M/S. WEST FORT HIGHER EDUCATION TRUST V. THE INCOME TAX OFFICER

WP(C)/31599/2016

AI Insights

The case involves M/S. West Fort Higher Education Trust, represented by its managing trustee K.M. Mohandas, challenging an order (Ext.P5) by the Commissioner of Income Tax which denied condonation of delay in depositing accumulated funds for the assessment year 2010-11. The petitioner had accumulated `28 lakhs for future application under Section 11(2) of the Income Tax Act and sought an extension for the due date of filing the return and depositing the accumulated amount, citing oversight. The Commissioner rejected the application, leading to the writ petition. The court examined the powers granted to the Commissioner under the circular and the Act, ultimately deciding in favor of the petitioner.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 755477 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 22-11-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM; K M V PANDALAI
• Assessee Lawyers: HARISANKAR MENON; MEERA MENON
• Keywords: Assessment Year 2010-11; Condonation of delay; Income Tax; Reassessment; Trust
• Section: 119(2)(b); 11(2)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE TUESDAY, THE 22ND DAY OF NOVEMBER 2016/1ST AGRAHAYANA, 1938 WP(C).No. 31599 of 2016 (Y) ---------------------------- PETITIONER(S): ------------- M/S. WEST FORT HIGHER EDUCATION TRUST POTTORE, M.G.KAVU P.O., THRISSUR-680581, REPRESENTED BY ITS MANAGING TRUSTEE, K.M.MOHANDAS. BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT(S): -------------- 1. THE INCOME TAX OFFICER THRISSUR-680004. 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX (EXEMPTION) CR BUILDINGS, I.S.PRESS ROAD, KOCHI-682018. 3. THE COMMISSIONER OF INCOME TAX (EXEMPTION) C.R.BUILDING, I.S.PRESS ROAD, KOCHI-682018. R1 TO R3 BY ADVS. SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22-11-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: MLG WP(C).No. 31599 of 2016 (Y) ---------------------------- APPENDIX PETITIONER(S)' EXHIBITS ----------------------- EXHIBIT P1 COPY OF ORDER ISSUED BY THE 2ND RESPONDENT DATED 17-03-2015. EXHIBIT P2 COPY OF ORDER ISSUED BY THE 1ST RESPONDENT DATED 11-12-2015. EXHIBIT P3 COPY OF CIRCULAR ISSUED BY THE INCOME TAX DEPARTMENT DATED 03-06-1980. EXHIBIT P4 COPY OF APPLICATION SUBMITTED BY THE PETITIONER BEFORE THE 3RD RESPONDENT DATED 19-11-2015. EXHIBIT P5 COPY OF ORDER ISSUED BY THE 3RD RESPONDENT DATED 14-07-2016. RESPONDENT(S)' EXHIBITS NIL ----------------------- //TRUE COPY// P.S TO JUDGE MLG A.M. SHAFFIQUE, J. =============== W.P. (C) No. 31599 of 2016 ================== Dated this, the 22nd day of November, 2016 J U D G M E N T Petitioner challenges Ext.P5 issued by the Commissioner of Income Tax denying condonation of delay under Section 119(2)(b) of the Income Tax, 1961. 2. The short facts involved in the writ petition would disclose that with respect to the assessment year 2010-11, petitioner had accumulated `28 lakhs for future application under Section 11(2). Since the Board of taxes had extended the period for filing return for the said assessment year upto 15/10/2010, petitioner submitted its return on 13/10/2010 and deposited `28 lakhs on 11/10/2010. The 2nd respondent by order dated 17/3/2015 found that finalisation of the assessment by the 1st respondent by order dated 14/3/2013 was erroneous and prejudicial to the interest of the revenue and therefore direction was issued to make a reassessment. Pursuant to the same, Ext.P2 order had been passed refusing the benefits under the statute and assessing the petitioner to tax raising a demand of `12,96,280/-. Petitioner thereafter having taken note of Circular W.P(C) No.31599/16 -:2:- No.273 dated 3/6/1980 submitted an application, Ext.P4, seeking for condonation of delay for extending the due date of filing of the return of the income for the assessment year 2010-11 and for giving notice to deposit accumulated amount. This came to be rejected by Ext.P5 on the ground that though delay could be condoned for filing Form No.10, since the deposit of accumulation is made under Section 11(2), there is no provision in the circular to condone the delay. 3. Learned counsel for the petitioner places reliance on the circular itself especially clauses (b) and (d) of the circular by which the Commissioners were given power to entertain applications to condone delay in respect of the said items. Clauses (b) and (d) of Circular No.273 reads as under:- “(b) that the failure to give notice to the Income- tax Officer under section 11(2) of the Act and investment of the money in the prescribed securities was due only to oversight. (c) ..... (d) that the trust agrees to deposit its funds in the prescribed securities prior to the issue of the Government sanction extending the time under section 11(2)”. 4. A statement has been filed by the standing counsel inter alia supporting the stand taken by the Commissioner. W.P(C) No.31599/16 -:3:- 5. But it is relevant to note that when there is a specific provision enabling the Commissioner to condone delay even in respect of “investment of the money in the prescribed securities” if it is found to be on account of oversight, necessarily, the Commissioner can exercise the power under Section 119 (2)(b) of the Act. It is not confined to failure to give notice to the Income Tax Officer under Section 11(2) alone. Even under Clause (d) as extracted above, time can be extended under Section 11(2). There is no prohibition for condoning delay even if the deposit is made belatedly. Under such circumstances, I am of the view that there is justification on the part of the petitioner to challenge Ext.P5. Accordingly, this writ petition is allowed. Ext.P5 is set aside and the 3rd respondent is directed to reconsider the matter afresh in the light of the observations made above and an order may be passed within a period of two months from the date of receipt of a copy of this judgment. Sd/- A.M. SHAFFIQUE, JUDGE Rp22/11/2016 //True Copy// P.S to Judge "