SHRI HINGULAMBIKA CO OPERATIVE V. THE COMMISSIONER OF INCOME TAX

WP/5235/2008

AI Insights

The case involves Shri Hingulambika Co-operative Housing Society Limited, which filed a writ petition against the Income Tax authorities challenging the rejection of their claim for a refund of excess tax paid and waiver of interest under Sections 234A, 234B, and 234C of the Income Tax Act, 1961. The petitioner argued that the rejection was based on the belated filing of returns, which should not preclude the refund of excess tax paid. The respondents contended that the returns were not filed voluntarily and thus, the petitioner was not entitled to a refund or waiver of interest. The court examined the legality of the orders passed by the Revisional Authority and the Chief Commissioner of Income Tax, focusing on whether the belated filing of returns by the petitioner precluded them from receiving a refund of excess tax paid.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 761275 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 02-03-2017
• Assessment Year: misc
• Other Referred Cases: A.Balakrishnan vs. General Manager, Hindustan Machine Tools Ltd. & Anr., Commissioner of Income Tax vs. Shelly Products and Another, Commissioner of Income Tax vs. Vatika Township P.Ltd., Dwarka Nath vs. Income Tax Officer & Anr., Smt.Mohammadi Begum & Anr. vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961, Co-operative Societies Act, 1978, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AMEET KUMAR DESHPANDE
• Assessee Lawyers: V K GURUNATHAN; G B YADAV
• Keywords: Belated returns; Income Tax; Refund of excess tax; Revisional Authority; Waiver of interest; Writ petition
• Section: 147; 234B; 133A; 264; 234A; 234C; 226; 140A

