SRI. SEBASTIAN KOTTOOR V. THE CHIEF COMMR. OF INCOME TAX, COCHIN

WP(C)/31380/2007

AI Insights

The case involves Mr. Sebastian Kottoor, the proprietor of Kottoor Dresses, who challenged the order of the Chief Commissioner of Income Tax, Cochin, regarding the waiver of interest under Sections 234 A & B of the Income Tax Act. The interest was levied on the enhanced compensation received from land acquisition proceedings initiated by the Indian Oil Corporation in 1990. The petitioner argued that the interest should be waived as there was no delay on his part in filing the tax returns post-receipt of the enhanced compensation. The court found that the first respondent's decision to partially waive the interest lacked a clear rationale and thus required a fresh examination.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 756000 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 03-08-2011
• Assessment Year: misc
• Other Referred Cases: Smt. Harbans Kaur Vs. Commissioner of Wealth Tax
• Laws Referred To: Income Tax Act, Land Acquisition Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P K R MENON; GEORGE K GEORGE
• Assessee Lawyers: P BALAKRISHNAN
• Keywords: Assessment Order; Income Tax; Land Acquisition; Waiver of interest
• Section: 147; 234B; 234A; 172

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 3RD AUGUST 2011 / 12TH SRAVANA 1933 WP(C).No. 31380 of 2007(I) -------------------------- PETITIONER: --------------- MR. SEBASTIAN KOTTOOR, PROPRIETOR, KOTTOOR DRESSES, M.G.ROAD, ERNAKULAM. BY ADV. MR. P.BALAKRISHNAN (E) RESPONDENTS: --------------- 1. THE CHIEF COMMISSIONER OF INCOMETAX, COCHIN. 2. THE INCOMETAX OFFICER, WARD 2(1) RANGE 2, ERNAKULAM. R1 AND R2 BY ADV. MR. P.K.R.MENON,SR.COUNSEL,GOI(TAXES) MR. GEORGE K. GEORGE, SC FOR IT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03/08/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) 31380 OF 2007 APPENDIX PETITIONER'S EXHIBITS : EXT. P1 : TRUE COPY OF ASSESSMENT ORDER DATED 21.03.2006 FOR 1998 - 99 EXT. P2 : TRUE COPY OF ASSESSMENT ORDER DATED 21.03.2006 FOR 1999 - 00 EXT. P3 : TRUE COPY OF ASSESSMENT ORDER DATED 21.03.2006 FOR 2000 - 01 EXT. P4 : TRUE COPY OF ASSESSMENT ORDER DATED 21.03.2006 F0R 2001 - 02 EXT. P5 : TRUE COPY OF THE PETITION DATED 17.05.2006 ADDRESSED TO THE 1ST RESPONDENT FOR WAIVER OF INTEREST EXT. P6 : TRUE COPY OF THE PETITIONER DATED 17.05.2006 ADDRESSED TO THE 1ST RESPONDENT FOR WAIVER OF INTEREST. EXT. P7 : TRUE COPY OF THE PETITION DATED 17.05.2006 ADDRESSED TO THE FIRST RESPONDENT FOR WAIVER OF INTEREST UNDER SECTION 234A & B FOR ASSESSMENT YEAR 1999 - 00 EXT. P8 : TRUE COPY OF PETITION DATED 17.05.2006 ADDRESSED TO THE 1ST RESPONDENT FOR WAIVER OF INTEREST UNDER SECTION 234 A & B FOR THE ASSESSMENT YEAR 2001 - '02 EXT. P9 : TRUE COPY OF ORDER DATED 18.09.2007 IN CCIT/CHN/WA/C-1/ 2006-07 OF THE 1ST RESPONDENT. /TRUE COPY/ P.A. TO JUDGE P.R. RAMACHANDRA MENON J. ~~~~~~~~~~~~~~~~~~~~~~~ W.P (C) No. 31380 of 2007 ~~~~~~~~~~~~~~~~~~~~~~~ Dated, this the 3rd August , 2011 JUDGMENT The petitioner is challenging the correctness and sustainability of Ext. P9 order passed by the Chief Commissioner of Income Tax, Cochin, who is the first respondent herein, declining the relief sought for to waive the interest payable under Sections 234 A & B of the Income Tax Act in respect of the income generated by the petitioner pursuant to the land acquisition proceedings. 2. The sequence of events as narrated in the Writ Petition is as follows : An extent of 70.02 Ares of agricultural land belonging to the petitioner was acquired way back in October 1990, on the basis of the requisition made by the Indian Oil Corporation. Compensation was awarded for the acquisition, as provided under the relevant provisions of the Land Acquisition Act. It is seen from the materials on record, that the quantum of compensation so awarded was challenged by the petitioner in appropriate proceedings and finally, this Court ordered enhancement. The enhanced compensation as aforesaid, including the