Wp(C)/27987/2014 Of Shri.thomas George Muthoot v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 6TH DAY OF NOVEMBER 2014/15TH KARTHIKA, 1936 WP(C).No. 27987 of 2014 (W) ---------------------------- PETITIONER: ------------------- SHRI.THOMAS GEORGE MUTHOOT, MUTHOOT HOUSE, KOZHENCHERRY, PATHANAMTHITTA DISTRICT, PIN:689 641. BY SRI.T.M.SREEDHARAN (SENIOR ADVOCATE) ADVS. SRI.V.P.NARAYANAN SMT.VANDANA MENON SMT.DIVYA RAVINDRAN RESPONDENT(S): ------------------------- 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -I, ENNIKKATTIL ESTATE, NEAR K.S.R.T.C BUS STATION, THIRUVALLA - 689 647. CIRCLE -I, ENNIKKATTIL ESTATE, NEAR K.S.R.T.C BUS STATION, THIRUVALLA - 689 647. 2. THE ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, IST FLOOR, (BLOCK C-1 & C-II), KENDRIYA BHAVAN, OPP. CSEZ, KAKKANAD, COCHIN-682037. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06-11-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 27987 of 2014 (W) ---------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS: ------------------------------------- EXHIBIT P1: TRUE COPY OF ASSESSMENT ORDER AND DEEMAND NOTICE DATED 27.12.2011 FOR THE ASSESSMENT YEAR 2006-07 PASSED BY THE FIRST RESPONDENT. DATED 27.12.2011 FOR THE ASSESSMENT YEAR 2006-07 PASSED BY THE FIRST RESPONDENT. EXT. P1(A): TRUE COPY OF -DO- FOR THE ASSESSMENT YEAR 2007-08 PASSED BY THE FIRST RESPONDENT.BY THE FIRST RESPONDENT. EXHIBIT P2: TRUE COPY OF COMMON APPELLATE ORDER DATED 28.8.2014 IN I.T.A.NO.63&64/COCH/214 OF THE INCOME TAX APPELLATE TRIBUNAL,COCHIN, FOR AY-2006-07 & 2007-08.I.T.A.NO.63&64/COCH/214 OF THE INCOME TAX APPELLATE TRIBUNAL,COCHIN, FOR AY-2006-07 & 2007-08. EXHIBIT P3: TRUE COPY OF MISCELLANEOUS PETITION 13.9.2014 FILED BY THE PETITIONER BEFORE THE ITAT, COCHIN BENCH.PETITIONER BEFORE THE ITAT, COCHIN BENCH. EXHIBIT P4: TRUE COPY OF CERTIFICATE DATED 26.2.2014 ISSUED BY THE CHARTERED ACCOUNTANT.CHARTERED ACCOUNTANT. EXHIBIT P5: TRUE COPY OF THE ORDER NO.TVDTO1734F/AE/13-14 DATED 31.3.2014 ISSUED BY THE DY. COMMISSIONER OF INCOME TAX (TDS), KOTTAYAM FOR AY-2006-07.DATED 31.3.2014 ISSUED BY THE DY. COMMISSIONER OF INCOME TAX (TDS), KOTTAYAM FOR AY-2006-07. EXHIBIT P6: TRUE COPY OF THE ORDER NO.TVDTO1734F/AE/13-14 DATED 31.3.2014 ISSUED BY THE DY. COMMISSIONER OF INCOME TAX (TDS), KOTTAYAM FOR AY-2007-08.DATED 31.3.2014 ISSUED BY THE DY. COMMISSIONER OF INCOME TAX (TDS), KOTTAYAM FOR AY-2007-08. EXHIBIT P7: TRUE COPY OF SHOW CAUSE NOTICE DATED 23.9.2014 ISSUED BY THE FIRST RESPONDENT.THE FIRST RESPONDENT. RESPONDENT(S)' EXHIBITS:-NIL --------------------------------------- /TRUE COPY/ P.A. TO JUDGE P.R. RAMACHANDRA MENON, J. --------------------------------------- W.P.(C) No.27987 of 2014 --------------------------------------- Dated this the 6[th] day of November, 2014. JUDGMENT The petitioner has approached this Court seeking for a direction to be issued to the 1[st] respondent to consider and passappropriate orders on Ext.P3 petition filed under Section 254(2)of the Income Tax Act, mainly pointing out that the contentionraised by the petitioner/assessee particularly in paragraph 12 ofthe written submissions of the note submitted before the saidrespondent has not been considered and as such, there is anerror apparent on the face of the record, to be acted upon by thisCourt. 2. The case of the petitioner is that, the assessment wasfinalised as per Ext.P1 series orders for the different assessmentyears 2006-2007 and 2007-2008. On challenging the same byfiling appeals, interference was declined and the appeals weredismissed as per Ext.P2 order dated 28.08.2014 passed by the2[nd] respondent. Since the vital points raised by the petitioner 2. The case of the petitioner is that, the assessment wasfinalised as per Ext.P1 series orders for the different assessmentyears 2006-2007 and 2007-2008. On challenging the same byfiling appeals, interference was declined and the appeals weredismissed as per Ext.P2 order dated 28.08.2014 passed by the2[nd] respondent. Since the vital points raised by the petitioner have been stated as omitted to be considered, Ext.P3 applicationfor rectification has been filed under Section 254(2) of theIncome Tax Act. Petitioner has approached this Court by filingthis writ petition against the coercive proceedings taken in themeanwhile. 