SHRI.THOMAS GEORGE MUTHOOT V. THE ASSISTANT COMMISSIONER OF INCOME TAX

WP(C)/27987/2014

AI Insights

The case involves Shri Thomas George Muthoot, the petitioner, who challenged the assessment orders for the years 2006-07 and 2007-08 issued by the Assistant Commissioner of Income Tax. The petitioner argued that the Income Tax Appellate Tribunal (ITAT) failed to consider vital points in his rectification application under Section 254(2) of the Income Tax Act, leading to an error apparent on the record. The ITAT had previously dismissed the petitioner's appeals against the assessment orders. The petitioner sought the High Court's intervention to direct the ITAT to consider his rectification application, while the respondents contended that all points raised had been considered and that the legal amendments cited by the petitioner did not apply retrospectively to the assessment years in question.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 768338 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 06-11-2014
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax Vs. Vegetable Products Ltd., Prudential Logistics and Transports, Calcutta High Court, Gujarat High Court, Allehabad High Court, Madras Bench of the Tribunal
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Assessment Order; Coercive Proceedings; Error apparent; Income Tax; Interest payment; Rectification; Tax Deduction
• Section: 254(2); 40(a)(ia); 260A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 6TH DAY OF NOVEMBER 2014/15TH KARTHIKA, 1936 WP(C).No. 27987 of 2014 (W) ---------------------------- PETITIONER: ------------------- SHRI.THOMAS GEORGE MUTHOOT, MUTHOOT HOUSE, KOZHENCHERRY, PATHANAMTHITTA DISTRICT, PIN:689 641. BY SRI.T.M.SREEDHARAN (SENIOR ADVOCATE) ADVS. SRI.V.P.NARAYANAN SMT.VANDANA MENON SMT.DIVYA RAVINDRAN RESPONDENT(S): ------------------------- 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -I, ENNIKKATTIL ESTATE, NEAR K.S.R.T.C BUS STATION, THIRUVALLA - 689 647. 2. THE ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, IST FLOOR, (BLOCK C-1 & C-II), KENDRIYA BHAVAN, OPP. CSEZ, KAKKANAD, COCHIN-682037. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06-11-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: mbr/ WP(C).No. 27987 of 2014 (W) ---------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS: ------------------------------------- EXHIBIT P1: TRUE COPY OF ASSESSMENT ORDER AND DEEMAND NOTICE DATED 27.12.2011 FOR THE ASSESSMENT YEAR 2006-07 PASSED BY THE FIRST RESPONDENT. EXT. P1(A): TRUE COPY OF -DO- FOR THE ASSESSMENT YEAR 2007-08 PASSED BY THE FIRST RESPONDENT. EXHIBIT P2: TRUE COPY OF COMMON APPELLATE ORDER DATED 28.8.2014 IN I.T.A.NO.63&64/COCH/214 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN, FOR AY-2006-07 & 2007-08. EXHIBIT P3: TRUE COPY OF MISCELLANEOUS PETITION 13.9.2014 FILED BY THE PETITIONER BEFORE THE ITAT , COCHIN BENCH. EXHIBIT P4: TRUE COPY OF CERTIFICATE DATED 26.2.2014 ISSUED BY THE CHARTERED ACCOUNTANT. EXHIBIT P5: TRUE COPY OF THE ORDER NO.TVDTO1734F/AE/13-14 DATED 31.3.2014 ISSUED BY THE DY. COMMISSIONER OF INCOME TAX (TDS), KOTTAYAM FOR AY-2006-07. EXHIBIT P6: TRUE COPY OF THE ORDER NO.TVDTO1734F/AE/13-14 DATED 31.3.2014 ISSUED BY THE DY. COMMISSIONER OF INCOME TAX (TDS), KOTTAYAM FOR AY-2007-08. EXHIBIT P7: TRUE COPY OF SHOW CAUSE NOTICE DATED 23.9.2014 ISSUED BY THE FIRST RESPONDENT. RESPONDENT(S)' EXHIBITS: - NIL --------------------------------------- /TRUE COPY/ P.A. TO JUDGE mbr/ P.R. RAMACHANDRA MENON, J. --------------------------------------- W.P.(C) No.27987 of 2014 --------------------------------------- Dated this the 6th day of November, 2014. JUDGMENT The petitioner has approached this Court seeking for a direction to be issued to the 1st respondent to consider and pass appropriate orders on Ext.P3 petition filed under Section 254(2) of the Income Tax Act, mainly pointing out that the contention raised by the petitioner/assessee particularly in paragraph 12 of the written submissions of the note submitted before the said respondent has not been considered and as such, there is an error apparent on the face of the record, to be acted upon by this Court. 2. The case of the petitioner is that, the assessment was finalised as per Ext.P1 series orders for the different assessment years 2006-2007 and 2007-2008. On challenging the same by filing appeals, interference was declined and the appeals were dismissed as per Ext.P2 order dated 28.08.2014 passed by the 2nd respondent. Since the vital points raised by the petitioner W.P.