GREEN HOPPER HOTELS AND RESORTS PVT. LTD., vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX,

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WP(C)/19397/2024HC KeralaKLHC01110033202401 August 2024Author: HONOURABLE MR. JUSTICE GOPINATH P.12 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the writ petitions by directing the Principal Commissioner of Income Tax to consider the petitioner's applications filed under Section 119(2)(b) of the Income Tax Act, 1961, for the assessment years 2018-2019, 2021-2022, and 2022-2023. The Court directed that the petitioner should file its returns, taking into consideration the orders passed by the Principal Commissioner. The matter would then proceed in accordance with law. The Court explicitly stated that it had not expressed any opinion on the merits of the contentions raised by either side, including whether the petitioner was or was not required to file an audit report under Section 44AB. The operative direction was to consider the pending applications and allow the process to continue.

What were the facts?

The petitioner, Green Hopper Hotels and Resorts Pvt. Ltd., filed income tax returns for assessment years 2017-2018, 2018-2019, 2021-2022, and 2022-2023 without the audit report mandated by Section 44AB of the Income Tax Act, 1961. Consequently, the returns were treated as invalid. The petitioner filed applications under Section 119(2)(b) of the Act seeking condonation of delay in filing these returns. The petitioner contended that an audit report was not required as its income was not from 'profit and gains of business' but solely from 'income from other sources'. The application for the 2017-2018 assessment year was allowed by the Commissioner, while applications for the other years were pending. The Revenue contended that the petitioner was indeed required to file an audit report.

What were the issues?

1. Whether the petitioner was required to file an audit report under Section 44AB of the Income Tax Act, 1961, for the assessment years in question, given its income was solely from 'income from other sources' and not 'profit and gains of business'? (Question of law) Assessee's Contention: The petitioner argued that Section 44AB was not applicable as its income was not derived from business profits but from 'income from other sources'. Revenue's Contention: The Revenue contended that the petitioner's assertion of not being required to file an audit report under Section 44AB was incorrect. However, acknowledging that the application for 2017-2018 was allowed, the Revenue submitted that the pending applications could be directed for disposal, and subsequent acceptance of returns could be decided by the assessing officer under the Faceless Assessment Scheme.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 119(2)(b)

AI-generated summary — verify with the full judgment below

Heard together (4 matters)

WP(C) NO. 19223 OF 2024
WP(C).19397/2024
WP(C) NO. 20056 OF 2024
WP(C) NO. 20090 OF 2024

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 1ST DAY OF AUGUST 2024 / 10TH SRAVANA, 1946 WP(C) NO. 19223 OF 2024 PETITIONER: GREEN HOPPER HOTELS AND RESORTS PVT. LTD., 11/161A, MLA ROAD, CHERAI BEACH, COCHIN,PIN – 683 514, REP BY ITS MANAGING DIRECTOR MR. M.D. KURIAKOSE. BY ADVS. V.B.HARI NARAYANAN FAZEEN FAISAL KOMBANEZHUTH NAMRIN SHAJU RESPONDENTS: 1 THE PRINCIPAL COMMISSIONER OF INCOME TAX, I.S. PRESS ROAD, COCHIN, PIN – 682 018. 2 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE (I), I.S. PRESS ROAD, COCHIN, PIN – 682 018. BY ADVS. SRI. JOSE JOSEPH (SR. SC), SRI. CYIRAC TOM (JR. SC). THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.08.2024, ALONG WITH WP(C).19397/2024, 20056/2024 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)Nos.19223 of 2024 and conn.cases 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 1ST DAY OF AUGUST 2024 / 10TH SRAVANA, 1946 WP(C) NO. 19397 OF 2024 PETITIONER: GREEN HOPPER HOTELS AND RESORTS PVT. LTD., 11/16LA, MLA ROAD, CHERAI BEACH, COCHIN, REP BY ITS MANAGING DIRECTOR, M.D. KURIAKOSE, PIN – 683 514. BY ADVS. V.B.HARI NARAYANAN FAZEEN FAISAL KOMBANEZHUTH NAMRIN SHAJU RESPONDENTS: 1 THE PRINCIPAL COMMISSIONER OF INCOME TAX, I.S. PRESS ROAD, COCHIN, PIN – 682 018. 2 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE (1), I.S. PRESS ROAD, COCHIN, PIN – 682 018. BY ADVS. SRI. JOSE JOSEPH (SR. SC), SRI. CYIRAC TOM (JR. SC). THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.08.2024, ALONG WITH WP(C).19223/2024 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)Nos.19223 of 2024 and conn.cases 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 1ST DAY OF AUGUST 2024 / 10TH SRAVANA, 1946 WP(C) NO. 20056 OF 2024 PETITIONER: GREEN HOPPER HOTELS AND RESORTS PVT. LTD., 11/161A, MLA ROAD, CHERAI BEACH, COCHIN, REP BY ITS MANAGING DIRECTOR MR. M.D. KURIAKOSE, PIN – 683 514. BY ADVS. V.B.HARI NARAYANAN FAZEEN FAISAL KOMBANEZHUTH NAMRIN SHAJU RESPONDENTS: 1 THE PRINCIPAL COMMISSIONER OF INCOME TAX, INCOME TAX BUILDING, I.S. PRESS ROAD, COCHIN, PIN – 682 018. 2 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE (I), INCOME TAX BUILDING, I.S. PRESS ROAD, COCHIN, PIN – 682 018. BY ADVS. SRI. JOSE JOSEPH (SR. SC), SRI. CYIRAC TOM (JR. SC). THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.08.2024, ALONG WITH WP(C).19223/2024 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)Nos.19223 of 2024 and conn.cases 4 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 1ST DAY OF AUGUST 2024 / 10TH SRAVANA, 1946 WP(C) NO. 20090 OF 2024 PETITIONERS: GREEN HOPPER HOTELS AND RESORTS PVT LTD, 11/161A, MLA ROAD, CHERAI BEACH, COCHIN, REP BY ITS MANAGING DIRECTOR, MR. MD KURIAKOSE, PIN – 683 514. BY ADVS. V.B.HARI NARAYANAN FAZEEN FAISAL KOMBANEZHUTH NAMRIN SHAJU RESPONDENTS: 1 THE PRINCIPAL COMMISSIONER OF INCOME TAX, INCOME TAX BUILDING, I.S. PRESS ROAD, COCHIN, PIN – 682 018. 2 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE (1),I.S. PRESS ROAD, COCHIN, PIN – 682 018. BY ADVS. SRI. JOSE JOSEPH (SR. SC), SRI. CYIRAC TOM (JR. SC). THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.08.2024, ALONG WITH WP(C).19223/2024 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)Nos.19223 of 2024 and conn.cases 5

