K.M.CHAKRAPANI, VATAKARA V. THE INCOME TAX OFFICER, WARD-2(2),KZD.

WP(C)/2504/2007

AI Insights

The case involves K.M. Chakrapani, a cement dealer, who had business dealings with Madras Cements Limited. During these dealings, credit notes were issued which were accounted for by Chakrapani as received. For the year ended 31.3.2002, Chakrapani reported a net income of Rs.2,92,430. However, the assessing officer added Rs.15,46,342 to the income for the assessment year 2002-03, which pertained to discounts/adjustments from December 2001 to March 2002, expecting them to be taxed in the same year. Chakrapani did not initially dispute this assessment but later sought exclusion of this income from the 2003 assessment, which was denied, leading to this writ petition. The court found that the same income should not be taxed twice, regardless of the party at fault, and directed the necessary adjustments to be made.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 755982 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 14-11-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH; P K R MENON; GEORGE GEORGE
• Assessee Lawyers: P RAGHUNATH; PREMJIT NAGENDRAN
• Keywords: Assessment; Double taxation; Income Tax; Mercantile system of accounting
• Section: 143(3); 264; 143(1)(a)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 14TH NOVEMBER 2011 / 23RD KARTHIKA 1933 WP(C).No. 2504 of 2007(W) ---------------------------------------- PETITIONER(S): ------------------------- K.M. CHAKRAPANI, PROPRIETOR, COIR INDIA, CEMENT DEALER, PALOLI PALAM, VATAKARA. BY ADVS. SRI.P.RAGHUNATH, SRI.PREMJIT NAGENDRAN. RESPONDENT(S): --------------------------- 1. INCOME TAX OFFICER, WARD 2 (2) KOZHIKODE. 2. COMMISSIONER OF INCOME TAX, KOZHIKODE. R1 & R2 BY ADV. JOSE JOSEPH, SC,IT BY SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC, IT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14/11/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.2504/2007 W APPENDIX PETITIONER'S EXHIBITS: P1: COPY OF ORDER U/S. 143 (1)(A) DTD. 29/03/04 FOR 2003-04. P2: COPY OF ASSESSMENT U/S. 143 (3) DTD. 27/01/2005 FOR 2002-03. P3: COPY OF ORDER DTD. 20/07/06 PASSED BY THE SECOND RESPONDENT ON APPLICATION U/S. 264 OF THE ACT. RESPONDENT'S EXHIBITS: N I L /TRUE COPY/ P.A.TO JUDGE Kss S. SIRI JAGAN, J. - - - - - - - - - - - - - - - - - - - - - - - W.P.(C)No.2504 of 2007 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 14th day of November, 2011 J U D G M E N T The petitioner is a dealer in cement and has dealings with M/s. Madras Cements Limited, a manufacturer of cements. In the course of business dealings between the two, the Madras Cements Ltd. issues credit notes which were accounted for by the petitioner as and when received from the company. For the year ended 31.3.2002, the petitioner returned a net income of Rs.2,92,430/- for the purpose of Income Tax Act. The assessing officer found that the petitioner had accounted for discounts/adjustments pertaining to the period December 2001 to March 2002 amounting to Rs.15,46,342/- during the year ended 31.3.2003, which according to him was to be taxed during the year ended 31.3.2002, since the petitioner is following the 'mercantile system of accounting'. Consequently the said amount of Rs.15,46,342/- was added to the income for the assessment year 2002-03. The petitioner did not W.P.(C)No.2504 of 2007 -2- dispute the assessment and paid tax accordingly. Thereafter the petitioner sought exclusion of the said income from the assessment for the year ended 31.3.2003. The petitioner's revision in this regard was rejected by Ext.P3 order on the ground that the mistake was committed by the assessee and not by the department. The petitioner submits that whether the mistake is of the assessee or of the department, the same income cannot be subjected to tax twice. The petitioner therefore seeks the following reliefs: “call for the records leading to the issue of Ext.P3 order and Ext.P1 order, peruse the same, hear arguments and A. issue a writ of certiorari quashing the original of Ext.P3 order passed by the 2nd respondent. B. issue a writ of certiorari quashing Ext.P1 order u/s 143 (1) (a) of the Act in so far as it assesses the income of Rs.1546,342/- for the year 2003-04 since the same has already been assessed for 2002-03.” 2. No counter affidavit has been filed in this writ petition. But the Standing Counsel for the Income Tax Department justifies the order on the ground that after completing the assessment, the assessing authority cannot W.P.(C)No.2504 of 2007 -3- reopen the assessment for deletion of the amount which has been added to another assessment year. Insofar as the mistake is that of the assessee the respondents cannot be blamed for the same and the petitioner is bound to suffer for his own mistake, is the contention raised. 3. I have considered the rival contentions in detail. 4. I am of opinion that whether it is because of a mistake committed by the assessee or the department, the same income cannot be taxed twice. It is not as if the department will never commit any mistakes. Bonafide mistakes can be committed by anybody. The stand that because the mistake is that of the assessee and not of the department, the assessee should suffer notwithstanding the fact that the same income has been assessed twice is to say the least, a Shylockian attitude which is unbecoming of a Government department. In the above circumstances, I am of opinion that, appropriate deletion shall be made in respect of the income which has been added to another assessment year from the assessment year in question. W.P.(C)No.2504 of 2007 -4- Accordingly Ext.P3 order is quashed. The 1st respondent assessing officer is directed to revise the assessment by deleting the income of Rs.15,46,342/- from the assessment of the petitioner for the year ended 31.3.2003 corresponding to assessment year 2003-04. Orders in this regard shall be passed and the excess tax paid by the petitioner refunded to the petitioner, as expeditiously as possible, at any rate, within a period of three months from the date of receipt of a copy of this judgment. Sd/- S. SIRI JAGAN JUDGE //True copy// P.A. TO JUDGE shg/ "