DAISY V. PRINCIPAL COMMISSIONER OF INCOME TAX

WP(C)/32420/2017

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The case involves Daisy, the petitioner, who filed a writ petition against the order of the Commissioner of Income Tax, Thiruvananthapuram, rejecting her application for condonation of delay in filing a refund claim under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner had filed her income tax return for the assessment year 2012-13 late, and her subsequent application for a refund was also delayed. The Commissioner rejected her application, not finding the claim genuine on merit. The petitioner contested this decision, arguing that the Commissioner should not have considered the merits of the claim while deciding on the condonation of delay. The court, however, upheld the Commissioner's decision, emphasizing the need to assess the genuineness of the claim before condoning the delay.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 765064 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 24-07-2023
• Assessment Year: misc
• Other Referred Cases: Pala Marketing Co-operative Society Ltd. v. Union of India and others [2008(1) KHC 637]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM; K M V PANDALAI
• Assessee Lawyers: S KRISHNAMOORTHY
• Keywords: Condonation of delay; Genuine hardship; Income Tax; Refund claim
• Section: 143(1); 139; 119(2)(b)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 24TH DAY OF JULY 2023 / 2ND SRAVANA, 1945 WP(C) NO. 32420 OF 2017 PETITIONER: DAISY AGED 55 YEARS AGED 55 YEARS, ANIZHAM HOUSE, KURUVITHOTTAM, KOTTUKAL, THIRUVANANTHAPURAM. BY ADV S.KRISHNAMOORTHY RESPONDENTS: 1 PRINCIPAL COMMISSIONER OF INCOME TAX OFFICE OF THE COMMISSIONER OF INCOME TAX, AYYAKHAR, KAWDIAR, THIRUVANANTHAPURAM-695103. 2 ASSISTANT COMMISSIONER OF INCOME TAX OFFICE OF THE COMMISSIONER OF INCOME TAX,AYYAKHAR, KAWDIAR, THIRUVANANTHAPURAM-695103. BY ADVS. SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI.K.M.V.PANDALAI INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24.07.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC No.32420 of 2017 2 JUDGMENT Dated this the 24th day of July, 2023 1. Heard Sri.S.Krishnamoorthy, learned counsel for the petitioner and Sri.Christopher Abraham, learned Standing Counsel for the Income Tax Department. 2. This writ petition has been filed under Article 226 of the Constitution of India impugning the order dated 26.05.2017 passed under Section 119(2)(b) of the Income Tax Act, 1961(herein after referred to as ‘IT Act’) by the Commissioner of Income Tax, Thiruvananthapuram, whereby the application filed by the petitioner under Section 119(2)(b) of the IT Act has been rejected 3. The petitioner filed return of the income for the assessment year 2012-13 on 19.08.2015, showing ‘nil’ total income. The due date for filing the return was 31.07.2012. When the return was WPC No.32420 of 2017 3 filed beyond the prescribed time limit, the same was processed under Section 139 of the IT Act. 4. Circular No.9/2015 dated 09.06.2015 prescribes the conditions for condonation of delay in processing the claim for refund by an assessee. The said circular has been placed on record with the writ petition as Ext.P10. The powers of acceptance or rejection of the applications within the monetary limits, had been delegated to the Principal Chief Commissioner of Income Tax. However, such power has to be exercised on following two conditions; i. At the time of considering the case under Section 119(2)(b), it shall be ensured that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits; ii. The Pr.CCIT/CCIT/Pr.CIT/CIT are empowered to direct the jurisdictional assessing WPC No.32420 of 2017 4 officer to make necessary inquiries or scrutinize the case in accordance with the provisions of the Act to ascertain the correctness of the claim. 5. The aforesaid circular further provides that a belated application for supplementary claim of refund can be admitted for condonation provided other conditions as referred to above, are to be fulfilled. Those conditions are; (i) The income of the assessee is not assessable in the hands of any other person under anyof the provisions of the Act; (ii) No interest will be admissible on belated claim of refunds; (iii) The refund has arisen as a result of excess tax deducted collected at source and/or excess advance tax payment and/or excess payment of self-assessment tax as per the provisions of the Act. 6. Learned counsel for the petitioner submits that the Commissioner of Income Tax instead of considering the application of the WPC No.32420 of 2017 5 petitioner for condonation of delay on merit has considered the whole case on merit, and rejected the claim without condoning the delay. He, therefore, submits that this approach of the Commissioner of Income Tax rejecting the claim of the petitioner without touching on the merit of the application for condonation of delay, is incorrect and not as per the provisions of the Act or the circular mentioned above. He further submits that in view thereof, the writ petition may be allowed and the matter may be remitted to the Commissioner of IT or deciding the application for condonation of delay a fresh. 