Kerala H.C : the respondents herein challenging exhibit P13 order by which their claim for refund was rejected on the ground that the returns for the assessment years 1996-97 and 1997-98 were filed belatedly and exhibit P16 order, declining to condone delay in filing the returns

High Court Of Kerala

DCIT vs. Vasco Sales & Marketing Corpn

Assessment Years : 1996-97 And 1997-98

Section : 119

Antony Dominic And Shaji P. Chaly, JJ.

W.A.No. 1152 Of 2013 And Wp(C) No. 24109 Of 2005

July 3, 2015

JUDGMENT

Antony Dominic, J. -This writ appeal is filed by the respondents in W. P. (C.) No. 24109 of 2005 (Vasco Sales & Marketing Corpn. v. Dy. CIT Error! Hyperlink reference not valid.). The writ petition was filed by the respondents herein challenging exhibit P13 order by which their claim for refund was rejected on the ground that the returns for the assessment years 1996-97 and 1997-98 were filed belatedly and exhibit P16 order, declining to condone delay in filing the returns. By the judgment under appeal, relying on the judgment of this court in Pala Marketing Co-operative Society Ltd. v. Union of India [2009] 311 ITR 177/[2008] 167 Taxman 238 (Ker), the learned single judge condoned the delay in applying for refund and remitted the case to the third appellant to reconsider the application for refund afresh and pass orders thereon. It is this judgment which is impugned before us.

2. We heard the learned counsel for the appellants and the learned counsel, appearing for the respondent.

3. Admittedly, the returns for the assessment years 1996-97 and 1997-98 were filed belatedly on June 30, 1998, and February 29, 2000, respectively. In these returns, the assessee claimed refund of the advance tax paid. Exhibit P13 order was passed rejecting their claim for refund on the ground that returns were filed after the due dates for both the assessment years and the claim for refund cannot be entertained. It was thereupon that the assessee filed exhibits P14 and P15 applications before the second appellant to condone the delay in terms of section 119(2)(b) of the Income-tax Act. On that application, exhibit P16 order was passed. In that order, the third appellant held that the returns were filed in response to the notices issued under section 148 and that in such a case, the assessee will not be entitled to claim refund of advance tax paid and relied on the judgment of the Bombay High court in K. Sudhakar S. Shanbhag v. ITO [2000] 241 ITR 865/[2003] 126 Taxman 476. The third appellant also held that the assessee has not properly explained the delay. It is these orders which are set aside by the learned single judge.

4. It is true that returns are to be filed before the due date under section 139(1) or (4) of the Income-tax Act and in cases where returns are belatedly filed or refund claims are made beyond the time provided in section 239 of the Act, refund cannot be claimed. However, section 119(2)(b) of the Act empowers the Central Board of Direct Taxes to authorise any income-tax authority, not being a Commissioner (Appeals), to admit an application or claim for any refund after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on the merits in accordance with law. As is evident from this section, the purpose of conferring such authority is for “avoiding genuine hardship”.

Section 119(2)(b) reads thus :

“119. (2)(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income-tax authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law.”

6. In the light of the above provision, when exhibits P14 and P15 applications were filed by the assessee, what was required to be examined was whether, to avoid genuine hardship to the assessee, it was necessary to condone the delay, in making the application for refund. Exhibit P16 order does not show that the Commissioner has examined exhibits P14 and P15 applications in the manner as required under section 119(2)(b). On the other hand, the Commissioner has discussed on the merits of the application and held that the delay has not been properly explained and that when the returns are filed in response to the notices issued under section 148, the assessee will not be entitled to claim refund of advance tax paid. In our view, such an order does not reflect a proper exercise of power under section 119(2)(b) and for that reason, exhibit P16 is unsustainable.

7. It is true that the Bombay High Court in the judgment in K. Sudhakar S. Shanbhag’s case (supra) has held that when the return is filed in response to a notice under section 148, the assessee is not entitled to claim refund. However, if the Commissioner condones the delay in exercise of his power under section 119(2)(b), the fact that the return was filed in response to a notice under section 148 would pale into insignificance.

8. In this case, according to us, when exhibit P16 order was passed in an improper manner, the learned single judge ought to have directed reconsideration of exhibits P14 and P15 instead of condoning the delay by himself. Therefore, while we are inclined to agree with the learned single judge on the unsustainability of exhibits P13 and P16 orders, according to us, the proper consequential order to be passed is to direct reconsideration of exhibits P14 and P15 with a direction to pass fresh orders in the matter.

9. Therefore, we set aside the judgment of the learned single judge to the extent the delay is condoned and dispose of the writ appeal quashing exhibits P13 and P16 orders and directing the competent authority among the appellants to reconsider exhibits P14 and P15 and pass orders thereon in the light of section 119(2)(b) of the Income-tax Act. This shall be done at any rate within two months from the date of receipt of a copy of this judgment.

10. Writ appeal is disposed of as above.

[Citation : 377 ITR 318]