Partnership Firm V. Income Tax Department

WP/8678/2019

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The case involves a partnership firm engaged in transportation services, which filed a Writ Petition under Article 226 of the Constitution of India against an order passed by the Income Tax Department. The petitioner sought to declare the order as illegal and arbitrary, and to condone a delay of 35 days in filing a revision application regarding an assessment order that significantly increased their assessed income. The court found that the delay was not willful and directed the authorities to reconsider the revision application on its merits, emphasizing the need for a fair assessment process.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 699707 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 22-10-2019
• Assessment Year: misc
• Laws Referred To: Constitution of India, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Assessment Order; Condonation of delay; Income tax assessment; Revision application; Scrutiny; Writ of Mandamus
• Section: 144; 143(2); 264; 226

Judgement Text

"THE HONOURABLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HONOURABLE SRI JUSTICE CHEEKATI MANAVENDRANATH ROY WRIT PETITION No.8678 of 2019 ORDER:- (Per Hon’ble Sri Justice C.Praveen Kumar) The present Writ Petition came to be filed under Article 226 of the Constitution of India seeking issuance of writ of mandamus declaring the order in F.No.U/s.264/PCIT/TPT/2018-19, dated 25.03.2019, passed by respondent No.2, as illegal and arbitrary, and consequently, to set aside the same and direct respondent No.2 to condone the delay of 35 days in filing the revision application by the petitioner and hear the revision application on merits. 2. Heard the learned counsel for the petitioner, learned Assistant Solicitor General of India appearing for respondent No.1 and Smt M.Kiranmayee, learned Standing Counsel for Income Tax appearing for respondent Nos.2 and 3. 3. The circumstances which led to filing of the present writ petition may be stated as follows: The petitioner is a partnership firm engaged in the business of providing transportation services with loading and unloading. The petitioner has been engaged in the said business since 15 years and has been diligently filing its returns and paying its taxes accordingly. In the course of its business, the petitioner filed its e-return for the assessment year 2015-2016 on 17.10.2015 by admitting income to a tune of Rs.7,19,340/-. The petitioner’s case was selected for scrutiny on the premise that the petitioner had CPK, J & CMR, J W.P.No.8678 of 2019 2 shown low profits and booked large expenses in its profit and loss account. Accordingly, respondent No.3 issued a notice under Section 143 (2) of the Income Tax Act, 1961 (for short, “the Act”) on 28.07.2016 requesting the petitioner to produce its books of accounts in order to finalize the assessment proceedings. Thereafter, respondent No.3 issued a show cause notice, dated 17.11.2017, which was admittedly not served on the petitioner, and thereafter, another notice, dated 01.12.2017, was issued which was also not served on the petitioner. Despite the above two notices being not served on the petitioner, respondent No.3 proceeded to pass an assessment order, dated 29.12.2017, which was served on the petitioner on 02.01.2018, under Section 144 of the Act, estimating the income of the petitioner @ 4% of the gross receipts of Rs.13,25,24,636/- and assessed the income of the petitioner for the assessment year 2015-2016 at Rs.53,00,990/-. Aggrieved by the assessment order passed by respondent No.3, the petitioner preferred a revision application before respondent No.2 under Section 264 of the Act. Along with the revision application, the petitioner also preferred an application seeking condonation of delay of 35 days in filing the revision application. Rejection of the same led to filing of the present writ petition. 4. Learned counsel for the petitioner would submit that the delay in filing the revision application is neither willful nor wanton. It was urged stating that due to involvement in the business of transports, loading, unloading and realization of bills etc., the petitioner has no knowledge of Income Tax law and hence, pleads that some delay has occurred in preferring the revision, which CPK, J & CMR, J W.P.No.8678 of 2019 3 according to him is neither willful nor wanton. He pleads that if the delay is not condoned, the petitioner would be put to irreparable loss. 5. On the other hand, Smt M.Kiranmayee, learned Standing Counsel for Income Tax appearing for respondent Nos.2 and 3, would submit that since the petitioner is a partnership firm, definitely, it would have been advised and assisted by efficient auditors and the involvement of the petitioner in its day to day affairs would not be a valid ground for not filing the revision application within the period of limitation and that the explanation given in the application cannot be accepted. That apart, it is pleaded that in spite of the notice being served, the petitioner never approached the authorities and hence, contends that the request of the petitioner cannot be accepted. 6. Before proceeding further, it would be useful to refer to Section 264 (3) of the Act, which reads as under: “In the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier : Provided that the Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period.” 7. A reading of the above provision makes it clear that in case an application for revision under this section is to be made by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is CPK, J & CMR, J W.P.No.8678 of 2019 4 earlier. Proviso to Section 264 (3) of the Act postulates that the Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit the application made after expiry of that period. 8. From the above, it is clear that the case of the petitioner falls under the proviso to Section 264 (3) of the Act. Though the delay condone petition filed before the concerned is very cryptic in nature without explaining the day to day delay, we feel that having regard to the fact that the delay is only 35 days, it is just and proper to direct the authorities to consider the application, instead of rejecting the same on cryptic reasons. Hence, the order under challenge is set aside and the matter is remanded to respondent No.2/The Principal Commissioner of Income Tax, Tirupati to consider and decide the same on merits as expeditiously as possible. It is needless to mention that the writ petitioner shall cooperate with the authorities in deciding the revision application. 9. Accordingly, the Writ Petition is allowed and the matter is remanded back to respondent No.2. There shall be no order as to costs. Miscellaneous petitions pending, if any, in this Writ Petition shall stand closed. _______________________________ JUSTICE C.PRAVEEN KUMAR ________________________________________________ JUSTICE CHEEKATI MANAVENDRANATH ROY Date : 22.10.2019 AMD CPK, J & CMR, J W.P.No.8678 of 2019 5 THE HONOURABLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HONOURABLE SRI JUSTICE CHEEKATI MANAVENDRANATH ROY WRIT PETITION No.8678 of 2019 Date : 22.10.2019 AMD "