Wp(C)/5799/2008 Of M/S Shebin Jewellery v. The Chief Commr.of Income Tax, Cochin

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE MONDAY, THE 3RD DAY OF DECEMBER 2012/12TH AGRAHAYANA 1934 WP(C).No. 5799 of 2008 (M) -------------------------- PETITIONER(S): -------------------------- M/S.SHEBIN JEWELLERY, TIRUR ROAD, PUTHANATHANI, MALAPPURAM DISTRICT. BY ADVS.SRI.P.BALAKRISHNAN (E) SRI.K.C.KIRAN RESPONDENT(S): --------------------------- 1. THE CHIEF COMMISSIONER OF INCOME TAX, COCHIN. 2. THE INCOME TAX OFFICER, WARD 1, TIRUR. BY ADV. SRI.JOSE JOSEPH, SC,INCOME TAX SRI.GEORGE K. GEORGE, SC, INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17-11-2012, THE COURT ON 03-12-2012 DELIVERED THE FOLLOWING: Kss WPC.NO.5799/2008 M APPENDIX PETITIONER'S EXHIBITS: P1:COPY OF LETTER DTD. 28/01/2004 ADDRESSED TO THE ASST.DIRECTOROF INCOME TAX (INV.).OF INCOME TAX (INV.). P2:COPY OF LETTER DTD. 23/03/2004 ADDRESSED TO THE 2ND RESPONDENT. P3:COPY OF NOTICE UNDER SECTION 148 DTD. 29/11/2005 FOR THE ASST.YEAR 2001-02.ASST.YEAR 2001-02. P4:COPY OF NOTICE UNDER SECTION 148 DTD. 29/11/2005 FOR THE ASST.YEAR 2002-03.ASST.YEAR 2002-03. P5:COPY OF LETTER DTD. 17/12/2005 ADDRESSED TO THE 2ND RESPONDENT.RESPONDENT. P6:COPY OF LETTER DTD. 3/01/2006 FROM THE 2ND RESPONDENT. P7:COPY OF LETTER DTD. 16/01/2006 ADDRESSED TO THE 2ND RESPONDENT. P8:COPY OF LETTER DTD. 23/01/2006 FROM THE 2ND RESPONDENT. P9:COPY OF LETTER DTD. 6/02/2006 FROM THE 2ND RESPONDENT ADDRESSED TO THE ASST.COMMR. OF IT, CALICUT.ADDRESSED TO THE ASST.COMMR. OF IT, CALICUT. P10:COPY OF LETTER DTD. 12/07/2006 FROM THE 2ND RESPONDENT. P11:COPY OF LETTER DTD. 17/07/2006 ADDRESSED TO THE ASST.COMMISSIONER OF IT, KOZHIKODE.ASST.COMMISSIONER OF IT, KOZHIKODE. P12:COPY OF THE ORDER OF ASSESSMENT FOR THE ASSESSMENT YEAR 2001-02.YEAR 2001-02. P13:COPY OF THE ORDER OF ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03.YEAR 2002-03. P14:COPY OF PETITION DTD. 30/06/2007 ADDRESSED TO THE 1ST RESPONDENT FOR THE ASST. YEAR 2001--02.RESPONDENT FOR THE ASST. YEAR 2001--02. P15:COPY OF PETITION DTD. 30/06/2007 ADDRESSED TO THE 1ST RESPONDENT FOR THE ASST.YEAR 2002-03.RESPONDENT FOR THE ASST.YEAR 2002-03. P16:COPY OF ORDER DTD. 15/11/2007 OF THE 1ST RESPONDENT. RESPONDENT'S EXHIBITS: N I L /TRUE COPY/ Kss P.S.TO JUDGE WPC.NO.5799/2008 M A.M.SHAFFIQUE, J * * * * * * * * * * * * * W.P.C.No.5799 of 2008 ---------------------------------------- Dated this the 3[rd] day of December 2012 J U D G M E N T This writ petition is filed challenging Ext.P16 order passedby the Chief Commissioner of Income Tax, Kochi in anapplication filed by the petitioner seeking waiver of interestimposed on the petitioner/assessee under Section 234A of theIncome Tax Act. 2.Imposition of interest was in respect of delay in filingthe returns for the assessment year 2001-02 and 2002-03. Asper the provisions of the Act, the returns were to be filed on31/08/2001 and 31/08/2002 during the respective assessmentyears. The returns were filed only on 03/10/2006. 3.According to the petitioner, the delay in filing thereturn could not be attributable to the petitioner since afterconducting a survey in the office premises of the petitioner, thedocuments were impounded by the Asst.Director of Income Tax(Investigation), Calicut on 14/02/2002. According to thepetitioner, he requested for release of the books by Ext.P1 dated 2.Imposition of interest was in respect of delay in filingthe returns for the assessment year 2001-02 and 2002-03. Asper the provisions of the Act, the returns were to be filed on31/08/2001 and 31/08/2002 during the respective assessmentyears. The returns were filed only on 03/10/2006. 3.According to the petitioner, the delay in filing thereturn could not be attributable to the petitioner since afterconducting a survey in the office premises of the petitioner, thedocuments were impounded by the Asst.Director of Income Tax(Investigation), Calicut on 14/02/2002. According to thepetitioner, he requested for release of the books by Ext.P1 dated 28/01/2004 addressed to the ADIT (Investigation), specificallystating that those were required for preparation of the returns.When there was no response, a further letter dated 23/03/2004was issued to the Income Tax Officer of the respective area forobtaining copies of the books. There was no response for sometime; but by Ext.P3 dated 29/11/2005, the assessing officerissued notice under Section 148 of the Income Tax Act callingupon him to file the return within twenty days failing whichassessment for the year 2001-02 shall be treated as escapedassessment. A similar notice was issued as Ext.P4 in respect ofassessment year 2002-03 also on the said date. On receiving thesaid notice, petitioner again requested the Income Tax officer byletter dated 17/12/2005 stating that since the returns are to befiled, an opportunity should be granted to take copies of theseized documents to file the return of income. Without accedingto the said request, it is stated that by Ext.P6 dated 03/01/2006the Income Tax Officer had again requested him to file returns,which was replied by Ext.P7 again requesting for taking copiesof the books seized from the petitioner. 