Wp(C)/19823/2006 Of P.varkey Jacob v. Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 15TH DECEMBER 2009 / 24TH AGRAHAYANA 1931 WP(C).No. 19823 of 2006(I) -------------------------- PETITIONER(S): --------------- SRI.VARKEY JACOB, LEGAL HEIR OF LATE SMT. LUCY KOCHUVAREED, THATTIL HOUSE, LATIN CHURCH ROAD, TRICHUR-680 001. BY ADV. SRI.V.RAMACHANDRAN, SENIOR ADVOCATE SRI.ABEESH JOSE RESPONDENT(S): --------------- 1. DEPUTY COMMISSIONER OF INCOME-TAX(ASST.) CIRCLE II (1), RANGE II, SAKTHAN THAMPURAN NAGAR, TRICHUR-680 001. 2. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II (1), RANGE II, SAKTHAN THAMPURAN NAGAR, TRICHUR- 680 001. ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) FOR R SRI.JOSE JOSEPH, SC, FOR INCOME TAX FOR R THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 15/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX /TRUE COPY/ P.A.TO JUDGE P.R. RAMACHANDRA MENON, J. -----------------------------------------------W.P.(C). No. 19823 of 2006 --------------------------------------------- Dated, this the 15[th] day of December, 2009 J U D G M E N T Whether the 'self-assessed tax' paid by the assessee on30.03.1989 in respect of the assessment years 1979-80 to 1984-85, onthe basis of the returns filed later on 11.10.1989, (i.e., before theissuance of notice under Section 148 of the Income Tax Act, but soughtto be treated as valid returns filed in response to the above notice) hasto be refunded to the assessee, on setting aside the assessment orderpassed by the assessing authority under Section 143 (3) of the Act, isthe issue involved herein. 2.The sequence of events reveals that the predecessor-in-interest of the petitioner, late Lucy Kochuvareed was a co-owner of the“Vellanikkara and Thattil Rubber Estate”, which was acquired by theGovernment of Kerala on 15.03.1974. Challenging the inadequacy ofcompensation awarded, the matter was taken up before the ReferenceCourt and also before this Court, whereby the compensation wasenhanced, granting interest at the rates stipulated under the amendedLand Acquisition Act. The said proceedings became final as per the judgment delivered by this Court on 28.08.1987 in the concerned LandAcquisition Appeal. Total amount awarded by this Court towards intereston the enhanced compensation, for the period from 01.05.1973 to28.08.1987, was Rs.96,56,593/-, out of which, the deceased LucyKochuvareed obtained 2/3 share, i.e., Rs.64,37,728/-; which wasdisbursed to her in three instalments during the year ended on31.03.1988, 31.03.1989 and 31.03.1990 respectively. 3.On 30.03.1989, the assessee (Lucy Kochuvareed) remitted asum of Rs.26,58,000/- as borne by Ext.P1 challan receipt, wherein theassessment year was mentioned as '1989-90'. Subsequently on07.10.1989, the assessee wrote a letter to the concerned Income TaxOfficer, stating that the assessment year shown as '1989-90' was only amistake, instead of remitting the amounts by separate challans for '11'years and requested the department to give credit to the '11' yearscommencing from the assessment year 1979-80 to 1989-90, showing thetotal tax liability as Rs.26,10,814/- and seeking to refund the balance sumof Rs.47,186/-. The assessee also requested the department not tocharge any interest, since there was total uncertainty regarding thequantum of enhanced compensation payable and also as to the rate ofinterest (which became final only on passing the final verdict by this Courtin 1987) and further since bulk of the amount towards interest was received only during the previous year ended on 31.03.1989.Immediately thereafter, the deceased assessee filed a series of returns ofincome for all the '11' assessment years as stated above. received only during the previous year ended on 31.03.1989.Immediately thereafter, the deceased assessee filed a series of returns ofincome for all the '11' assessment years as stated above. 4.The returns so filed on 11.10.1989 in respect of the years1988-89 and 1989-90 were subsequently amended by filing 'revised'returns on 03.01.1990 and returns on 23.03.1990. Exts.P2 and P3assessment orders were passed in respect of the said assessment yearsunder Section 143 (3) by the first respondent, fixing the tax liability,interest payable under the different provisions, the amount of tax alreadypaid from the total amount of Rs.26,58,000/- effected on 30.03.1989 andthe balance payable. Even though the first respondent accepted thereturns filed on 11.10.1989 in respect of the assessment years 1985-86onwards, the returns filed in respect of the assessment years 1979-80 to1984-85 were not accepted