Wp(C)/1503/2020 Of Daison Joseph v. The Principal Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS TUESDAY, THE 28TH DAY OF JANUARY 2020 / 8TH MAGHA, 1941WP(C).No.1503 OF 2020(K) PETITIONER/S: DAISON JOSEPHAGED 41 YEARS PULLATTU HOUSE, POONJAR P.O., KOTTAYAM DISTRICT,PIN-686 581 BY ADV. SRI.BOBBY JOHN RESPONDENT/S: 1THE PRINCIPAL COMMISSIONER OF INCOME TAXKOTTAYAM, 1ST FLOOR,PUBLIC LIBRARY BUILDING, KOTTAYAM,PIN-686 001KOTTAYAM, 1ST FLOOR,PUBLIC LIBRARY BUILDING, KOTTAYAM,PIN-686 001 2THE INCOME TAX OFFICER WARD-I,KOTTAYAM,PUBLIC LIBRARY BUILDING,KOTTAYAM,PIN 686018KOTTAYAM,PUBLIC LIBRARY BUILDING,KOTTAYAM,PIN 686018 3THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX,KERALA, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, ERNAKULAM, PIN-682 018KERALA, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, ERNAKULAM, PIN-682 018 4THE UNION OF INDIA,REPRESENTED BY TS SECRETARY TO GOVERNMENT, FINANCE DEPARTMENT, RAJPATH MARG, CENTRAL SECRETARIAT, NEW DELHI,PIN-110 001REPRESENTED BY TS SECRETARY TO GOVERNMENT, FINANCE DEPARTMENT, RAJPATH MARG, CENTRAL SECRETARIAT, NEW DELHI,PIN-110 001 R1-4 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAXR4 BY ADV. SRI.K.SUDHINKUMAR OTHER PRESENT: SRI.P.VIJAYAKUMAR, ASGI THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON28.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ALEXANDER THOMAS, J. ----------------------------------------- W.P.(C.) No. 1503 of 2020 ----------------------------------------- Dated this the 28[th] day of January, 2020 JUDGMENT The case projected in the W.P.(C.) is as follows : That the petitioner is running a franchise of M/s.Karvy Stock BrokingLtd. at Erattupuetta near Pala in Kottayam District and that he is nowaggrieved by the impugned Ext.P4 order dated 30.07.2019 issued by the 1[st]respondent, under Sec.119(2)(b) of the Income Tax Act, whereby the pleaof the petitioner for condoning delay in filing returns of the income tax forthe assessment years 2012-13, 2013-14 and 2014-15 has been rejected.According to the petitioner, the said rejection order cannot be said to bereasonable and that the impugned order has not taken into considerationall the relevant aspects of the matter and that the petitioner has indeed gothis genuine hardships and realties as contemplated in Ext.P5, CentralBoard of Direct Taxes Circular No.9/2015 dated 9.6.2015. The factualdetails are as follows : 2.In the year 2010, the petitioner's child was diagnosed as acancer patient during 2010. thereafter, the petitioner has been runningfrom hospital to hospital in connection with the treatment of his daughteruntil 2017 when the patient completed the treatment and advised for further follow up action. On 20.06.2016, the petitioner has filed Ext.P2Aand Ext.P2B returns for the assessment year 2013-14 and 2014-15 beforethe 2[nd] respondent. On 29.11.2017, the Regional Cancer Centre,Thiruvananthapuram issued Ext.P5 certificate stating completion oftreatment. On 11.12.2017, the petitioner has filed Ext.P2 return for theassessment year 2012-13 before the 2[nd] respondent and also filed Ext.P3application under Sec.119(2)(b) of the Income Tax Act, 1961 forcondonation of delay in filing returns for the abovesaid periods. On05.10.2018, the matter was posted for hearing and the petitioner appearedbefore the 1[st] respondent and explained the circumstances for the delay infiling returns. On 30.07.2019, the 1[st] respondent passed Ext.P4 orderrejecting Ext.P3 application for condonation of delay. 3.The main contentions urged by the petitioner are as follows : (a)The case of the petitioner qualifies every condition specified inExt.P5 circular. Therefore, the 1[st] respondent ought to have allowed theapplication considering the genuine hardship which caused the delay infiling returns. 3.The main contentions urged by the petitioner are as follows : (a)The case of the petitioner qualifies every condition specified inExt.P5 circular. Therefore, the 1[st] respondent ought to have allowed theapplication considering the genuine hardship which caused the delay infiling returns. (b)The only reason stated in Ext.P4 order for rejecting theapplication for condonation of delay is that the petitioner was running thefranchisee during the relevant period though he could not file income taxreturns. The said reason stated for rejecting the application is hypertechnical and imaginary in nature, and contrary to the purpose and object of Sec.119(2)(b) of the Income Tax Act, 1961 and also Ext.P5 circular issued by the CBDT. (c)The impugned order militates against the dictum laid down in this regard by various decisions of the Hon'ble Courts. (d)The impugned order is perverse in nature. In the light of these averments and contentions, the petitioner has filed the instant W.P.