KERALA STATE ELECTRONICS DEVELOPMENT CORPORATION V. THE ASSISTANT COMMISSIONER OF INCOME TAX

WP(C)/28909/2013

AI Insights

The case involves the Kerala State Electronics Development Corporation (KELTRON), which sought to challenge the rejection of its income tax return for the assessment year 1997-98. The return was initially filed with provisional accounts due to a delay in appointing auditors, as required for a government company. The Income Tax Department rejected the return as invalid under Section 139(9) of the Income Tax Act, 1961, because it was not accompanied by audited accounts. Despite subsequent submissions of audited accounts and appeals, the return was not accepted, leading KELTRON to file this writ petition. The court examined the procedural history and the compliance with statutory requirements, ultimately dismissing the petition on the grounds that the petitioner had not adhered to the necessary timelines and procedural requirements for rectifying the return.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 748740 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 15-06-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Sick Industrial Companies (Special Provisions) Act, 1985
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: M A ZOHRA; JOESEPH JOSEPH
• Assessee Lawyers: JOSEPH MARKOSE; V MARKOS; ABRAHAM MARKOS; ABRAHAM THARAKAN; BINU MATHEW; TOM KAKKUZHIYIL
• Keywords: Assessment Year 1997-98; Audited accounts; BIFR; Income Tax; Invalid Return; Provisional Accounts; Sick Company
• Section: 264; 139(9); 44A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN THURSDAY, THE 15TH DAY OF JUNE 2023 / 25TH JYAISHTA, 1945 WP(C) NO. 28909 OF 2013 PETITIONER: KERALA STATE ELECTRONICS DEVELOPMENT CORPORATION KELTRON HOUSE, VELLAYAMBALAM, THIRUVANANTHAPURAM, REPRESENTED BY ITS MANAGING DIRECTOR C.PRASANNA KUMAR. BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.ABRAHAM VARGHESE THARAKAN SRI.BINU MATHEW SRI.TOM THOMAS KAKKUZHIYIL RESPONDENTS: 1 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1 (1), THIRUVANANTHAPURAM 695 001. 2 THE COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM 695 011. 3 CENTRAL BOARD OF DIRECT TAXES NORTH BLOCK, NEW DELHI 110 001 REPRESENTED BY ITS CHAIRMAN. BY ADV SMT.M.A.ZOHRA, SC, KELTRON BY SRI.JOSE JOSEPH-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15.06.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) No.28909 OF 2013 2 ANU SIVARAMAN, J. ========================= W.P.(C) No.28909 of 2013 ========================= Dated this the 15th day of June, 2023 JUDGMENT This writ petition is filed seeking the following reliefs: “(i) call for the records relating to Exhibit P2 and P11 and to quash the same by the issue of a writ of certiorari or other appropriate writ, direction or order and direct the Respondents to complete the assessment for 1997-98 on (ii) direct the Respondents to accept on record the audited accounts for assessment year 1997-98 and consider the return filed for Assessment year 1997-98 as valid and complete the assessment on merits. (iii) direct the Respondents to permit the Petitioner to carry forward loss claimed for assessment year 1997-98;” 2. Heard the learned counsel for the petitioner and the learned counsel appearing for the respondents. 3. It is submitted by the learned counsel for the petitioner that the petitioner is a Government Company engaged in the business of manufacturing and trading of electronic goods. It is an assessee under the Income Tax Act on the files of the 1st respondent. It is submitted that on account of huge losses, the petitioner is a sick company under WP(C) No.28909 OF 2013 3 the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 and a reference under Section 16 was pending with the BIFR, New Delhi as Case No.605 of 2002. It is stated that a scheme has also been sanctioned in 2012 in respect of the Company. It is contended that with respect to the assessment year 1997-98, the petitioner had filed the return within the stipulated period. However, being a Government Company, its accounts are audited by the Chartered Accountants appointed by the Comptroller and Auditor General and since there was a delay in the appointment of the Auditor, the return was accompanied by provisional accounts and not by audited accounts. However, by Exhibit P2 intimation dated 19.02.1999, the 1st respondent informed the petitioner that the return based on provisional account is an invalid return, under Section 139(9) of the Income Tax Act, 1961. It is submitted that after the accounts were duly audited, the petitioner filed the audited accounts on 26.09.2002. It is stated that in Exhibit P3, the petitioner had explained the delay and had sought for rectification of the returns and the reopening of the assessment. However, no WP(C) No.28909 OF 2013 4 orders were passed thereon. The petitioner filed an appeal before the Commissioner of Income Tax (Appeals) on 02.12.2002 and also filed a revision petition before the 2nd respondent under Section 264 of the Income Tax Act. It is stated that by Exhibit P4, the revision was dismissed on the ground that an appeal is pending before the Commissioner of Income Tax (Appeals). Thereafter, the Commissioner of Income Tax (Appeals), by Exhibit P5 order, considered the appeal and dismissed the same. 2nd appeal preferred before the Income Tax Appellate Tribunal was rejected, since Exhibit P2 order treating return as invalid was found to be not an appealable order. 