as beyond the specified time provided underSection 139 of the Income Tax Act. 5.It is the admitted case of the petitioner that the deceasedassessee could not file the returns in respect of the assessment years1979-80 to 1984-85 within the time as specified under Section 139. It isstated that the assessing authority had issued notice under Section 148 ofthe Income Tax Act on 04.07.1980; despite which no return was filed,since she believed that she had no taxable income. Thereafter on 15.07.1983, the assessing authority issued notice under Section 142 (1)for commencing an enquiry for making assessment which was replied bythe petitioner as per letter dated 28.07.1983 stating that, her main sourceof income was interest receivable on the additional compensation, if any,that was to be allowed by the High Court of Kerala (where the matter waspending consideration) and hence that she was not in a position to file thereturns till the proceedings before the High Court were got finalized.Accordingly, time was sought for, to file the returns, on different occasions(according to the petitioner she was granted time till 24.10.1989 as statedin paragraph 5 of the Writ Petition). It was after finalisation of theproceedings before this Court in the Land Acquisition Appeal, that shechose to file the returns on 11.101989 for the '11' assessment years1979-80 to 1989-90, though the returns in respect of the assessmentyears 1979-80 to 1984-85 were belated. 6.The assessing authority who did not accept the returns inrespect of the assessment years 1979-80 to 1984-85 being time barred,issued fresh notice under Section 148 of the Income Tax Act on18.01.1990. Instead of filing fresh returns, the deceased assessee, asper Ext.P4 series letters dated 20.02.1990, requested the assessingauthority to treat the returns already filed by her on 11.10.1989 as validreturns in response to the notice issued under Section 148 of the Income 6.The assessing authority who did not accept the returns inrespect of the assessment years 1979-80 to 1984-85 being time barred,issued fresh notice under Section 148 of the Income Tax Act on18.01.1990. Instead of filing fresh returns, the deceased assessee, asper Ext.P4 series letters dated 20.02.1990, requested the assessingauthority to treat the returns already filed by her on 11.10.1989 as validreturns in response to the notice issued under Section 148 of the Income Tax Act. Finally, the first respondent passed the final orders underSection 143 (3) on 31.12.1990 for the assessment years 1979-80 to 1984-85 as borne by Ext.P5 series, whereby, the first respondent held thatinterest was liable to be paid under different heads and after giving creditto the amount of tax already paid on 30.03.1989, the balance amount wasdemanded, which was challenged by filing different Writ Petitions beforethis Court. Pursuant to the direction given by this Court to pursue thestatutory remedy, the assessee preferred appeals before theCommissioner of Income Tax. After considering the facts and figures,the appellate authority, also placing reliance on the dictum laid down bythe Division Bench of this Court in Writ Appeal No. 1648/2002; held thatthe assessment orders passed under Section 143 (3), read with Section147 for the assessment years 1979-80 to 1984-85, were not correct orsustainable; the liability having been extinguished by way of limitationwhich hence could not be reopened, invoking the extended limitationcontained in the amended provisions. Accordingly, Ext.P5 series orders,refixing the tax liability, also by way of adding interest under differentheads, were annulled. 7.Pursuant to Ext.P6 appellate order, the second respondentpassed Ext.P7 series orders giving effect to the appellate order andcancelling Ext.P5 series orders, declaring that the 'returns' already filed by the assessee on 11.10.1989 would stand unchanged; thus showing thebalance of tax payable as 'nil'. The petitioner has approached this Courtchallenging Ext.P7 to the extent the departmental authorities have notchosen to refund the amount of tax paid by the deceased assessee on30.03.1989. It is contended that the course followed is not correct in theabsence of any 'valid return' as on the date of filing the same on11.10.1989; that no tax was paid along with the return filed on11.10.1989; that no valid proceedings could have been taken against theassessee in respect of the belated period, when Ext.P5 series orderspassed by the assessing authority were annulled by the appellateauthority vide Ext.P6 and hence that the department could not havevalidly levied, imposed or collected any tax, thus seeking to refund thesum of Rs.17,23,123/- with interest as prescribed. 