(C) No.27987 of 2014 2 have been stated as omitted to be considered, Ext.P3 application for rectification has been filed under Section 254(2) of the Income Tax Act. Petitioner has approached this Court by filing this writ petition against the coercive proceedings taken in the meanwhile. 3. Heard the learned Senior Counsel Sri. T.M Sreedharan, appearing for the petitioner, as well as the learned Standing Counsel appearing for the respondents as well. 4. The learned Senior Counsel appearing for the petitioner submits that, by virtue of the amendment of the statute, incorporating the second proviso to Section 40(a)(ia), the rigour of the provision as to effect of non-deduction of tax payable on interest paid has been virtually watered down. It is stated that, the assessment was finalised in the case of the petitioner, disallowing the claim for interest paid by the petitioner to the sister concern, in connection with the borrowal of money in the course of transactions. It is stated that, the sister concern of the petitioner has already satisfied the entire tax and in the said W.P.(C) No.27987 of 2014 3 circumstances, proceedings have been finalised in respect of the sister concern, as borne by Exts.P5 and P6 orders passed by the Deputy Commissioner of Income Tax (TDS) for the concerned assessment years. This being the position, there is absolutely no rhyme or reason to have proceeded against the petitioner and hence this writ petition, to cause Ext.P3 to be considered and disposed of. The learned counsel also points out that, the 2nd respondent has relied on the decision rendered by the Calcutta High Court as well as the Gujarat High Court, without any regard to the law declared by the Allehabad High Court. Referring to the decision rendered by the Madras Bench of the concerned Tribunal in C.O. No.155(Mds) of 2013 in ITA No.2076 of 2012, the learned Senior Counsel points out that, if two views are available, the one which is favourable to the assessee has to be adopted, in view of the law declared by the Apex Court as per the law declared in (1973) 88 ITR 192 (SC) (Commissioner of Income Tax Vs. Vegetable Products Ltd.) (which in turn has been followed by the Madras Bench of the Tribunal). W.P.(C) No.27987 of 2014 4 5. The learned Standing Counsel appearing for the respondents submits that, the idea and understanding of the petitioner is quite wrong and misconceived. It is stated that, all the points raised from the part of the assessee have been considered as discernible from Ext.P2 order itself. The benefit of amendment watering down the rigour of Section 40(a)(ia) got into in the statute book only by virtue of the amendment brought about with effect from 01.04.2013. The scope of the said provision has already been considered by a Division Bench of this Court as per the decision reported in Prudential Logistics and Transports (2014 (364) ITR 689. It has been categorically held by the Bench, that the amendment brought about with effect from 01.04.2013 cannot come to the rescue of the assessee in respect of the assessment for previous years. It is also pointed out that, the said decision rendered by this Court has been referred to by the 2nd respondent/Tribunal in Ext.P2 order. The Tribunal, being bound by the verdict passed by the jurisdictional High Court, there is 'no error apparent on the face of the record' W.P.(C) No.27987 of 2014 5 to entertain the petition preferred by way of Ext.P3. It is also brought to the notice of this Court that the petitioner is still having a remedy by way of appeal, as provided under Section 260A of the Income Tax Act, if any substantial question of law is involved. 6. The learned Senior Counsel appearing for the petitioner submits that, the petitioner is ready and willing to pursue the said remedy and seeks for some breathing time by way of 'two weeks' and seeks to intercept the coercive proceedings being taken in the meanwhile. The learned counsel also points out that, the petitioner has already satisfied the liability to an extent of 68% and the balance remaining is only 32%. 7. After hearing both the sides, this Court holds that the remedy available to the petitioner, if at all aggrieved, is by way of Section 260A of the Income Tax Act. It is open for the petitioner to pursue such remedy in accordance with law and subject to valid and sustainable grounds. So as to enable the petitioner to pursue such exercise, coercive proceedings against W.P.(C) No.27987 of 2014 6 the petitioner shall be kept in abeyance for a period of 'two weeks', on condition that the petitioner satisfies 1/3rd of the balance liability to be cleared in both the cases, which shall be effected within 'one week'. The writ petition is disposed of. P.R. RAMACHANDRA MENON, JUDGE sp "