M/S. KAMMAVARI CREDIT CO OPERATIVE SOCIETY LIMITED V. THE ASST. COMMISSIONER OF INCOME TAX

WP/53332/2017

AI Insights

The case involves M/s. Kammavari Credit Co-operative Society Limited, which filed a writ petition against the orders of the Income Tax authorities concerning the denial of tax exemption under Section 80P of the Income Tax Act. The petitioner, a co-operative society, argued that they were entitled to tax exemptions as per the provisions applicable to co-operative societies, not banks. The Income Tax Commissioner had previously rejected their application for condonation of delay in filing for tax exemption, leading to the current writ petition. The court found that similar cases had been treated differently and that the petitioner had been granted exemptions in subsequent years, thus meriting a re-evaluation of their case.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 698109 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 29-05-2018
• Assessment Year: misc
• Other Referred Cases: CIT vs Sri Biluru Gurubasappa Pattina Sahakari Sangha Niyamitha
• Laws Referred To: Income Tax Act, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: M V SESHACHALA; ARAVIND CHAVAN
• Keywords: Co-operative Society; Condonation of delay; Exemption under section 80P; Income Tax; Writ petition
• Section: 143(1); 80P; 264

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF MAY, 2018 BEFORE THE HON’BLE MR. JUSTICE B. VEERAPPA WRIT PETITION No.53332 OF 2017(T-IT) BETWEEN: M/S. KAMMAVARI CREDIT CO-OPERATIVE SOCIETY LIMITED, NO.10, 22ND MAIN ROAD, JAYANAGAR, HBCS LAYOUT, PADMANABHANAGAR, BENGALURU-560 070, REPTD. BY ITS PRESIDENT, SRI. T. BHADRACHALAM, AGED 59 YEARS, S/O. SRI. T. ANJANEYALU NAIDU. ... PETITIONER (BY SRI M.V. SESHACHALA, SENIOR COUNSEL FOR SRI ARAVIND V CHAVAN, ADVOCATE) AND: 1. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 4(1), BMTC BUILDING, 6TH FLOOR, KORAMANGALA, BENGALURU-560 095. 2 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX-7, BMTC BUILDING, 5TH FLOOR, KORAMANGALA, BENGALURU-560 095. 3. THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX-2, C.R. BUILDING, QUEENS ROAD, BENGALURU-560 001. ... RESPONDENTS (BY SRI JEEVAN J. NEERALGI, CGSC) **** THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 24.3.2017 PASSED BY R-2 VIDE ANNEXURE-H; THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:- O R D E R The petitioner filed the present writ petition for a writ of certiorari to quash the order bearing No.F.No.264/Pr.CIT-7/BNG/2016-17 dated 24.3.2017 passed by the 2nd respondent as per Annexure-H. In 3 the alternative, the petitioner has sought for quashing the order bearing No.F.No.CC-1/Tech- I/119(2)(b)/46A/2010-11/2245 dated 19.3.2013 passed by the 3rd respondent vide Annexure-K. 2. It is the case of the petitioner – Society that it has filed return of income on 31.10.2007 for the assessment year 2007-08 declaring a total income of Rs.86,33,892/- and paid a tax of Rs.27,93,270/- and on 18.2.2009 the return was processed by the 1st respondent under the provisions of Section 143(1) of the Income Tax Act (‘Act’ for short), accepting the returns. On 22.2.2010 revised return was filed declaring Nil income and claiming deduction under the provisions of Section 80P of the I.T. Act and on 14.6.2010 an application was filed for condonation of delay in filing the revised return. 3. It is further contended that on 7.3.2012 Revision Petition was filed under Section 264 of the Act 4 challenging the intimation dated 18.2.2009 issued under Section 143(1) of the I.T. Act and that was also the subject matter of the writ petitions before this Court in W.P. Nos.11624-625/2012 and in the said writ petitions, the petitioner has also challenged the order passed under Section 264 of the Act for the assessment year 2008-09. This Court after hearing both the parties by an order dated 26.7.2012 allowed the writ petitions and set aside the order passed under Section 264 of the Act and remanded the matter for fresh consideration. On 25.3.2013 order came to be passed under Section 264 of the Act by the Commissioner of Income Tax for the year 2007-08 holding that the assessee is not entitled for the relief under Section 80P of the Act and the assessee was also not entitled for condonation of delay. Therefore the petitioner filed W.P. Nos.18466- 467/2013 for quashing the order dated 25.3.2013 passed under Section 264 of the Act by the Commissioner of Income Tax for the assessment years 5 2007-08 and 2008-09. After hearing both the parties, this Court by an order dated on 12.9.2014 remitted the matter again to the Commissioner of Income Tax in view of the dictum of the Division Bench of this Court in ITA No.5006/2013. After remand, the respondent authority has rejected the delay application and consequently revision was also dismissed by the impugned order dated 24.3.2017. Hence the present writ petition is filed. 4. I have heard the learned counsel for the parties to the lis. 5. Sri Seshachala, learned senior counsel appearing for the petitioner contended that the impugned order passed by the 2nd respondent rejecting the application for condonation of delay and the revision petition is erroneous and contrary to the material on record. He would further contend that the Division Bench of this Court by an order dated 5.2.2014 made in 6 ITA No.5006/2013 held that when the status of the assessee is a Co-operative society and is not a Co- operative bank, the order passed by the Assessing Authority extending the benefit of exemption from payment of tax under the provisions of Section 80P(2)(a)(i) of the Act is correct. There is no dispute that the petitioner is also a co-operative society and not a Co-operative bank and therefore is entitled for the benefit of exemption from payment of tax under Section 80P(2)(a)(i) of the Act. He would further contend that the very Commissioner of Income Tax for the subsequent years i.e., 2008-09, 2012-13 and 2013-14 granted exemption to the very petitioner. The same has not been considered by the Commissioner in the impugned order. 