8.The respondents have filed a counter affidavit rebutting thevarious averments and allegations raised by the petitioner, also pointingout that, though notice under Section 148 and other relevant provisions oflaw were admittedly issued on 04.07.1980 and 15.07.1983, no return wasfiled but for sending a reply dated 28.07.1983 stating that the matter couldnot be finalized because of the proceedings pending before the HighCourt of Kerala and thus seeking for further time as conceded inparagraph 7 of the Writ Petition. It is also conceded in the very same 8.The respondents have filed a counter affidavit rebutting thevarious averments and allegations raised by the petitioner, also pointingout that, though notice under Section 148 and other relevant provisions oflaw were admittedly issued on 04.07.1980 and 15.07.1983, no return wasfiled but for sending a reply dated 28.07.1983 stating that the matter couldnot be finalized because of the proceedings pending before the HighCourt of Kerala and thus seeking for further time as conceded inparagraph 7 of the Writ Petition. It is also conceded in the very same paragraph that, in response to the subsequent notice dated 18.01.1990issued by the department under Section 148 of the Income Tax Act, theassessee, vide Ext.P4 series letters dated 20.02.1990, had requested theIncome Tax Officer to treat the returns already filed on 11.10.1989 as the'valid returns' in response to the notice. The contention of the petitionerthat the remittance made on 30.03.1989 vide Ext.P1 challan was only inrespect of the year '1989-90' that too by mistake, has been sought to berebutted by producing Ext.R1(a) letter dated 07.10.1989 written by theassessee, seeking to have the amount credited towards the tax liability for'11' years commencing from 1979-80 to 1989-90 as stated therein. Thepetitioner has reiterated the contentions by filing the reply affidavit; inresponse to which, the department has filed a statement dated11.06.2009 and an additional statement dated 24.06.2009 through theStanding Counsel (along with petitions seeking to accept the same)asserting that the course pursued by the department in issuing Ext.P7 isvery much correct and proper and that the assessee who had remitted thetax voluntarily and filed the returns is estopped from contending that thefiling of the returns and remittance of the tax was not valid or proper. 9.Mr. V. Ramachandran, learned Senior Counsel appearing forthe petitioner submits that the returns filed on 11.10.1989 in respect of theassessment years 1979-80 to 1984-85 were admittedly beyond the time as stipulated under Section 139 of the Income Tax Act; that no tax waspaid on the date of filing the returns; that on the date of effecting theExt.P1 payment, no return was in existence and further since no returnwas filed simultaneously remitting the tax, there was no valid return andas such, the department could not have imposed, levied or collected anytax under any circumstance. Ext.P5 series orders passed by theassessing authority having been rightly set aside by the appellateauthority, as per Ext.P6 order, the amount already remitted on30.03.1989, to the extent is has been appropriated vide Ext.P7, is liable tobe refunded to the petitioner, submits the learned Senior Counsel. 10.Mr.P.K.Ravindranadha Menon, the learned Senior Counselappearing for the respondents seeks to sustain Ext.P7 series ordersbased on the contents of the counter affidavit and the statements filedsubsequently, stating that the relevant provisions of law and the judicialprecedents do not support the case of the petitioner and that neitherExt.P6 appellate order setting aside Ext.P5 assessment orders andrefixing the tax liability charging interest under different heads, nor thedecision rendered by the Division Bench of this Court in Writ Appeal No.1668/2002 does come to the petitioner's rescue and hence that the taxpaid by the deceased assessee, as assessed and shown in the returnsfiled by her, is not liable to be refunded. Reference is also made to the proviso (b) to Section 240 of the Income Tax Act (which however wasbrought into force only from 01.04.1989) in support of the said contention,pointing out that the Ext.P6 appellate order was passed only on21.11.2005. proviso (b) to Section 240 of the Income Tax Act (which however wasbrought into force only from 01.04.1989) in support of the said contention,pointing out that the Ext.P6 appellate order was passed only on21.11.2005. 