(C.) with the following prayers. (i)to issue a writ in the nature of certiorari or any other appropriate orderquashing Exhibit-P4 order passed by the 1[st] respondent.(ii)to issue a writ in the nature of mandamus or any other appropriate orderdirecting the 1[st] and 2[nd] respondents to treat Exhibit P2, Exhibit P2A and ExhibitP2B returns filed by the petitioner as returns within the statutory time limit, andto consider the claim of refund pursuant to the same expeditiously. (iii)to issue a writ in the nature of mandamus or any other appropriate orderdirecting the 2[nd] respondent to refund the amount claimed in Exhibit P2, ExhibitP2A and Exhibit P2B returns, after due verification of the relevant records,expeditiously. (iv)to issue a writ in the nature of mandamus or any other appropriate orderdirecting the 2[nd] respondent to adjust the amount claimed as refund in Exhibit P2,Exhibit P2A and Exhibit P2B returns towards the future liabilities of the petitionerunder the Income Tax Act, 1961 after due verification of the relevant records. (v)to pass such other orders as this Hon'ble Court may deem fit and proper inthe facts and circumstances of the case;and(v) to award the cost of the proceeding to the petitioner.” 4.Heard Sri.Bobby John Pulickaparambil, learned counsel appearing for the petitioner and Sri.Jose Joseph, learned standing counsel appearing for respondents 1 to 3- Income Tax Department, Government of India, Sri.K.Sudeep Kumar, learned Central Government Counsel appearing for R4- Union of India. 5.The relevant portion of clause (b) of sub-section (2) of Section 119 of the Income Tax Act, 1961 provides as follows : (b)the Board may, if it considers it desirable or expedient so to be for avoiding genuine hardship in any case or class of cases, by general or specialorder, authorise (any income-tax authority, not being a Commissioner(Appeals) to admit an application or claim for any exemption, deduction, refundor any other relief under this Act after the expiry of the period specified by orunder this Act for making such application or claim and deal with the same onmerits in accordance with law.” 6.The Central Board of Direct Taxes has issued Ext.P5 circular No.9/2015 dated 9.6.2015 and para 5 thereof reads as follows : “5.The powers of acceptance/rejection of the application within the monetary limitsdelegated to the Pr.CCsIT/CCsIT/Pr.CsIT/CsIT in case of such claims will be subject to thefollowing conditions : avoiding genuine hardship in any case or class of cases, by general or specialorder, authorise (any income-tax authority, not being a Commissioner(Appeals) to admit an application or claim for any exemption, deduction, refundor any other relief under this Act after the expiry of the period specified by orunder this Act for making such application or claim and deal with the same onmerits in accordance with law.” 6.The Central Board of Direct Taxes has issued Ext.P5 circular No.9/2015 dated 9.6.2015 and para 5 thereof reads as follows : “5.The powers of acceptance/rejection of the application within the monetary limitsdelegated to the Pr.CCsIT/CCsIT/Pr.CsIT/CsIT in case of such claims will be subject to thefollowing conditions : i.At the time of considering the case under Section119 (2)(b), it shall be ensuredthat the income/loos declared and /or refund claimed is correct and genuine and alsothat the case is of genuine hardship on merits.ii.The Pr.CCIT/CCIT/Pr.CIT/CIT dealing with the case shall be empowered todirect the jurisdictional assessing officer to make necessary inquiries or scrutinize thecase in accordance with the provisions of the Act to ascertain the correctness of theclaim.”that the income/loos declared and /or refund claimed is correct and genuine and alsothat the case is of genuine hardship on merits.ii.The Pr.CCIT/CCIT/Pr.CIT/CIT dealing with the case shall be empowered todirect the jurisdictional assessing officer to make necessary inquiries or scrutinize thecase in accordance with the provisions of the Act to ascertain the correctness of theclaim.” 