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE 2ND DAY OF MARCH 2017 BEFORE THE HON’BLE MRS.JUSTICE RATHNAKALA WRIT PETITION NO.5235/2008 (T-IT) Between: Shri Hingulambika Co-operative Housing Society Limited Tilak Road Bijapur-586 101 Rep. by its Secretary Sri Sripathi Rao Aged about 43 years Son of Sri Hanumantha Rao Saraf. … Petitioner (By Sri.V.K.Gurunathan & Sri.G.B.Yadav, Advs. For Sri.S.Parthasarathi, Adv.) And: 1. The Commissioner of Income-tax Opp.Civil Hospital Dr.Ambedkar Road Belgaum-590 001. 2. The Chief Commissioner of Income-tax Aayakar Bhavan, Plot No.5 EDC Complex, Patto Plaza Panaji-403 001. 3. The Income-tax Officer Ward-I 2 Aayakar Bhavan, Near All India Radio Athani Road Bijapur-586 101. … Respondents (By Sri.Ameetkumar Deshpande, Adv.) This Writ Petition is filed under Article 226 of the Constitution of India, praying to quash the order of respondent No.1 dt.3.10.2006 under Section 264 of the Act for the assessment years 1991-92, 1993-94, 1997-98 and 1998-99 vide Annex.F, etc. This Petition having been heard and reserved for orders on 22.2.2017 and coming on for pronouncement of order this day, the court made the following: O R D E R Petitioner/a Co-operative Society registered under the Co-operative Societies Act, 1978, is aggrieved by the rejection of its claim for refund of excess Tax paid/waiver of interest under Section 234A, 234B and 234C of the Income Tax Act, 1961 (‘the Act’ for brevity) by the respondent/Authorities. 2. Facts relevant for the present case is, after a survey under Section 133A of the Act on 12.1.2001, the petitioner filed its returns for the assessment years 1991- 92 to 1998-99 and paid tax on self-assessment under 3 Section 140A of the Act; on 8.2.2006, revised returns was filed claiming refund of excess tax paid. The third respondent/Assessing Officer vide his letter Annexure-D declined to consider the claim on the ground that original returns of income and revised returns were filed belatedly. The revision filed under Section 264 of the Act thereon before the first respondent/Commissioner of Income Tax was rejected on the sole ground that no order is passed by Assessing Officer on the prayer of the petitioner for refund of excess of tax paid. The petitioner made another effort before 2nd respondent/Chief Commissioner of Income Tax seeking waiver of interest levied under Sections 234A, 234B and 234C of the Act. After enquiry, said application was rejected vide Annexure-H. The reason assigned for rejection was, the returns was not voluntarily filed by the petitioner but consequent upon survey conducted under Section 133A of the Act; though the income was chargeable to tax, it was not paid well in advance on due dates and it was self-assessment; the interest is rightly charged for not 4 having filed returns voluntarily qua detecting by the Department and for not paying tax in advance on the due date. 3. Sri.V.K.Gurunathan, learned Counsel for the petitioner assailing the above three orders of the Authorities submits that the Assessing Officer gravely erred in rejecting refund on the ground of delayed returns and delayed revised returns. Since the Assessing Authority had accepted that the returns were belated, then there is no returns, thus there is no tax. The tax paid by the petitioner, since is wrongly withheld by the Revenue, same is liable to be refunded to the petitioner. The endorsement at Annexure-D issued by Assessing Authority/3rd respondent, declining the prayer of the petitioner for refund of excess of Tax collected is therefore an order under the Act amenable for revision under Section 264 of the Act. The Revisional Authority failed to exercise his jurisdiction over the order of Assessing 5 Authority, which is prejudicial to the interest of the assessee/petitioner. The payment made by the assessee was not self-assessment Tax and there were no valid proceedings under the Act. The calculation of interest by the assessee was wrong and the second respondent by appreciating the said fact should have directed the Authorities to refund the interest as prayed by petitioner. Without verifying the error or otherwise of calculation of interest, the second respondent has rejected waiver of interest for extraneous reasons, thus, the orders at Annexures-F and H be quashed directing Authorities to waive interest/refund the excess tax paid to the petitioner. 4. Sri.Ameetkumar Deshpande, learned Counsel appearing for the respondents while seeking to sustain the orders under challenge submits that the petitioner having not filed returns within stipulated period by its own conduct prevented the Assessing Authority from assessing 6 its returns for yesteryears. The revised returns was still more belated. When there is no assessment of returns, thus there is no order under the Act, which was amenable for revisional jurisdiction. Likewise waiver of interest in respect of non-est proceedings cannot be allowed and this petition is misconceived. Very filing of the returns by the petitioner indicates that it admits its liability to pay tax. It is its self-serving statement that tax paid is excess despite there being no order by the Assessing Officer. 5. With the above rival submissions, the short question that arises for consideration is on the legality of the order passed by Revisional Authority and Chief Commissioner of Income Tax in rejecting the prayer of assessee. 6. The respondent/Authorities are in agreement on one fact that belated returns cannot be revisited. But under Section 147 of the Act, the Assessing Officer is authorized to assess reasonable income escaping 7 assessment within a period of four years of returns. That being so, the returns filed by the petitioner which was within the limitation of four years was within the propriety of Assessing Officer, which was overlooked by him. Then it follows that the Revisional Authority had every authority over the returns and revised returns of the petitioner, though was not assessed by the Assessing Officer. Instead of disposing off the revision petition on its merits, it is disposed with a sweeping remark that no order is passed by the Assessing Officer. 7. This Court in the matter of A.Balakrishnan –vs- General Manager, Hindustan Machine Tools Ltd. & Anr. ([2007] 290 ITR 227 [Kar]) held that the Income-tax authorities are duty bound to process a return claiming refund even though filed beyond the period prescribed under Sections 139(1) and 139(4) of the Income Tax Act, 1961, said finding was upheld by the Division Bench of this Court. The Apex Court in Commissioner of Income 8 Tax –vs- Shelly Products and Another ([2003] 261 ITR 367(SC)] & Commissioner of Income Tax –vs- Vatika Township P.Ltd. [(2014) 367 ITR 466 (SC)] observed thus: “13.2 Further, where the assessment had been annulled in appeal, say for want of jurisdiction or for any other technical reason, and such annulment became final, the judicial pronouncement did not permit retention of even the tax due on the basis of the returned income. Several High Courts had held that in such a case even the tax paid by way of tax deducted at source or advance tax and the tax which was due on the basis of the returned income had to be refunded to the assessee. Equity demanded that even where an assessment was annulled for any reason, the liability of the assessee, at least to the extent of tax payable on the basis of the income declared in the return, should remain. To overcome this difficulty and to make the position clear, the proviso to section 240, inserted by the Amending Act, 1987, provides that where the assessment is annulled, the refund shall become due only in respect of the amount, if any, 9 paid in excess of the tax chargeable on the total income returned by the assessee.” That explains the onus of the authorities under the Act when a refund is claimed. 8. With regard to the submission that Annexure-D is not an order amenable for revisional jurisdiction, it is worthwhile to recall the observation of the Apex Court in Dwarka Nath –vs- Income Tax Officer & Anr. [(1965) 57 ITR 349] wherein it is held thus: “8. . . . . . That apart, on the assumption that the order of the CIT under s.33A of the Act was an administrative one, the respondent would not be in a better position. What the appellant complains is that the ITO in terms of s.29 of the Act is under an obligation to issue a demand notice. If the said contention was correct, he did not discharge the duty imposed on him by the statute. If the CIT only made an administrative order in refusing to give any direction to the ITO, it would not exonerate the said officer from discharging his statutory duty. In that event the 10 assessee would certainly be entitled to approach the High Court under Art.226 of the Constitution for the issue of a writ of mandamus or other appropriate direction to the ITO to discharge his statutory duty. We, therefore, reject the preliminary objection of the respondents.” 9. In Smt.Mohammadi Begum & Anr. –vs- Commissioner of Income Tax ([1985] 49 CTR 90(AP), the argument advanced on behalf of the assessee that the revisional powers of the CIT under Section 264 of the IT Act should be exercised within the period of limitation fixed by the statute for the ITO to complete his assessment was not appreciated. But in the matrix on hand, the revisional authority contained from exercising its jurisdiction for the sole reason that there was no assessment of the returns/revised returns by the Assessing Officer and the same was not proper and it needs to be quashed and matter has to be considered on merits. 11 For the discussion made supra, the petition is allowed. The order of the 1st respondent dated 3.10.2006 as at Annexure-F and the order of 2nd respondent dated 21.1.2008 as at Annexure-H are hereby quashed. The second respondent is directed to re-consider the application of the petitioner at Annexure-G afresh in accordance with law after giving opportunity to both sides. Sd/- JUDGE KNM/- "