4.The Income Tax Officer, by Ext.P8 dated 23/01/2006intimated the petitioner that the books and documents are not incustody of that office and the petitioner was requested toapproach the Deputy Commissioner of Income Tax, CentralCircle. Petitioner submitted another request Ext.P9 dated06/02/2006 to the Assistant Commissioner of Income Tax,Central circle, Calicut. He was again faced with another demandby Income Tax Officer for filing returns by notice dated12/07/2006 for which he had sent a reply wherein he again madea request to the Assistant Commissioner of Income Tax forproviding copies of the documents. 5.It is stated that thereafter the documents werereceived and returns were filed on 03/10/2006 declaring a totalloss for the assessment years. The Income Tax Department,after having verified the returns as per Exts.P12 and P13 ordersassessed the petitioner and returned a total income ofRs.2,27,950/- in respect of assessment year 2001-'02 andRs.4,80,110/- in respect of assessment year 2002-'03 and therebyassessing the tax payable and imposing interest under Section234A as Rs.60,724/- in respect of assessment year 2001-02 and It is stated that thereafter the documents were Rs.86,507/- in respect of 2002-'03. The imposition of interestunder Section 234A was challenged by the petitioner bysubmitting Ext.P14 and P15 to the Chief Commissioner ofIncome Tax stating that the delay in filing was on account of notgetting the copies of books of accounts in time though thePetitioner had requested for the same. This resulted in acommon order being passed by the Chief Commissioner ofIncome Tax as per Ext.P16. It is stated that thereafter the documents were Rs.86,507/- in respect of 2002-'03. The imposition of interestunder Section 234A was challenged by the petitioner bysubmitting Ext.P14 and P15 to the Chief Commissioner ofIncome Tax stating that the delay in filing was on account of notgetting the copies of books of accounts in time though thePetitioner had requested for the same. This resulted in acommon order being passed by the Chief Commissioner ofIncome Tax as per Ext.P16. 6.It is the contention of the petitioner that the ChiefCommissioner had come to the conclusion that the reason for thedelay was not due to obtaining the documents in time; but theCommissioner had proceeded on the basis that some margin hasto be left for the time required for filing the returns after takingcopies of the books and documents and considering the attemptof the assessee was not with full heart, 50% of interest waswaived for the period from January 2006 to September 2006. 7.According to the petitioner, he was entitled for waiverof interest for the entire period and should not have beenconfined to a short period i.e. January 2006 to September 2006and that too 50% of the said amount. On the other hand, Sri.Jose Joseph, learned Standing Counsel for the Department contendsthat though the documents were impounded after surveyconducted in respect of assessment year 2001-02, the returnsought to have been filed on 31/08/2001 and the documents wereimpounded only on 14/02/2002. Therefore there is nojustification in demanding any waiver of interest for theassessment year 2001-'02. In regard to the assessment year2002-'03, though the documents were impounded on 14/03/2002and returns ought to have been field on 31/8/2002, the requestfor release of documents Ext.P1 was issued only on 28/01/2004.Therefore, according to the learned Standing Counsel, if therewas any genuine interest in filing returns, the petitioner couldhave filed the same within the stipulated time as far as 2001-'02assessment year is concerned and in respect of the secondreturn for the assessment year 2002-'03, there was no genuinityin requesting for the documents after the period stipulated. 8.It is further submitted that the application dated23/03/2004 was for taking books of accounts for the purpose ofsales tax assessment for the year 2000-'01. It is again submittedthat even after taking copies of the impounded documents the assessee had tried to avoid the payment of tax aggregating toRs.2,60,753/- for the assessment years 2001-02 and 2002-03 bynot declaring the correct total income in the returns filed on03/10/2006. It is further submitted that there is no statutoryright available for the petitioner to demand waiver of interestunder Section 234A and waiver of interest is granted only on thebasis of Board's order in F.No.400/129/2002-IT(B) dated29/06/2006. The applicable provision has been extracted inExt.P16 order which reads as under: “ It has also specified the class or classes ofincome in which the reduction or waiver ofinterest u/s 234A or 234B, or 234C can beconsidered, as follows: (a)Where, during in the course of searchand seizure