractors. In the case of the petitioner, for the assessment year1999-2000, although the tax collection certificates were issued to thepetitioner as early as on 27.4.1998 and 19.5.1998, the petitioner didnot file his return under the Income Tax Act till 10.9.2003. Ideally,the petitioner ought to have filed his return of his income for the said assessment year on or before 31.7.1999, or at least a belated returnby 31.3.2001. In the instant case, admittedly, the return was filed onlyon 10.9.2003. Since there was no return filed within time for the saidassessment year, and an amount of Rs.36,304/- was collected from thepetitioner by way of tax by the person effecting payments to him, andit was the case of the petitioner that he did not have sufficient incomein the said year as would justify the payment of tax to the extent ofRs.36,304/-, he approached the respondent authorities with a petitionfor condonation of delay in filing of the return for the assessment year1999-2000, so that an assessment could be done for the said year andas a consequence, the petitioner could claim a refund of the tax paidin excess for the said year. The application for condonation of delaycame to be considered by the 1[st] respondent, who proceeded to rejectthe same on the ground that the petitioner had not succeeded inshowing sufficient cause for the condonation of the delay. Thedecision of the High Court of Karnataka, that was relied upon by thepetitioner in support of his contention that the delay ought to becondoned, was also not considered by the authority. In the writpetition, the petitioner impugns Ext.P10 order of the 1[st] respondent. 2. A statement has been filed on behalf of the respondents,wherein Ext.P10 order of the 1[st] respondent is sought to be justifiedfor the reasons contained therein. In particular, it is pointed out thatthe petitioner had not properly explained the delay occasioned by himin filing the return. It is pointed out that the power to condone delayhas to be exercised taking into account the facts and circumstances ineach case and since, in the instant case, the 1[st] respondent was notconvinced of the reasons projected by the petitioner for the delay,Ext.P10 was passed rejecting the claim of the petitioner. 3. I have heard Sri.M.V. Bipin, the learned counsel appearingon behalf of the petitioner as also Sri.Jose Joseph, the learnedStanding counsel appearing on behalf of the Income Tax Department. 4. On a consideration of the facts and circumstances of the caseas also the submissions made across the Bar, I find that the petitioneris a person who has been consistently filing returns with the IncomeTax Department every year in connection with his business. Ext.P1income tax clearance certificate, which is produced by the petitionerin the writ petition, would reveal that the income tax assessments were done in respect of the petitioner from 1994-95 till 1998-99. Forthe assessment year 1994-95 to 1997-98, the total income assessedwas nil and the petitioner did not have to pay any tax for the saidyears. For the assessment year 1998-99, the total income assessedwas in a sum of Rs.4,840/- and the tax paid by the petitioner was anamount of Rs.8,538/-. The higher amount of tax paid obviously is areference to the amounts, that were collected from the petitioner atsource in connection with the contract that the petitioner had in thesaid year with the Forest Department. For the assessment year1999-2000, although it is not in dispute that there is a delayoccasioned by the petitioner in the filing of the return, it is thespecific case of the petitioner that the petitioner's father had not beenkeeping well and required medical attention, and it was under thosecircumstances that the petitioner was not able to file his return alongwith the copies of the tax collected at source certificates obtained byhim. The 1[st] respondent, who considered the application forcondonation of delay, was expected to look into the genuineness of thereasons given by the petitioner for seeking condonation of delay infiling the return. In Ext.P10 order, while the 1[st] respondentdisbelieves the reasons given by the petitioner, I am of the view that insofar as the petitioner is a person who has been filing returns intime during the previous assessment years, and the delay occasionedin filing the return in the assessment year 1999-2000 was an isolatedinstance, the petitioner could not be treated at par with habitualoffenders while considering the application for condonation of delay.On the peculiar facts of this case, I am of the view that the discretionvested in the 1[st] respondent, under Section 119 (2b) of the IT Act,ought to have been exercised in favour of the petitioner, taking intoaccount the fact that the petitioner was a person who was nototherwise liable to pay any amount by way of tax in respect of hisincome for the said year, and the amounts collected at source for thesaid year would ordinarily be due to him by way of refund once theassessment was completed. Thus, taking a lenient view in the matter,and considering the fact that the petitioner is not a habitual offenderwhen it comes to complying with the procedure prescribed for filingreturns under the IT Act, I quash Ext.P10 order and direct the 2[nd]respondent to complete the income tax assessment of the petitionerfor the assessment year 1999-2000, by treating the delay in filing thereturn as condoned, and by taking into account Ext.P2 series ofcertificates produced by him and after verifying the accounts produced by the petitioner to substantiate his declaration of totalincome. The 2[nd] respondent shall pass consequential orders asdirected in this judgment within a period of three months from thedate of receipt of a copy of this judgment after hearing the petitioner.I make it clear that if the assessment proceedings completed by the2[nd] respondent, as directed in this judgment, results in the grant ofany amount by way of refund to the petitioner, the petitioner will notbe entitled to claim any interest on the amount paid to him by way ofrefund. A.K.JAYASANKARAN NAMBIAR JUDGE prp