4. Thereafter, the petitioner preferred a further revision as Exhibit P7 and also filed a petition before the Central Board of Direct Taxes as Exhibit P8. It is submitted that the petitioner had produced material before the Revisional Authority with regard to the delay in filing the audited accounts. However, by Exhibit P11 order dated 12.08.2013, the revision was also rejected on the ground that since the order had already been subject matter of an appeal, the 2nd WP(C) No.28909 OF 2013 5 respondent could not consider the revision under Section 264. It is the contention of the petitioner that the rejection of the appeals and revision were on technicalities and that the contentions on merits raised by the petitioner had not been considered. 5. Learned counsel appearing for the respondents submits that the facts are evident from the materials placed on record. It is submitted that the BIFR proceedings had been initiated only in the year 2002 and the contentions raised by the petitioner with regard to the delay in furnishing audited accounts in respect of the assessment year 1997-98 is completely untenable. It is further contended that since the return was defective as it was not accompanied by audited accounts as required under Section 44A, the matter was immediately informed to the petitioner by the Assessing Officer by Deficiency Letter dated 10.08.1998. On 26.08.1998, the Managing Director of the petitioner had informed that audit of its accounts is to be taken up in a month and a further time of three months was sought for curing the defects. Since the audited accounts were not produced and the defect in the WP(C) No.28909 OF 2013 6 return was not rectified, even within the three months as sought for, another letter was issued by the Assessing Officer on 29.12.1998, informing the assessee that the return would be treated as invalid under Section 139(9). Further three months time was sought for by the Managing Director by letter dated 15.01.1999. By Exhibit P2 letter dated 19.02.1999, the petitioner was informed by the Assessing Officer that the return of income filed in respect of the assessment year 1997-98, based on provisional accounts is invalid under Section 139(9). It is submitted that it was thereafter that a letter dated 26.02.2002 was filed before the Assessing Officer asking to rectify the proceedings, enclosing a copy of the audited accounts. It is stated that by Exhibt P3 letter dated 26.09.2002, the petitioner had requested to complete the assessment and to issue refund as per the TDS certificates originally filed. It is stated that an appeal was preferred to the Commissioner of Income Tax (Appeals) as against Exhibit P2 on 02.12.2002. While so, the petitioner had also approached the Revisional Authority with a revision, which was rejected on the ground that the appeal filed by the WP(C) No.28909 OF 2013 7 assessee before the Commissioner of Income Tax (Appeals) seeking the same relief is pending. It was also found in Exhibit P4 that the last date for completing assessment on the basis of the voluntary requirement for the assessment year 1997-98 was 31.03.1999 and that it was only after Exhibit P2 intimation had been issued that the defect was attempted to be cured on 26.02.2002. It is, therefore, contended that no steps could, thereafter, have been taken by the Assessing Authority or the Appellate or Revisional Authorities in the matter. It is contended that after suffering Exhibits P5 and P6 orders, the petitioner had again preferred a revision, which has been considered and rejected by Exhibit P11. It is submitted that in the light of the admitted facts, the rejection of the revision was perfectly legal and valid and no steps could have been taken since the return stood rejected on 19.02.1999 and no rectification was attempted on or before 31.03.1999 which was the last date in respect of the assessment year. 6. Having considered the contentions advanced, I notice that the petitioner had been given ample opportunity to WP(C) No.28909 OF 2013 8 produce the audited accounts and to rectify the defect in the return submitted on 28.11.1997. Deficiency letters dated 10.08.1998 and a letter intimating that return is liable to be rejected as defective dated 29.12.1998 have been issued to the petitioner which is not in dispute. It is also not in dispute that the audited accounts were produced only after Exhibit P2 on 26.02.2002, long after the last date for filing the rectified returns in respect of the year in question. In the above factual situation, i am of the opinion that the contention raised by the petitioner cannot be accepted. I do not find any patent illegality or irregularity in the orders passed by the original, Appellate or Revisional Authorities. The writ petition fails and the same is accordingly dismissed. Sd/- ANU SIVARAMAN JUDGE SSK/15/06 WP(C) No.28909 OF 2013 9 APPENDIX PETITIONER EXHIBITS P1 EXHIBIT P1. COPY OF THE SUMMARY RECORD OF THE PROCEEDINGS BEFORE THE BIFR HELD ON 2012.2012 AND THE SANCTIONED SCHEME. P2 EXHIBIT P2. COPY OF THE INTIMATION DATED 19.2.99 OF THE IST RESPONDENT INFORMING THE PETITIONER THAT THE RETURN BASED ON PROVISIONAL ACCOUNT IS INVALID. P3 EXHIBIT P3. COPY OF THE PETITIONERS LETTER DATED 26.9.02 FILING AUDITED ACCOUNTS AFTER CURING THE DEFECTS. P4 EXHIBIT P4. COPY OF THE ORDER DATED 10.3.04 PASSED BY THE 2ND RESPONDENT. P5 EXHIBIT P5. COPY OF THE ORDER DATED 04.01.11 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 1, THIRUVANANTHAPURAM DISMISSING THE APPEAL FILED BY THE PETITIONER. P6 EXHIBIT P6. COPY OF THE APPELLATE ORDER DATED 21.6.12 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, KOCHI BENCH. P7 EXHIBIT P7. COPY OF THE REVISION PETITION DATED 25.7.12 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. P8 EXHIBIT P8. COPY OF THE PETITION DATED 26.5.11 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. P9 EXHIBIT P9. COPY OF THE PETITIONERS LETTER DATED 23.5.13 SUBMITTED BEFORE THE 2ND RESPONDENT. P10 EXHIBIT P10. COPY OF THE CIRCULAR NO.367 DATED 26.5.1983 ISSUED BY THE 3RD RESPONDENT. P11 EXHIBIT P11. COPY OF THE IMPUGNED ORDER DATED 12.8.13 PASSED BY THE 2ND RESPONDENT DISMISSING THE REVISION PETITION FILED BY THE PETITIONER. "