M.JAMES V. THE INCOME TAX OFFICER, KANNUR AND OTHE

WP(C)/9766/2009

AI Insights

The case involves M. James, the petitioner, challenging the rejection of his applications for waiver of interest on tax liabilities assessed against a firm his late father was a partner in, for the year 1981-82. The petitioner argued that the interest waivers under Sections 139(8), 217, and 220(2) of the Income Tax Act were unjustly denied. The High Court found procedural errors in how the applications were handled by the tax authorities, particularly noting that the second respondent lacked jurisdiction to decide on the waiver applications and that the third respondent did not adequately consider the petitioner's financial hardships.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 766940 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-11-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: T M SREEDHARAN; C K SHERIN; V P NARAYANAN
• Keywords: Assessment Year 1981-82; Financial hardship; Jurisdiction; Non-cooperation; Tax liability; Waiver of interest
• Section: 220(2); 220(2A); 139(8); 217

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC TUESDAY, THE 27TH DAY OF NOVEMBER 2012/6TH AGRAHAYANA 1934 WP(C).No. 9766 of 2009 (M) -------------------------- PETITIONERS: ------------- M.JAMES,PP-VI/125,MANGARA HOUSE, OPP;ST.JUDE CHURCH,P.O.,THADIKKADAVU CHANOKUNDU,TALIPARAMBA TALUK,KANNUR DISTRICT. BY ADVS.SRI.T.M.SREEDHARAN SMT.C.K.SHERIN SRI.V.P.NARAYANAN RESPONDENTS: -------------- 1. THE INCOME TAX OFFICER, WARD-1,KANNUR. 2. THE ADDITIONAL COMMISSIONER OF INCOME TAX,RANGE 1,KANNUR. 3. THE COMMISSIONER OF INCOME TAX, KANNUR. 4. THE TAX RECOVERY OFFICER, RANGE-1,KANNOTHUMCHAL,KANNUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27-11-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX(WPC 9766/2009) PETITIONER'S EXHIBTS: P1: TRUE COPY OF NOTICE DT.9.2.2009 ISSUED BY R4 TO THE PETITIONER. P2: TRUE COPY OF STATEMENT OF ARREARS FURNISHED BY R4. P3: TRUE COPY OF APPLICATION DT.23.8.08 FOR WAIVER OF INTEREST SUBMITTED BY THE PETITIONER BEFORE R2 UNDER SEC.139(8). P4: TRUE COPY OF APPLICATION DT.1.3.08 FOR WAIVER OF INTEREST SUBMITTED BY THE PETITIONER BEFORE R2 UNDER SEC.217. P5: TRUE COPY OF THE APPLICATION DT.23.2.09 SUBMITTED BEFORE R3 BY THE PETITIONER UNDER SEC.220(2). P6: TRUE COPY OF REPRESENTATION DT.12.2.2009 SUBMITTED BY PETITIONER TO R2. P7:TRUE COPY OF JUDGMENT DT.4.3.2009 IN WPC NO.6590/2009 OF THE HIGH COURT OF KERALA. P8: TRUE COPY OF ORDER DT.12.3.2009 PASSED RELATING TO WAIVER OF INTEREST U/S.139(8). P9: .DO. .DO. U/S.217. P10: TRUE COPY OF ORDER C.NO.220-6/CIT/KNR/08-09 DT.19.3.2009 PASSED BY R3. P11: TRUE COPY OF NOTICE DT.27.2.2009 UNDER RULES 38 AND 52 OF THE TAX RECOVERY RULES ISSUED BY R4. P12: TRUE COPY OF PETITION FILED UNDER RULE 40 OF THE IT RULES DT.12.3.2009 SUBMITTED BY PETITIONER BEFORE R1. P13: TRUE COPY OF PETITION UNDER RULE 117A OF THE IT RULES DT.12.3.2009 SUBMITTED BY PETITIONER BEFORE R1. P14: TRUE COPY OF ORDER DT.23.2.2007 PASSED BY R3. P15: TRUE COPY OF PROCEEDINGS DT.27.12.2001 PASSED BY R1. P16: TRUE COPY OF NOTICE OF DEMAND IN FORM NO.57 DT.6.8.2004 ISSUED BY R4. P17: TRUE COPY OF RECEIPT DT.30.3.2009 ISSUED BY THE TAX RECOVERY OFFICER, RANGE-1, KANNUR. P18: TRUE COPY OF RECEIPT DT.15.4.2009 ISSUED BY THE TAX RECOVERY OFFICER, RANGE-1, KANNUR. TRUE COPY pms P.S. to Judge ANTONY DOMINIC, J. .................................................................... W.P.(C) No.9766 of 2009 .................................................................... Dated this the 27th day of November, 2012. JUDGMENT Heard learned Senior counsel for the petitioner and the learned counsel for the respondents. 