11.It is conceded by both the sides that interest payable on thecompensation pursuant to the Land Acquisition proceedings taken by theGovernment of Kerala was got quantified and became final only onpassing the judgment by this Court in the concerned Land AcquisitionAppeal in the year 1987 and the said amounts were disbursed to theassessee in three instalments, during the year ending on 31.03.1988,31.03.1989 and 31.03.1990. It is beyond doubt that the said amounts,though disbursed in a particular year/years is liable to be distributed forthe different years concerned, in view of the declaration of law in thisregard by a Full Bench of this Court in Peter John Vs. Commissioner ofIncome Tax [157 ITR 711] and by the Apex Court in SankariManickyamma Vs. Commissioner of Income Tax, Andhrapradesh[181 ITR 400]. The case of the petitioner is that the assessee, despitethe receipt of Section 148 notice dated 04.07.1980 and Section 142 (1)notice dated 15.07.1983, could not file any return, as the main source ofthe income was from the 'interest' to be obtained on enhancement of thecompensation; for which, proceedings were pending consideration before this Court, as explained in the reply dated 28.07.1983 submitted beforethe department. 12.It is also an admitted fact that the proceedings became finalonly pursuant to the verdict passed by this Court in the Land AcquisitionAppeal in 1987 and it was accordingly, that the deceased assessee, whogot the interest disbursed by way of three instalments in the year endingon 31.03.1988, 31.03.1989 and 31.03.1990 chose to pay a sum ofRs.26,58,000/- as per Ext.P1 challan; followed by filing the returns for thedifferent assessment years from 1979-80 to 1989-90 on 11.10.1989.There was absolutely no case for the deceased assessee (after thejudgment and decree obtained from this Court in the Land AcquisitionAppeal), that she was not liable to file any return or to pay any tax. Thedispute arose only when the returns in respect of the assessment years1979-80 to 1984-85 were not accepted, leading to Ext.P5 series orderspassed under Section 143 (3), casting huge liability upon the assesseeunder different heads; which in turn were subjected to challenge in appealleading to Ext.P6 order annulling the assessement orders (placingreliance on the dictum in Varkey Jospeh’s case in Writ Appeal No.1668/2002). It was in the said circumstance, that the petitioner put up a'new case' that the tax remitted under Ext.P1 challan, to the extent as nowclaimed in the Writ Petition, is liable to be refunded; contending that the returns submitted by the deceased assessee on 11.10.1989 were 'notvalid returns' and hence no tax could have been levied, imposed orcollected by the department in any manner. returns submitted by the deceased assessee on 11.10.1989 were 'notvalid returns' and hence no tax could have been levied, imposed orcollected by the department in any manner. 13.The sum and substance of the pleadings and materials onrecord is that the proceedings originally taken by the department to havethe assessment effected by issuing the statutory notices on 04.07.1980and 15.07.1983 were got stalled by the assessee, by filing petitions forextension of time, referring to pendency of the land acquisitionproceedings before this Court, contending that the main income was byway of 'interest' obtainable on enhancement of the compensation by theHigh Court in the said proceedings. Admittedly, the proceedings becamefinal only in the year 1987; whereby a sum of Rs.64,37,728/-, being theshare of the deceased assessee, was disbursed to her by way of threeinstalments in the years ended on 31.03.1988, 31.03.1989 and31.03.1990. It was only on finalization of the the quantum as above, thatthe deceased assessee volunteered to pay the sum of Rs.26,58,000/-towards the tax liability on 30.03.1989 as borne by Ext.P1. Though theassessment year was shown in Ext.P1 challan as '1989-90', it wassubsequently sought to be corrected vide Ext.R1(A) dated 07.10.1989, tohave it apportioned in respect of the '11' different assessment years from1979-80; followed by the returns filed on 11.10.1989. It was without mentioning anything about Ext.R1(A) letter written by the deceasedassessee, that the petitioner chose to mould the Writ Petition, wronglystating that Ext.P1 payment was only in respect of the assessment year'1989-90'. The course and conduct pursued by the petitioner in filing theWrit Petition, without disclosing the entire facts, cannot but bedeprecated. 