7.Sri.Bobby John Pulickaparambil, learned counsel appearing for the petitioner would contend that the impugned Ext.P4 rejection orderdated 30.7.2019 has been rendered by the 1[st] respondent without taking into consideration the relevant aspects of the matter and the same cannotbe said to be reasonable and proper exercise of power in this regard. Thelearned counsel for the petitioner would place reliance on variousjudgments which are as follows. That in Sudha Krishnaswamy v.ChiefCommissioner of Income Tax [(2019) 414 ITR 144 (KAR)], the issuethat is considered as regarding the correctness of an order rejecting theapplication for condonation of delay under Sec. 119(2)(b) of the IncomeTax Act on the ground that assessee sustained injuries in an accident andalso he is facing stringent financial crisis. Therein the Karnataka HighCourt deprecated the practice of rejecting the said application on hyper technicalities and it was held as follows : “It is trite law that rendering substantial justice shall be paramount considerationof the Courts as well as the Authorities rather than rejecting on hyper-technicalities. It may be true that there is some lapse on the part of the petitioner,that itself would not be a factor to turn out the plea for filing of the return, whenthe explanation offered was acceptable and genuine hardship is established.Sufficient cause shown by the petitioner for condoning the delay in acceptable andthe same cannot be rejected out-rightly technicalities.” 8.Further that in the decision in Artist Tree Pvt. Ltd.v. Central Board of Direct Taxes, (2014) 369 ITR 691 (Bom) considered acase regarding the correctness of an order rejecting application for delaycondonation under Sec.119 (2)(b) and the records including the TDScertificate was misplaced during shifting of the office of the company andtherein the Bombay High Court cautioned against adopting a restrictiveapproach in such matters particularly when there is no malafide orculpable negligence on the part of the assessee and wherein, it has been held in para 23 thereof as follows : 8.Further that in the decision in Artist Tree Pvt. Ltd.v. Central Board of Direct Taxes, (2014) 369 ITR 691 (Bom) considered acase regarding the correctness of an order rejecting application for delaycondonation under Sec.119 (2)(b) and the records including the TDScertificate was misplaced during shifting of the office of the company andtherein the Bombay High Court cautioned against adopting a restrictiveapproach in such matters particularly when there is no malafide orculpable negligence on the part of the assessee and wherein, it has been held in para 23 thereof as follows : “In the light of the aforesaid discussion, we are of the opinion that an acceptableexplanation was offered by the petitioner and a case of genuine hardship wasmade out. The refusal by the CBDT to condone the delay was a result of adoptionof an unduly restrictive approach. The CBDT appears to have proceeded on thebasis that the delay was deliberate, when from explanation offered by thepetitioner, it is clear that the delay was neither deliberate, nor on account ofculpable negligence or any malefides. Therefore, the imputed order dated 16 May2006 made by the CBDT refusing to condone the delay in filing the return ofIncome for the assessment year 1997-1998 is liable to be set aside. Consistent withthe provisions of Section 119(2)(b) of the said Act, the concerned ITO or theassessing officer would have to consider the return of income and deal with thesame on merits and in accordance with law.” 9.The petitioner would point out that the Accounts Departmenthas no case that the IT returns of the petitioner is factually wrong or thatclaim for refund is said to beinadmissible and thus the petitioner would urge that there is no dispute regarding the entitlement of the petitioner andthat the only hurdle is the delay secured in filing of the return whichaccording to the petitioner has been caused due to reasons beyond hiscontrol and the authority should have adopted a pragmatic, fair and justapproach rendering substantial justice to the petitioner, particularly, whenthere is no loss of revenue and also when there is absolutely no case ofculpable negligence of any malafides on the part of the petitioner in regardto the late submission of the returns. 