2. Petitioner's father late Sri.Chacko Mathew was a partner in a firm by name Malanadu Liquors. His father expired on 20.6.1994. The challenge in this Writ Petition pertains to Exts.P8, P9 and P10 orders rejecting the applications made by the petitioner seeking waiver of interest on the tax liability of the firm for the assessment year 1981-82. In so far as Exts.P8 and P9 are concerned, those orders were passed on Exts.P3 and P4 applications filed by the petitioner, seeking waiver of interest levied under Sections 139(8) and 217 of the Income Tax Act. Reading of Exts.P8 and P9 orders passed by the second respondent shows that the authority competent to consider Exts.P3 and P4 is the Assessing Officer, the first respondent. However, after holding that he had no jurisdiction to entertain the application, he went into the merits of the claim and held that the petitioner is not eligible for waiver. W.P.(C) No.9766/2009 2 3. In my view, once the second respondent has realised that he had no jurisdiction to have entertained Exts.P3 and P4, he had no reason to have adjudicated the entitlement to the petitioner on merits and instead he should have left the matter at that stage so that the petitioner could have moved the competent authority for waiver. In this case both sides submit that subsequently petitioner filed Exts.P12 and P13 before the first respondent, the competent authority, seeking waiver as permissible under Rule 40 and Rule 117A of the Income Tax Rules. In such circumstances, I set aside Exts.P8 and P9 and direct that the first respondent shall consider Exts.P12 and P13 in accordance with law and pass orders thereon. 4. Now what remains is Ext.P10. Ext.P10 order was passed by the third respondent on Ext.P5 application filed by the petitioner under Section 220(2A) of the Income Tax Act seeking waiver of interest levied on the petitioner under Section 220(2) of the said Act. Reading of this order shows that the claim of the petitioner has been rejected on merits on the ground that the petitioner has not cumulatively satisfied the conditions specified in Section 220(2A). In this order the third W.P.(C) No.9766/2009 3 respondent has accepted that by October 2008 the petitioner has paid the entire principal demand of tax. However, as far as the financial hardship which is to be proved by the applicant is concerned, it has been held that the petitioner has failed in proving the financial hardship of the other partners of the firm also. As far as this aspect of the matter is concerned, in Ext.P5 what was sought by the petitioner is that he should be relieved of the interest liability. In such a situation he cannot be expected to prove the financial hardship of the other partners of the firm who are not the applicants. In such a case the Officer could not have insisted that the petitioner should prove the financial hardship of the other partners and should not have rejected his application on his failure. 5. It is also held that there was no co-operation in the assessment and recovery. First of all, such a non-operation could have been attributed against the assessees and could not have been attributed against a legal heir. On the other hand, the order itself discloses that the petitioner has paid the entire tax demand in instalments. The third condition is that the default should be for reasons beyond the control of W.P.(C) No.9766/2009 4 the assessee. It is seen that the petitioner has filed a representation supplying the facts, which according to him, justifies his request that there has been no proper consideration of that aspect also. In such circumstances, I am not satisfied that there has been a proper consideration of the petitioner's request as required under Section 220(2A). For that reason I set aside Ext.P10. The third respondent is directed to consider Ext.P5 and pass fresh orders in accordance with law. Writ Petition is disposed of accordingly. ANTONY DOMINIC Judge pms "