interest as provided under the relevant provisions of law was satisfied by the acquisitioning authority. On receipt of compensation and interest as above, the petitioner filed necessary returns before the W.P. (C) No. 31380 of 2007 : 2 : Income Tax authority. The petitioner also filed Exts. P5 to P8 petitions for waiver of interest levied under Sections 234 A & B in respect of the assessment years 1998 - '99 to 2001 - '02. The matter was considered by the first respondent, who passed Ext. P9 order, partly allowing the relief sought for, whereby only 75 % of the interest payable was waived, leaving the balance 25 %, which forms the subject matter of challenge in this writ petition. 3. The learned counsel for the petitioner submits that the impugned order has been passed by the first respondent without proper application of mind. Eventhough the liability to satisfy the interest under Sections 234 A & B is mandatory, there is a provision for waiving the interest and the petitioner is sought to avail the said benefit, more so when there was no lapse or delay on the part of the petitioner, who filed the return, immediately on getting the enhancement awarded. In the said circumstances, the petitioner contends that he could not have been mulcted with the liability to satisfy interest. It is also contended that, by virtue of Section 147 of the Income Tax Act , the assessment, if at all could have been made, it should have confined to a period of six years, but on going by the materials on record, the assessment as above has transgressed in to the forbidden field as well. W.P. (C) No. 31380 of 2007 : 3 : 4. The learned standing counsel appearing for the respondents submits that the idea and understanding of the petitioner is quite wrong and misconceived. The liability to satisfy the 'Interest' under the statute is mandatory. With regard to the benefit sought to be extended (referring to the notification issued by the CBDT), it is submitted that, the first respondent has passed Ext. P9 order only after taking note of the totality of the circumstances. The challenge raised by the petitioner, is stated as not sustainable, since the law has been declared in crystal clear terms as per the decision reported in 224 ITR 418 (Smt. Harbans Kaur Vs. Commissioner of Wealth Tax) 5. The learned counsel for the petitioner submits that the case of the petitioner does not fall within the purview of Clause (b) of the 'second paragraph' of the notification. The learned counsel further submits that the concerned respondent is well vested with the power to have extended the benefit, by delegation effected by the CBDT as per notification 26.06.2006. It is also not a disputed fact that the CBDT is vested with the power under Section 172 of the Act to grant relief on interest as per general or specific orders. The question to be considered is whether the first respondent was justified in limiting the extent of relief to the petitioner as ordered in Ext. P9 . W.P. (C) No. 31380 of 2007 : 4 : 6. Considering the facts and circumstances of the case, this Court finds that there is considerable force in the submission made by the learned counsel for the petitioner in this regard. The reason to restrict the relief, despite the satisfaction as to the genuineness of the clams is not discernible from Ext. P9. The dispute is not with regard to the power of the respondents to grant the relief in part, but with regard to the rationale in the restriction impose. In the said circumstances, the matter requires to be reconsidered by the first respondent. Accordingly, Ext. P9 is set aside and the first respondent is directed to consider the matter afresh, after conducting a fresh enquiry, taking note of all the relevant facts and circumstances, of course after giving an opportunity of hearing to the petitioner. This shall be done, as expeditiously as possible, at any rate within 'three months' from the date of receipt of a copy of this judgment. The Writ Petition is disposed of Sd/- P. R. RAMACHANDRA MENON, JUDGE kmd "