6. He would further contend that in terms of the instructions No.13/2006 dated 22-12-2006 issued by the Central Board of Direct Taxes at item No.4, it 7 clearly depicts that “no fresh application for claiming refund will be entitled beyond six years from the end of the assessment year for the application claim is made.” In the present case, though the delay was only for 2 years and properly explained, the authority without considering the same has proceeded to reject on the ground of technicality. When the very authorities, subsequently granted benefit of exemption, the Commissioner while passing the impugned order ought not to have rejected the application for condonation of delay as well as revision and therefore, he sought to quash the impugned order passed by the respondents by allowing the writ petition. 7. Per contra, Sri Jeevan J. Neeralgi, learned Central Government Standing Counsel sought to justify the impugned order contending that the Division Bench judgment of this Court relied upon by the learned Senior Counsel is the subject matter of appeal pending 8 before the Hon’ble Supreme Court in SLP (Civil) No. 9958/2015 and therefore, sought to dismiss the writ petition. 8. Having heard the learned Counsel for the parties, it is an undisputed fact that the petitioner is the Co-operative Society registered under the Co-operative Societies Act, 1959. According to the petitioner, he is entitled for exemption under Section 80(P) of the Income Tax Act. It is also not in dispute that the Division Bench of this Court by the order dated 5.2.2014 passed in ITA No.5006/2013 while considering the earlier petition filed by the very petitioner against the order dated 25.3.2013 passed by the 2nd respondent under Section 264 of the Act for the years 2007-08 and 2008- 09 allowed the appeal and remitted the matter to the 2nd respondent for reconsideration in accordance with law. In the light of the judgment stated supra, after remand, the Commissioner for Income Tax proceeded to dismiss 9 the application for condonation of delay mainly on the ground of technicality. It is also not in dispute that this Court while considering the earlier writ petitions i.e., W.P.No.18466-467/2013 filed by the very petitioner against the order dated 25.3.2013 passed by the 2nd respondent under Section 264 of the Income Tax Act for the years 2007-08 and 2008-09, relying upon the Division Bench judgment of this Court in ITA No.5006/2013 D.D. 5.2.2014 disposed of the petitions and remanded the matter to the 2nd respondent for reconsideration in accordance with law in the light of the judgment of the Division Bench stated supra. After remand, the Commissioner of Income Tax proceeded to reject the application for condonation of delay and dismissed the revision petition mainly on the ground of technicality. 9. It is also brought to the notice of this Court that in identical circumstances, in the case of CIT –vs- 10 Sri Biluru Gurubasappa Pattina Sahakari Sangha Niyamitha in ITA No.5006/2013 D.D. 5.2.2014, the very Commissioner for Income Tax has condoned the delay and allowed the petition granting exemption under Section 80P(2)(a)(i) of the Act. It is also not in dispute that for the subsequent assessment years 2008-09, 2012-13 and 2013-14, the Commissioner for Income Tax (Appeals) in respect of very petitioner, has granted exemption from payment of tax. In all fairness, the Commissioner while passing the impugned order ought not to have rejected the application for condonation of delay as well as revision petition. It is also not in dispute that when the Commissioner himself has granted exemption to subsequent years to the very petitioner and the Board’s Instruction No.13/2006 dated 22.12.2006 clearly depicts that up to six years application for refund can be entertained, but in the present case it is only two years. Therefore, the Commissioner for Income Tax ought to have proceeded 11 to condone the delay and decide the revision petition on merits relying upon the dictum of this Court in the case of CIT –vs- Sri Biluru Gurubasappa Pattina Sahakari Sangha Niyamitha in ITA No.5006/2013 D.D. 5.2.2014, but the same has not been done in the present case. 10. It is well settled that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. It must be grasped that judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 11. In view of the above writ petition is allowed. The impugned order passed by the 2nd respondent as per Annexures-H and K are hereby quashed and the matter is remanded in respondent No.2 for re- 12 consideration afresh in the light of the dictum of the Division Bench of this Court in the case of The Commissioner of Income Tax –vs- Sri Biluru Gurubasava Pattina [ITA No. 5006/2013 D.D. 5.2.2014] and in the light of the Board’s Instruction No.13/2006 dated 22.12.2006 especially item No.4 and also in view of the subsequent orders passed by the Commissioner of Income Tax (Appeals), Bengaluru for the assessment years 2008-09, 2012-13 and 2013-14 in respect of very petitioner and pass orders strictly in accordance with law. Ordered accordingly. Sd/- Judge Gss/Nsu/- "