3. Heard the learned Senior Counsel Sri. T.M Sreedharan,appearing for the petitioner, as well as the learned StandingCounsel appearing for the respondents as well. 4. The learned Senior Counsel appearing for the petitionersubmits that, by virtue of the amendment of the statute,incorporating the second proviso to Section 40(a)(ia), the rigourof the provision as to effect of non-deduction of tax payable oninterest paid has been virtually watered down. It is stated that,the assessment was finalised in the case of the petitioner,disallowing the claim for interest paid by the petitioner to thesister concern, in connection with the borrowal of money in thecourse of transactions. It is stated that, the sister concern of thepetitioner has already satisfied the entire tax and in the said circumstances, proceedings have been finalised in respect of thesister concern, as borne by Exts.P5 and P6 orders passed by theDeputy Commissioner of Income Tax (TDS) for the concernedassessment years. This being the position, there is absolutely norhyme or reason to have proceeded against the petitioner andhence this writ petition, to cause Ext.P3 to be considered anddisposed of. The learned counsel also points out that, the 2[nd]respondent has relied on the decision rendered by the CalcuttaHigh Court as well as the Gujarat High Court, without any regardto the law declared by the Allehabad High Court. Referring to thedecision rendered by the Madras Bench of the concerned Tribunalin C.O. No.155(Mds) of 2013 in ITA No.2076 of 2012, the learnedSenior Counsel points out that, if two views are available, the onewhich is favourable to the assessee has to be adopted, in view ofthe law declared by the Apex Court as per the law declared in(1973) 88 ITR 192 (SC) (Commissioner of Income Tax Vs. Vegetable Products Ltd.)(which in turn has been followed bythe Madras Bench of the Tribunal). W.P.(C) No.27987 of 2014 5. The learned Standing Counsel appearing for therespondents submits that, the idea and understanding of thepetitioner is quite wrong and misconceived. It is stated that, allthe points raised from the part of the assessee have beenconsidered as discernible from Ext.P2 order itself. The benefit ofamendment watering down the rigour of Section 40(a)(ia) gotinto in the statute book only by virtue of the amendment broughtabout with effect from 01.04.2013. The scope of the saidprovision has already been considered by a Division Bench of thisCourt as per the decision reported in Prudential Logistics andTransports (2014 (364) ITR 689. It has been categoricallyheld by the Bench, that the amendment brought about with effectfrom 01.04.2013 cannot come to the rescue of the assessee inrespect of the assessment for previous years. It is also pointedout that, the said decision rendered by this Court has beenreferred to by the 2[nd] respondent/Tribunal in Ext.P2 order. TheTribunal, being bound by the verdict passed by the jurisdictionalHigh Court, there is 'no error apparent on the face of the record' to entertain the petition preferred by way of Ext.P3. It is alsobrought to the notice of this Court that the petitioner is stillhaving a remedy by way of appeal, as provided under Section260A of the Income Tax Act, if any substantial question of law isinvolved. to entertain the petition preferred by way of Ext.P3. It is alsobrought to the notice of this Court that the petitioner is stillhaving a remedy by way of appeal, as provided under Section260A of the Income Tax Act, if any substantial question of law isinvolved. 6. The learned Senior Counsel appearing for the petitionersubmits that, the petitioner is ready and willing to pursue thesaid remedy and seeks for some breathing time by way of 'twoweeks' and seeks to intercept the coercive proceedings beingtaken in the meanwhile. The learned counsel also points out that,the petitioner has already satisfied the liability to an extent of68% and the balance remaining is only 32%. 7. After hearing both the sides, this Court holds that theremedy available to the petitioner, if at all aggrieved, is by wayof Section 260A of the Income Tax Act. It is open for thepetitioner to pursue such remedy in accordance with law andsubject to valid and sustainable grounds. So as to enable thepetitioner to pursue such exercise, coercive proceedings against the petitioner shall be kept in abeyance for a period of 'twoweeks', on condition that the petitioner satisfies 1/3[rd] of thebalance liability to be cleared in both the cases, which shall beeffected within 'one week'. The writ petition is disposed of. P.R. RAMACHANDRA MENON, JUDGE sp