KOZHIKODE DISTRICT PETROLEUM DEALERS ASSOCIATION V. THE INCOME TAX OFFICER

WP(C)/29348/2016

AI Insights

The case involves the Kozhikode District Petroleum Dealers Association and other petitioners challenging the assessment orders related to the reimbursement of evaporation losses on petroleum products. The petitioners argued that the reimbursement received for evaporation losses should not be included in their income, as it is a permissible loss under the agreement with the oil companies. The Joint Commissioner, however, issued an order without providing a copy to the petitioners, leading to this writ petition. The court found that the petitioners are entitled to a copy of the order and the right to challenge it, emphasizing the need for transparency and proper communication in administrative decisions.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 755501 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 06-09-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: K M V PANDALAI; M NAMBIAR
• Assessee Lawyers: HARISANKAR MENON; MEERA MENON
• Keywords: Assessment Order; Evaporation Loss; Income Tax; Petroleum products; Reimbursement
• Section: 144A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN TUESDAY, THE 6TH DAY OF SEPTEMBER 2016/15TH BHADRA, 1938 WP(C).No. 29348 of 2016 (P) ---------------------------- PETITIONER(S): ------------- 1. KOZHIKODE DISTRICT PETROLEUM DEALERS ASSOCIATION, EVERGREEN SYNDICATE BUILDING, DOOR NO 4/228,ARABIND GHOSH ROAD, KOZHIKODE 673 032, REPRESENTED BY ITS SECRETARY, SHAMSUDHIN. 2. K.P SIVANANDAN, M/S. CHOISONS, KANNUR ROAD, KOZHIKODE 673 001. 3. M/S. GREEN FUEL & SERVICES, NARAYANA NAGAR, VADAKARA, KOZHIKODE DISTRICT, REPRESENTED BY ITS MANAGING PARTNER K VINOD. BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT(S): -------------- 1. THE INCOME TAX OFFICER, WARD-2(3),KOZHIKODE 673 001. 2. THE INCOME TAX OFFICER, WARD 2(2), KOZHIKODE 673 001. 3. JOINT COMMISSIONER OF INCOME TAX. RANGE-2, KOZHIKODE 673 001. 4. THE REGIONAL MANAGER, M/S. HINDUSTAN PETROLEUM CORPORATION LTD, SEAPORT AIRPORT ROAD, IRUMPANAM, ERNAKULAM, KOCHI 682 309. 5. THE MANAGER, M/S. INDIAN OIL CORPORATION, GLOBENET MEDIA, PANAMPILLY NAGAR AVENUE, MIG HOUSING SOCIETY, ERNAKULAM, KOCHI 682 036. R1-3 BY SRI.K.M.V.PANDALAI, SC BY SRI.M.GOPIKRISHNAN NAMBIAR THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06-09-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PJ WP(C).No. 29348 of 2016 (P) ---------------------------- APPENDIX PETITIONER(S)' EXHIBITS ----------------------- EXHIBIT P1 COPY OF LETTER ISSUED BY THE 2ND RESPONDENT TO THE 3RD PETITIONER EXHIBIT P2 COPY OF PETITION FILED BY THE 3RD PETITIONER BEFORE THE 3RD RESPONDENT EXHIBIT P3 COPY OF ASSESSMENT ORDER PASSED BY THE 2ND RESPONDENT OF THE 3RD PETITIONER EXHIBIT P4 COPY OF ASSESSMENT ORDER PASSED BY THE 1ST RESPONDENT OF THE 2ND PETITIONER RESPONDENT(S)' EXHIBITS ----------------------- NIL. / TRUE COPY / P.S. TO JUDGE PJ K. VINOD CHANDRAN, J. ---------------------------------- W.P(C). No.29348 of 2016-P ---------------------------------- Dated this the 6th day of September, 2016 JUDGMENT The petitioner is aggrieved with the fact that despite an application filed under Section 144A of the Income Tax Act, 1961 [for brevity, the Act], the Joint Commissioner, 3rd respondent, has issued an order without communicating a copy to the petitioner. The assessment year was of 2013-2014, in which the petitioner raised a contention before the Joint Commissioner that the proposal of assessment made for the year discloses an issue which would be an issue recurring in every year; which is the reimbursement of price paid of W.P(C). No.29348 of 2016-P 2 petroleum products also being included in the income of the petitioner. 2. The petitioner is said to be purchasing petroleum products from respondents 4 & 5 after paying the entire amounts for the quantity of the product purchased. In effecting retail sale, there is bound to be evaporation, which the respondent Oil Companies by virtue of the agreement itself stipulates reimbursement upto a particular limit. After the sale of the products, the petitioner retail dealer is entitled for commission for the quantity of the products sold which excludes the loss occasioned due to evaporation. That loss, to the extent permissible, is reimbursed, which cannot be included in the income of the petitioner; was the short contention. 3. It was in such circumstances that the W.P(C). No.29348 of 2016-P 3 petitioner filed an application under Section 144A of the Act for a clarification from the Joint Commissioner and necessary directions. The Joint Commissioner has looked at the facts of the case and approved the proposal of the Assessing Officer, which may not be a proper exercise, especially when a legal question was raised, for which the Commissioner could only have issued a clarification, based on which the facts could be considered by the Assessing Officer itself. As of now this Court would not say anything on the clarification issued in the form of a recommendation directly to the Assessing Officer, since the petitioner has challenged the Assessment Order and not such recommendation made; refusing issuance of any direction to the Assessing Officer. 4. The assessment orders are also appealable W.P(C). No.29348 of 2016-P 4 under the statute. Leaving the petitioner to avail of the remedies under the statute with respect to the assessment orders, it has to be held that the petitioner would also be entitled to challenge the order issued under Section 144A of the Act. In such circumstances, the 3rd respondent is directed to issue a copy of the order to the petitioner within a period of three weeks from the date of receipt of the certified copy of this judgment, which the petitioner may challenge; if so advised. The writ petition is so disposed of without any observation on the merits or an order on costs. Sd/- K. VINOD CHANDRAN, JUDGE. //True Copy// P.A. to Judge. sp/06/09/16 "