operations, books of account etc.were seized and the CCIT/DGIT concerned issatisfied on the facts and circumstances of thecase, that the delay in furnishing return was forreasons beyond the control of the assessee, andis not attributable to him, x x x x x x x x (d)Where return of income could not befiled voluntarily by the assessee due tounavoidable circumstances and such return isfiled by the assessee or his legal heirs withoutdetection by the Assessing Officer.” The above provision is made applicable only for givingwaiver of interest under Section 234A. “ It has also specified the class or classes ofincome in which the reduction or waiver ofinterest u/s 234A or 234B, or 234C can beconsidered, as follows: (a)Where, during in the course of searchand seizure operations, books of account etc.were seized and the CCIT/DGIT concerned issatisfied on the facts and circumstances of thecase, that the delay in furnishing return was forreasons beyond the control of the assessee, andis not attributable to him, x x x x x x x x (d)Where return of income could not befiled voluntarily by the assessee due tounavoidable circumstances and such return isfiled by the assessee or his legal heirs withoutdetection by the Assessing Officer.” The above provision is made applicable only for givingwaiver of interest under Section 234A. 9.According to the learned Standing Counsel, petitioneris not entitled for waiver of interest. Once the discretion hasbeen exercised by the competent authority, judicial review is notpossible. The learned Standing Counsel also relied uponjudgments in Deputy Commissioner of Income Tax v.P.M.Antony [2002 Vol.257 ITR 616] and Kerala State Cashew Development Corporation v. Income Tax Officer andanother [1990 Vol.186 ITR 521] to contend for the position thatthe circular has been issued only to enlarge the discretion of theCommissioner to reduce or waive interest though there is nostatutory provision under Section 234A. Therefore the conditionprescribed for invoking the provision of waiver should be strictlyapplied. In the present case, the argument is that since the discretion has been properly applied in terms of the provisions ofthe circular, no interference is called for. Learned StandingCounsel also relied upon the judgment in Univeral TradesCorporation v. Chief Commissioner of Income Tax & Ors.[(2001) 249 ITR 291(Ker)] in order to contend that a strictapproach is required in the matter. 10.Having heard the counsel on either side, the onlypoint that requires to be considered is whether the petitioner isentitled for waiver of interest for the entire period from24/01/2004 onwards which is the date on which he requestedthe concerned officers to return the files. 11.The Chief Commissioner had considered the matterelaborately and found as under: “4.It is noted that the documents wereimpounded after a survey in the premises f theassessee. The survey had connection withaction u/s.132, in the case of Thayampattilgroup of assessees, with which the assessee wasconnected. The jurisdiction over Thayampattilgroup was assigned to the Assessing Officer inCentral Circle, Calicut, and the documentsappear to have been in his custody because of this, and as the same was needed as an appealwas pending in that case. 5.The order impounding the documentshad been passed on 14/02/2002, by the DIT(Investigation) Calicut. The assessee could haveeasily noted that such documents are not keptby the DIT for long and would be sent to theAssessing Officer concerned, and also thatbooks and documents impounded are notreleased till the purpose is served. If theintention was to use the books and documentsimpounded, to prepare accounts including thetransactions not recorded in the regular booksof accounts, it could have enquired with theADIT (Inv), as to which officer, the documentshave been sent and after ascertaining the same,ask the custodian to permit the assessee to takecopies of the documents. This is not what hasbeen done in this case. The assessee requeststhe ADIT (Inv.) to release books of accounts anddocuments, when the filing of returns can bedone with out the originals. 6.The stand taken by it shows that itwas trying to wriggle out of the situation. In theinitial stages, the managing partner admittedstock outside the books of accounts. Later he submitted that some transactions had not beenentered in the books, but did not give thedetails. 6.The stand taken by it shows that itwas trying to wriggle out of the situation. In theinitial stages, the managing partner admittedstock outside the books of accounts. Later he submitted that some transactions had not beenentered in the books, but did not give thedetails. 