7. In support of his contention, learned counsel for the petitioner has relied on the judgment of this Court passed in the case of Pala Marketing Co-operative Society Ltd.v. Union of India and others [2008(1) KHC 637]. WPC No.32420 of 2017 6 8. On the other hand, learned counsel for the Revenue Department has submitted that without considering the merit of the claim, the application for condonation of delay regarding hardship cannot be considered. The authority has to record to the satisfaction for accepting or rejecting the claim of the assessee should be genuine. When the authority finds the claim of the assessee is not genuine and bonafide, then there is no question of condoning the delay. He has further submitted that the circular relied on by the learned counsel for the petitioner ie.,9/2015, itself provides that, while considering the application under Section 119(2)(b) of the IT Act, the authority is required to consider the claim of the assessee on merit, and also the claim for condonation of delay. If the claim of the assessee is not found genuine on merit, then there is no question of condonation of delay in WPC No.32420 of 2017 7 filing the claim/refund. The submission of the learned counsel for the revenue is that the Commissioner of Income Tax has not found the claim of the petitioner or assessee just and proper, and, therefore, there was no question of allowing the application of the petitioner or the assessee for condoning the delay in filing the application for refund. 9. I have considered the submissions of the learned counsel for the petitioner. It is not in dispute that the circular issued by the CBDT are binding on the Income Tax authorities. Paragraph 5 of circular No.9/2015 mentioned above specifically provides that the authority is required to show that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits. Therefore, the Income Tax authority which is empowered to condone the delay in WPC No.32420 of 2017 8 filing the application for refund is to ensure itself that the claim of the assessee is genuine and bonafide. Therefore, I find not much substance in the submission of learned counsel for the petitioner that the commissioner was not required to enter into the merit of the claim of the petitioner and he should have confined himself to the genuine hardship of the petitioner while considering the application for condoning the delay in filing the application. So far as the judgment in the case of Pala Marketing Co- operative Society (supra) is concerned, nowhere it is said that while considering the application for condonation of delay, the authority is not required to consider the merit of the claim. Paragraph 4 of the said judgment, which has been relied on by the learned counsel for the petitioner on re production reads as under: “4. So far as the merits of the assessee's claim for condonation of delay is concerned, I find the WPC No.32420 of 2017 9 assessee is bound to get it's accounts audited under S.64 of the Cooperative Societies Act. The delay in audit by the auditor appointed under the Act is not attributable to the assessee. Even though Standing Counsel submitted that assessee was free to get the accounts audited by any accountant defined under the Act, I do not think this contention can be accepted because audit covered by other statues are recognised under second proviso to S.44A(b) of the Income Tax Act. Until 2001 audited accounts and report in the prescribed form could be filed through the statutory audit. However, only from 01/04/2001 report from auditor is required and even thereafter the audit report prepared by auditor appointed under the special statute could be submitted. Besides showing sufficient cause for delay in filing the return for refund, assessee has also established his case of genuine hardship in as much as it has suffered losses in the five succeeding years. The genuine hardship contemplated under S.119(2)(b) obviously is financial hardship caused to the assessee if delay is not condoned. If delay in this case is not condoned, the cooperative society will be deprived of Rs. 10 lakhs and odd which it was otherwise not liable to pay by virtue of the exemption claimed under S.80P of the Income Tax Act. In the circumstances, I quash Ext. P9 declaring WPC No.32420 of 2017 10 petitioner's entitlement for condonation of delay under S.119(2)(b) of the Act and consequently direct the 4th respondent to process petitioner's claim for refund under S.237 and grant refund to the extent found eligible within a period of three months from the date of production of copy of this judgment by the petitioner.” 10. Even otherwise when the circular itself provides that the claim of the assessee has to be considered and the authority is required to reach to the satisfaction as to the genuineness of the claim, then only the question of condoning the delay in filing the refund application arises. Therefore, I find no substance in this writ petition, which is hereby rejected. 11. The writ petition is dismissed as above. Sd/- DINESH KUMAR SINGH JUDGE AP WPC No.32420 of 2017 11 A PPENDIX OF WP(C) 32420/2017 PETITIONER EXHIBITS EXHIBIT P1 COPY OF THE PARTITION DEED NUMBER 1019/88. EXHIBIT P2 COPY OF INTIMATION UNDER SECTION 12(2) OF THE LAND ACQUISITION ACT. EXHIBIT P3 COPY OF LETTER ISSUED BY THE INCOME TAX AUTHORITIES DATED 8-2-2006. EXHIBIT P4 COPY OF THE ASSESSMENT UNDER SECTION 143(1) OF THE INCOME TAX ACT. EXHIBIT P5 COPY OF THE COMMUNICATION ISSUED BY TASILDAR DATED 30-5-2011. EXHIBIT P6 COPY OF THE ORDER DATED 26-5-2017. EXHIBIT P7 COPY OF CERTIFICATE ISSUED BY THE VILLAGE OFFICER VIZHINJAM DATED 17-12-2016. EXHIBIT P8 COPY OF CERTIFICATE ISSUED BY THE VILLAGE OFFICER VIZHINJAM DATED 1-03-2017. EXHIBIT P9 COPY OF CERTIFICATE ISSUED BY THE VILLAGE OFFICER VIZHINJAM DATED 4-05-2017. EXHIBIT P10 COPY OF THE CIRCULAR NUMBER 9/2015 (F.NO.312/22/2015-0T) DATED 9-6-2016. True English Translation of Ext P7 True English Translation of Ext P7 True English Translation of Ext P8 True English Translation of Ext P8 True English Translation of Ext P9 True English Translation of Ext P9 "