10.It is urged by Sri.Bobby John Pulickaparambil, learned counselappearing for the petitioner that the incidents in the petitioner's family is agreat tragedy inasmuch as his daughter who was then only 2 years old, wasdiagnosed with a serious cancerous ailment and he had to run fromhospitals to hospitals for treatment of his child and that it is only in view ofthe extreme mental strain and the circumstances under which thepetitioner was forced to divert his energies solely for the purpose oftreatment of his child, that the delay has occurred. True, that the petitionercould not concentrate on his business activities, which resulted in the delayin submissions of the returns, but the same occurred only due to thesecircumstances and that the department has no case that there is anyelement of culpable negligence or any malafides or there was any deliberatedelay on the part of the petitioner in delaying the submission of his returns.Hence, it is urged by the counsel for the petitioner that the impugned order is vitiated and that this Court may grant the reliefs sought for by thepetitioner. is vitiated and that this Court may grant the reliefs sought for by thepetitioner. 11.Sri. Jose Joseph, learned standing counsel appearing for therespondents 1 to 3 has opposed the pleas in the abovesaid petition. Afterhearing both sides and after careful evaluation of the facts andcircumstances of this case, the petitioner has not placed materialparticulars regarding the treatment of the child and it is seen that thepetitioner has mainly placed reliance on Ext.P1 certificate issued by theRegional Cancer Centre, Thiruvananthapuram. During the course of thehearing, the learned counsel for the petitioner has also made available acopy of the medical certificate/medical records issued by the AmritaInstitute of Medical Sciences and Research Centre, Edappally which dealswith the treatment given to the child etc. The petitioner should have givenmore comprehensive details of the treatment of the child and should alsohas to sworn to an affidavit regarding the various aspects which compelledhim to divert his energies to the business affairs, in view of his pressingcompulsions to give more devoted attention to the treatment of his infantdaughter. In the absence of such materials, the 1[st] respondent cannot beblamed for taking an approach of this nature in the impugned order. If thepetitioner had placed all the relevant materials, the 1[st] respondent could haveconsidered all the same and render a considered decision thereon and afteradverting to all such relevant aspects. Prima facie, this Court finds force in the abovesaid contention raised by the petitioner on the basis of the dictumlaid down by the Bombay High Court in the aforestated judgment in ParaNo.23 of Artist Tree Pvt.Ltd case (Supra), where it has been held that solong as the delay cannot be said to be deliberate or cannot be said to be onaccount of culpable negligence or malafides, then the respondent authorityconcerned would take a fair and liberal approach in the matter, in order toensure substantial justice be meted out. 12.Taking note of the overall facts of this case and moreparticularly, taking into account the tragic circumstances, under which thepetitioner was forced to undergo in view of the serious cancer ailments,that had affected his young and infant daughter, this Court is of theconsidered view that the matter could be given a second look by the 1[st]respondent after considering all the matters afresh. Accordingly, It isordered that the matter will stand remitted to the 1[st] respondent forconsideration of all the matters afresh and after taking into account theadditional materials that being produced by the petitioner without anyfurther delay. For effectuating such a remit, the impugned Ext.P4 orderwill stand quashed and Ext.P3 application will stand remitted to the 1[st]respondent for consideration and decision afresh. The petitioner willimmediately give all relevant details of the