High Court Of Kerala
Thomas John Muthoot Vs. ACIT
Section : 40(a)(ia),194A, 260A
Assessment Years : 2005-06 To 2007-08
P.R. Ramachandra Menon, J.
W.P. (C) Nos. 28582 & 28583 Of 2014
November 5, 2014
JUDGMENT
1. The petitioners have approached this court seeking for a direction to be issued to the second respondent to consider and pass appropriate orders on exhibit P3 petition filed under section 254(2) of the Income-tax Act, 1961, 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 exhibit P1 series orders for the different assessment years 2005-06, 2006-07 and 2007-08. On challenging the same by filing appeals, interference was declined and the appeals were dismissed as per exhibit P2 order dated August 28, 2014, passed by the second respondent. Since the vital points raised by the petitioner has been stated as omitted to be considered, exhibit P3 application for rectification has been filed under section 254(2) of the Income-tax Act and 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, invoking the second proviso to section 40(a)(ia), the rigour of the provision as to effect of non-deduction of tax payable 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 circumstances, proceedings have been finalised in respect of the sister concern, as borne by exhibits P5 to P7 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 exhibit P3 to be considered and disposed of. The learned counsel also points out that the second 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 Allahabad High Court. Referring to the decision rendered by the Madras Bench of the concerned Tribunal in C. O. No. 155 (Mds) of 2013 in I. T. A. 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 CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (which in turn has been followed by the Madras Bench of the Tribunal).
5. The learned standing counsel appearing for the respondents submits that, the idea and understanding of the petitioner is quite wrong and mis-conceived. It is stated that all the points raised from the part of the assessee have been considered as discernible from exhibit P2 order itself. The benefit of the amendment watering down the rigour of section 40(a)(ia) appeared in the statute book only by virtue of the amendment brought about with effect from April 1, 2013. The scope of the said provision has already been considered by the Division Bench of this court as per the decision in Prudential Logistics & Transports v. ITO [2014] 364 ITR 689/51 taxmann.com 426. It has been categorically held by the Bench in the said decision, that the amendment brought about with effect from April 1, 2013, cannot come to the rescue of the assessee in respect of the assessment of the previous years. It is also pointed out that the said decision rendered by this court has been referred to by the second respondent-Tribunal in exhibit 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. It is also pointed out that, the petition preferred by way of exhibit P3, stating that there is an error apparent on the face of the record, it is not liable to be entertained, as there is no error apparent on the face of the record at all. 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” to pursue such proceedings and seeks to intercept the coercive proceedings being taken in the meanwhile. The learned counsel also points out that in respect of W. P. (C.) No. 28582 of 2014, the petitioner has already satisfied liability to an extent of 81 per cent and in respect of the other case, the payment effected is to the tune of nearly 66 per cent.
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 available or valid and sustainable grounds. So as to enable the petitioner to pursue such exercise, coercive proceedings against the petitioner shall be kept in abeyance for a period of “two weeks”, on condition that the petitioner satisfies one-third of the balance liability to be cleared in both the cases, which shall be effected within “one week”.
Both the writ petitions are disposed of.
[Citation : 369 ITR 525]
