Wp(C)/39470/2022 Of Catherine Thomas v. Principal Chief Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH FRIDAY, THE 6 DAY OF OCTOBER 2023 / 14TH ASWINA, 1945 WP(C) NO. 39470 OF 2022 PETITIONER: CATHERINE THOMAS,AGED 86 YEARS W/O LATE K.T. THOMAS, 1-C AMBER PARK, CANNON SHED ROAD, KOCHI - 682011 BY ADV NISHA JOHN RESPONDENTS: 1 2 3 PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, KOCHI, PIN - 682018 KOCHI, KERALA CR BUILDING, I.S. PRESS ROAD, THE ADDITIONAL COMMISSIONER OF INCOME TAX, CIRCLE 1(1), KOZHIKODE AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE, PIN - 673001TAX RECOVERY OFFICER, AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE, PIN - 673001 BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Dated this the 6[th] day of October, 2023 1.Heard Smt.Nisha John, learned counsel forthe petitioner as well as Sri. Christopher Abraham,learned Standing Counsel appearing for the IncomeTax Department. 2.The writ petition is filed challengingExt.P12 demand notice directing the petitioner topay an amount of Rs.16,11,512/- as interest on theincome tax of Rs.10,76,869/-, the tax determinedfinally by Ext.P4 order dated 10.01.2011 passed onthe rectification application of the petitioner. Thepetitioner has already paid the entire tax amount on27.01.2011, within 35 days from the date of Ext.P4.The learned counsel for the petitioner submits thatthe 2nd proviso to Section 220(2) of the Income TaxAct has been inserted by Finance Act of 2014 and ithas been made applicable only with effect from01.10.2014. Therefore, this provision cannot be make use of in respect of the demand of taxcrystallized and paid by an assessee before the saiddate ie.,01.10.2014. 3.The learned counsel for the petitioner alsosubmits that the petitioner’s case has to be governedby the unamended provision of Section 220 asexisted on 01.10.2014. It is submitted that thepetitioner was liable to pay interest, if he wouldfailed to make the payment of the finally assessedamount within 35 days from the date of crystallizingthe tax. However, the assessee had paid the taxwithin 35 days from the date of Ext.P4 order. 4.The learned counsel for the petitioner hasplaced reliance on the judgment of the SupremeCourt in the case of Vikrant Tyres Ltd v.FirstIncome Tax Officer [Income Tax Report, Vol.247,Page 821]. In the afore-mentioned judgment it washeld that Section 220(2) of the Income Tax Act wouldbe applicable in a case where even after the notice ofdemand under Section 156 and after a further period of 35 days as provided under Section 220(1) theassessee continue as a defaulter in the matter ofpayment of tax. Only in case where the assesseedefaults in payment of tax assessed, 35 days afterthe notice of demand under Section 156 liability topay interest accrues. 5.The learned counsel therefore submits thatin the present case the demand was crystallized onlyon 10.01.2011 by Ext.P4 order and the assessee hadpaid the crystallized tax amount within 35 days fromthe said date ie. on 27.01.2011. It is thereforesubmitted that the petitioner cannot be held liable topay the interest by taking recourse to the 2[nd] provisoof Section 220(2) which has been introduced witheffect from 01.10.2014. 6.The learned Standing Counsel for theIncome Tax Department has not disputed the legalposition that the 2[nd] proviso which has beenintroduced in the Finance Act of 2014 will haveprospective operation with effect from 01.10. 2014. AP 5.The learned counsel therefore submits thatin the present case the demand was crystallized onlyon 10.01.2011 by Ext.P4 order and the assessee hadpaid the crystallized tax amount within 35 days fromthe said date ie. on 27.01.2011. It is thereforesubmitted that the petitioner cannot be held liable topay the interest by taking recourse to the 2[nd] provisoof Section 220(2) which has been introduced witheffect from 01.10.2014. 6.The learned Standing Counsel for theIncome Tax Department has not disputed the legalposition that the 2[nd] proviso which has beenintroduced in the Finance Act of 2014 will haveprospective operation with effect from 01.10. 2014. AP As the Finance Act itself makes it clear that it hascome into with effect from 01.10.2014 and therefore,by no stretch of imagination its operation cannot besaid to be retrospective. Considering the saidposition of law, and also taking into considerationthe judgment of the Supreme Court in the case ofVikrant Tyres (supra), I find substance in thesubmission of the learned Counsel for the petitionerthat the petitioner cannot be held to be default inmaking the payment of tax which was crystallized byExt.P4. Therefore, Section 220(2) would notempower the Department in levying interest on thetax assessed which has already been paid. Thus, thepresent writ petition succeeds. Ext.P12 impugnednotice is set aside. Sd/- DINESH KUMAR SINGH JUDGE APPENDIX OF WP(C) 39470/2022 PETITIONER EXHIBITS Exhibit P1TRUE COPY OF THE ASSESSMENT ORDER DT. 15.03.2002 FOR THE A.Y. 1995-96 PASSED BY THE2ND. RESPONDENTExhibit P2TRUE COPY OF THE ASSESSMENT ORDER DT. 22.12.2010 FOR THE A.Y. 1995-96 PASSED BY THE2ND. RESPONDENTExhibit P3TTRUE COPY OF THE ORDER DT. 23.12.2010 FOR THE A.Y. 1992-93 PASSED BY THE 2ND. RESPONDENTExhibit P4TRUE COPY OF THE ORDER DT. 10.01.2011 U/S. 154 OF THE ACT FOR THE A.Y. 1995-96 PASSED BYTHE 2ND. RESPONDENT ALONG WITH CHALLAN DT. 27.01.2011 EVIDENCING PAYMENT OF RS. 3,53,704/-Exhibit P5TRUE COPY OF THE ORDER GIVING EFFECT TO ITAT'S ORDER DT. 21.05.2020 FOR THE A.Y. 1995-96 PASSED BY THE 2ND. RESPONDENTExhibit P6TRUE COPY OF THE LETTER DT. 05.08.2020 SENT BY PETITIONER TO THE 2ND. RESPONDENT SEEKING TO RECTIFY EXT. P5 ORDERExhibit P7TRUE COPY OF THE RECTIFICATION ORDER CALCULATING THE REFUND DUE TO PETITIONER FOR THE A.Y. 1992-93 DT. 30.04.2019Exhibit P8TRUE COPY OF THE REPRESENTATION DT. 12.07.2022 MADE BY THE PETITIONER TO THE 2ND.RESPONDENTExhibit P9TRUE COPY OF THE REVISED ORDER DT. 28.09.2022FOR THE A.Y. 1995-96 PASSED BY THE 2ND. RESPONDENTExhibit P10TRUE COPY OF THE REPRESENTATION DT. 17.10.2022 MADE BY THE PETITIONER TO THE 2ND.RESPONDENTExhibit P11TRUE COPY OF THE RECTIFICATION ORDER DT. 27.10.2022 ISSUED BY THE 2ND. RESPONDENTExhibit P12TRUE COPY OF THE ORDER U/S. 220 (2) DT. 26.10.2022 MADE BY THE 2ND. RESPONDENTExhibit P13TRUE COPY OF THE REPRESENTATION DT. 01.11.2022 PREFERRED BY PETITIONER TO THE 2ND. RESPONDENT SEEKING TO DELETE ILLEGAL CHARGE OF INTEREST U/S. 220 (2)