14.Incidentally, it is to be noted that the appellant/petitioner inWrit Appeal No. 1668/2002 (referred to by the petitioner and relied on bythe appellate authority in Ext.P6 order) was a 'lessee'of the very sameRubber estate 'Vellanikara Estate' acquired by the Government forestablishing the Agricultural University, as involved herein. Thecompensation awarded to the said lessee was finally enhanced in LandAcquisition Appeal No. 247/1980 preferred before this Court, as perjudgment dated 28.01.1987. On receipt of the award amount includinginterest, the said lessee filed returns on 03.01.1990. The departmentaccepted the returns for the period from 1985-86 and in respect of thereturns for the assessment years 1979-80 to 1984-85, notice was issuedunder Section 148 of the Income Tax Act, to reopen the assessment andorders were passed under Section 143 (3), also charging Interest underSection 139 (8) and 217 of the Income Tax Act. The case put forth by thelessee before this Court was that, there was no justification for reopening the assessment invoking the 'amended' provisions of law and that theassessment could have been only under Section 147 (b) of the Act.There was no case for the said lessee that the amount paid by him as taxas per the returns ought to have been refunded. After discussing therelevant provisions of law and the binding judicial precedents, it was heldby a Division Bench of this Court that, the assessment orders issued,where the liability already stood extinguished, could not be reopened,invoking the extended limitation period in the amended provisions. Thesaid decision does never say that the amount paid by the petitioner byway of tax in respect of the income returned is liable to be refunded. the assessment invoking the 'amended' provisions of law and that theassessment could have been only under Section 147 (b) of the Act.There was no case for the said lessee that the amount paid by him as taxas per the returns ought to have been refunded. After discussing therelevant provisions of law and the binding judicial precedents, it was heldby a Division Bench of this Court that, the assessment orders issued,where the liability already stood extinguished, could not be reopened,invoking the extended limitation period in the amended provisions. Thesaid decision does never say that the amount paid by the petitioner byway of tax in respect of the income returned is liable to be refunded. 15.As observed hereinbefore, the amount remitted as perExt.P1 challan, mentioning the year of assessment as '1989-90', was latersought to be distributed in respect of '11' assessment years from 1979-80to 1989-90 as stated in Ext.R1(A) letter dated 07.10.1989 written by thedeceased assessee; simultaneously requesting that no 'interest' might belevied, in view of the nature and pendency of the proceedings whichbecame final only on quantification of the amount payable including the'rate' of Interest as per the judgment and decree passed by the High Courtof Kerala in the year 1987. After getting the proceedings initiated by thedepartment stalled, refering to the pendency of the proceedings beforethis Court and after remitting the tax voluntairily on finalization of the said proceedings (on the basis of the exact income obtained by way ofinterest), followed by filing of the necessary returns and also afterrequesting the department vide Ext.P4 series letters dated 20.02.1990 totreat the returns already filed on 11.10.1989 as valid returns in responseto the notice dated 18.01.1990 issued by the department under Section148 of the Income Tax Act, the petitioner is estopped from contendingthat the payment effected by the assessee was not voluntary and that noamount could have been appropriated by the department in respect of thetax admitted and shown as due for the different assessment years asrequested by the assessee herself in Ext.R1(A) letter dated 07.10.1989and as shown in the returns filed on 11.10.1989. The petitioner cannot bepermitted to blow hot and cold simultaneously and the contention raisedto the contrary does not appear to be palatable to this Court. 