7.If the intention was to disclose theunaccounted transactions, evidence regardingsome of which was impounded, and incomethereon, the assessee could have done so atleastat the time of filing the return of income. Thisappears to have been not the intention as thereturns were filed claiming loss onlypurportedly as per books of accounts. If theintention was only to admit the results as pertransactions recorded in the books of accounts ,as was done in the returns of income, theassessee could have focused on ascertainingfrom the investigation wing where the saidrecords are and approached the ACIT (Central)for allowing to take copies of the same and thephoto copying work of the documents couldhave been over in a few hours. Sending theletter dated 28/01/2004 asking the ADIT torelease the books of accounts impounded doesnot appear to be with any real intention to getthe same released so that the return showingunaccounted transactions could be filed. 8.The documents impounded appearnot to have been with the ITO, Tirur when theassessee asked his assessing Officer, to giveopportunity to take copies of the documents,and the assessee could have easily known wherethe documents are, by enquiring about thewhereabouts of the documents with the ADIT(Inv.) Calicut who impounded the documentsand then following up successively with theofficer(s) to whom these were transferred. Theassessee had the help of a Senior CharteredAccountant who is a seasoned professional tohelp it. I am not convinced that not following upthe matter in time, was due to ignorance orincapability. Asking the ADIT who did not havethe documents, to release the same and writingto his own assessing officer at Tirur for copies ofthe documents impounded only after receipt ofnotice u/s 148, and then again not incorporatingthe unaccounted transactions reflected by theimpounded documents to compute the income,while filing the return, appear to be calculatedmoves. The delay in filing of return for theassessment year 2000-01 which was due by31/08/2001 cannot be attributed to the surveyon 24/01/2002 and impounding of documents following the same, as it is clear that theassessee did not consider it necessary to file thereturn of income in time. The due date for filingthe return of income for the assessment year2002-03 was 31/08/2002. If the assessee wasreally bothered about filing the return by thedue date, it would have taken steps withoutmuch delay so as to enable it to file return by31/08/2002, the due date. The long wait upto28/01/2004 to ask the ADIT to release thedocuments and upto the latter half of December2004 and receipt of notice u/s 148 to ask theassessing officer to facilitate copying ofdocuments impounded does not reflect any realintention or conscious effort to file the return ofincome, showing correct income.” 12.On a perusal of the reasons stated for consideration ofthe application, I do not think that it will be justified on the partof this Court to enter a different finding. It is a fact that thedocuments were given to the petitioner only after more than twoyears. But the reasons stated by the Chief Commissioner wouldunequivocally indicate that initially the request was made torelease the books of accounts and documents; then the returns 12.On a perusal of the reasons stated for consideration ofthe application, I do not think that it will be justified on the partof this Court to enter a different finding. It is a fact that thedocuments were given to the petitioner only after more than twoyears. But the reasons stated by the Chief Commissioner wouldunequivocally indicate that initially the request was made torelease the books of accounts and documents; then the returns were prepared even without the originals. The assessee hadrequested for copies of the books and documents only by23/03/2004 which was later supplied after the alleged delay. Butit is indicated that from the returns it was found thatunaccounted transactions have been included, the same couldhave been done without verification of the records. In otherwords, though the assessee was requesting for the records it didnot make any difference as the returns were not in terms withthe documents produced and there were unaccountedtransactions. This finding of fact by Chief Commissioner hasresulted in not exercising the jurisdiction to waive interestcompletely. However, a small concession has been granted onaccount of the fact that there had been some delay on the part ofthe department in providing the copies of the documents.Therefore, this is a case where the assessee was only trying topoint out the non-availability of records as a reason for not filingthe returns in time. Returns were considered and Exts.P12 andP13 assessment orders were passed intimating the unaccountedtransactions also. 13.That being the situation, I do not think that there willbe any justification for this Court to extend the scope of judicialreview to Ext.P15 order. I do not find any illegality orarbitrariness in the said decision nor can it be stated to beunreasonable. This Court cannot sit in appeal against the saidfinding of fact by the Chief Commissioner. In the light of the above discussion, the writ petition failsand the same is dismissed. (sd/-) jsr (A.M.SHAFFIQUE, JUDGE) //True Copy// PA to Judge