treatment of his infant daughterand should also given additional medical certificates of the hospitalsconcerned wherein she was hospitalised or treated either as a inpatient or outpatient showing the details in connection with the disease and variousperiods in question. Such additional materials by way of medical records ofthe hospitals concerned may be made available by the petitioner to the 1[st]respondent along with the affidavit of the petitioner, without much delay,preferably within a period of one month from the date of production of acertified copy of this judgment. In the said affidavit, the petitioner shouldalso meticulously and precisely deals with the factual particulars regardingthe treatment of his child and the periods in question. outpatient showing the details in connection with the disease and variousperiods in question. Such additional materials by way of medical records ofthe hospitals concerned may be made available by the petitioner to the 1[st]respondent along with the affidavit of the petitioner, without much delay,preferably within a period of one month from the date of production of acertified copy of this judgment. In the said affidavit, the petitioner shouldalso meticulously and precisely deals with the factual particulars regardingthe treatment of his child and the periods in question. 13.After submission of the said additional materials, the 1[st]respondent may give notice of hearing to the petitioner and thereafter, the1[st] respondent will afford reasonable opportunity of being heard to thepetitioner through the authorised representative/counsel, if any and thenwill render a considered decision on the plea made by the petitioner for thecondonation of delay subject to the delay in the returns as made out inExt.P3 application and after duly taking into consideration variouscontentions of the petitioner and also in the light of the dictum laid downby the various courts including the aforestated judgments mentionedhereinabove. Considered decision on all affected matters may be taken bythe 1[st] respondent, without much delay, preferably within a period of 2-3months from the date of submission of the additional materials given bythe petitioner. However, it is made clear that in case the petitioner does notgive the additional materials, within the abovesaid time limit of one month as aforestated, then the 1[st] respondent may proceed with the proceedingsherein and then take a considered decision in the matter on the basis ofavailable materials etc. This Court would only observe that the 1[st]respondent would anxiously bestow his consideration to various aspects ofthe matter and may also consider the applicability of the dictum laid downby the Bombay High Court in the aforecited Artist Tree Pvt. Ltd.'s case(supra) and the various other rulings. With these observations and directions, the above W.P.(C.) will standdisposed of. sd/- ALEXANDER THOMAS,JUDGE SKS APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1TRUE COPY OF THE TREATMENT CERTIFICATE NO.RCC/2017/TC/9462,DAED 29.11.2017 ISSUED FROM REGIONAL CANCER CENTRE, THIRUVANANTHAPURAMNO.RCC/2017/TC/9462,DAED 29.11.2017 ISSUED FROM REGIONAL CANCER CENTRE, THIRUVANANTHAPURAM EXHIBIT P2TRUE COPY OF THE RETURN FOR THE ASSESSMENT YEAR 2012-13, FILED BY THE PETITIONER ON 11.12.2017 BEFORE THE 2ND RESPONDENTYEAR 2012-13, FILED BY THE PETITIONER ON 11.12.2017 BEFORE THE 2ND RESPONDENT EXHIBIT-P2ATRUE COPY OF THE RETURN FOR THE ASSESSMENT YEAR 2013-14, FILED BY THE PETITIONER ON 20.06.2016 BEFORE THE 2ND RESPONDENTYEAR 2013-14, FILED BY THE PETITIONER ON 20.06.2016 BEFORE THE 2ND RESPONDENT EXHIBIT P2 BTRUE COPY OF THE RETURN FOR THE ASSESSMENT YEAR 2014-15, FILED BY THE PETITIONER ON 20.06.2016 BEFORE THE 2ND RESPONDENTYEAR 2014-15, FILED BY THE PETITIONER ON 20.06.2016 BEFORE THE 2ND RESPONDENT EXHIBIT P3TRUE COPY OF THE APPLICATION FOR CONDONATION OF DELAY IN FILING RETURN , DATED 11.12.2017 SUBMITTED BY THE PETITIONER, BEFORE THE 1ST RESPONDENTCONDONATION OF DELAY IN FILING RETURN , DATED 11.12.2017 SUBMITTED BY THE PETITIONER, BEFORE THE 1ST RESPONDENT EXHIBIT P4TRUE COPY OF THE ORDER DATED 320.07.20198 PASSED BY THE 1ST RESPONDENTPASSED BY THE 1ST RESPONDENT EXHIBIT P5TRUE COPY OF THE CBDT CIRCULAR NO.9/20-15 DATED 09.06.2015DATED 09.06.2015