16.Some what a similar situation as to the sustainability of thecourse pursued by the department arose for consideration of the DivisionBench of the Calcutta High Court in Iqbal Singh Atwal Vs.Commissioner of Income Tax [(1984) 147 ITR 599] where the assesseefailed to file returns within the time provided under Section 139 (4), whennotice was issued under Section 148. In response to the said notice, theassessee requested that the return already filed might be treated as thereturn filed in pursuance to the notice under Section 148. The department 16.Some what a similar situation as to the sustainability of thecourse pursued by the department arose for consideration of the DivisionBench of the Calcutta High Court in Iqbal Singh Atwal Vs.Commissioner of Income Tax [(1984) 147 ITR 599] where the assesseefailed to file returns within the time provided under Section 139 (4), whennotice was issued under Section 148. In response to the said notice, theassessee requested that the return already filed might be treated as thereturn filed in pursuance to the notice under Section 148. The department accordingly effected the assessment on the basis of such returns filedearlier. The proceedings taken in this regard were declared as valid andvery much sustainable. Obviously, the said decision was rendered,following the verdict in similar lines passed by a Division Bench of theMadras High Court in K.S.Ratna Swami Vs. Additional Income TaxOfficer reported in [(1963) 48 ITR 568]. Then the remaining question isonly regarding the scope of Ext.P6 appellate order setting aside Ext.P5series assessment orders. As observed hereinbefore, Ext.P6 has only setaside the assessment made by the Department and not the returns filedby the assessee. The tax suffered by the assessee on the incomereturned voluntarily, by way of self-assessment has not been ordered orintended to be refunded vide Ext.P6 appellate order. More so, in view ofthe specific stipulation provided as per 'proviso (b)' to Section 240 of theIncome Tax Act. True the said provision was brought into force only witheffect from 01.04.1989. But, the returns were admittedly filedsubsequently on 11.10.1989; which were requested to be treated as validreturns in response to the notice issued under Section 148 (1) as perExt.P4 series letters dated 20.02.1990. In other words, the said 'proviso'had taken its breath and was very much live even on the date of filing thereturns and very much on the date of passing Ext.P6 appellate order. ThisCourt had an occasion to consider whether refund of the tax paid on 'self 16 assessment' could be ordered to be refunded. After discussing therelevant provisions of law, it was held by this Court in E. Philip JosephVs. Income Tax Officer [234 ITR 846] that no such refund of tax paid on'self assessment' could be ordered under any circumstance. The legalposition has become crystal-clear by virtue of the decision rendered bythe Apex Court in Commissioner of Income Tax Vs. Shelly Productsand another [261 ITR 367] holding that the assessee is not entitled tohave refund of tax paid on self-assessment. 17.Admittedly, the deceased assessee made a 'self assessment'of tax and remitted the same as per Ext.P1 challan; which was latersought to be distributed in respect of the different assessment years asstated in Ext.R1(A) letter dated 07.10.1989. This is in conformity with thefigures given in the returns filed by her voluntarily on 11.10.1989. Filing ofreturn itself is a mode of 'assessment' of tax, though by way of self-assessment. The deceased assessee admittedly having effected 'selfassessment' and paid the tax amount, it is no more open to contend thatthe said amount paid voluntarily by the deceased assessee, is to berefunded to the petitioner; merely since the subsequent proceedingstaken by the Department also charging interest for the delay underdifferent headshappened to be annulled by the appellate authority videExt.P6. As per Ext.P6, only the assessment orders passed by the WP(C) No. 19823 of 2006 'Department have been annulled and it has not set aside the self-assessment' made by the deceased assessee and has not ordered anyrefund of tax already remitted by her in respect of the differentassessment years as stipulated and requested by the assessee herself.The case set forth by the petitioner, raising hypothetical contentions,contrary to the admitted facts and figures, does not hold any water at all.No premium can be given to anybody for his/her own deeds or mis deedsand acts or omissions. WP(C) No. 19823 of 2006 'Department have been annulled and it has not set aside the self-assessment' made by the deceased assessee and has not ordered anyrefund of tax already remitted by her in respect of the differentassessment years as stipulated and requested by the assessee herself.The case set forth by the petitioner, raising hypothetical contentions,contrary to the admitted facts and figures, does not hold any water at all.No premium can be given to anybody for his/her own deeds or mis deedsand acts or omissions. In the above facts and circumstances, absolutely no interference iscalled for. The Writ Petition fails and it is dismissed accordingly. dnc P. R. RAMACHANDRA MENONJUDGE