JUDGMENT [WP(C) Nos.19223, 19397, 20056 and 20090 of 2024] The petitioner is common in all these writ petitions. The issues are identical and the writ petitions can

therefore be disposed of by a common judgment.

2.

The admitted facts are that the petitioner filed returns of income for the years 2017-2018, 2018-2019, 2021-2022 and 2022-2023, without an audit report as mandated by Section 44AB of the Income Tax Act, 1961 (hereinafter referred to as the ‘1961 Act’). The returns were therefore treated as invalid. The petitioner filed separate applications under Section 119(2)(b) of the 1961 Act praying for condonation of delay in filing the returns for the aforesaid years. It is the case of the petitioner that the petitioner is not required, in terms of the provisions of the 1961 Act, to upload an audit report, as the income of the petitioner is not income under the head of ‘profit and gains of business’ and the only income is ‘income from other sources’. It is submitted at the Bar that the application filed by the petitioner under Section 119(2)(b) for the year 2017-2018 has already been allowed by the Commissioner. It is submitted that the applications for the other years, namely 2018-2019, 2021- 2022 and 2022-2023, are pending consideration of the Commissioner.

3.

The learned Standing Counsel appearing for the Income Tax Department submits that the contention of the petitioner that it is not required to file a return along with an audit report as contemplated by the provisions of Section 44AB of the 1961 Act is absolutely incorrect. However, it is submitted that since the application of the petitioner under Section 119(2)(b) of the 1961 Act for the year 2017-2018 has already been allowed by the Commissioner, the applications filed by the petitioner for the other years can also be directed to be disposed of, and thereafter, if the petitioner were to file returns within the time granted in terms of the order passed under Section 119(2)(b) of the 1961 Act, the question as to whether the returns can be accepted can be taken by the competent assessing officer under the Faceless Assessment Scheme.

4.

Having heard the learned counsel for the petitioner and the learned Standing Counsel appearing for the Income Tax Department, these writ petitions will stand disposed of directing that the applications filed by the petitioner under Section 119(2)(b) of the 1961 Act for the years 2018-2019, 2021-2022 and 2022-2023 shall be considered by the Principal Commissioner of Income Tax (1st respondent). The petitioner shall file its returns taking into consideration the orders passed by the Principal Commissioner of Income Tax (if not already filed) and thereafter the matter shall be proceeded with in accordance with the law. I make it clear that I have not expressed any opinion on the merits of the contentions raised by either side including the contention that the petitioner is/is not required to file an audit report in terms of the provisions contained in Section 44 AB of the 1961 Act. Writ petitions are disposed of as above. GOPINATH P. JUDGE ats

Appendix — schedule of exhibits
APPENDIX OF WP(C) 19223/2024 PETITIONER’S EXHIBITS Exhibit P1 A COPY OF THE LEASE DEED DATED 07/05/2013. Exhibit P2 A COPY OF THE RETURN AND COMPUTATION DATED 24/10/2017. Exhibit P3 A COPY OF THE REFUND ORDER ALLOWING REFUND FOR THE ASSESSMENT YEAR 2016-17. Exhibit P4 A COPY OF THE SCREENSHOT FROM THE INCOME TAX PORTAL STATING THAT THE RETURNS FILED BY THE PETITIONER IS INVALID AS PER SECTION 139(9) OF THE INCOME TAX ACT 1961. Exhibit P5 A COPY OF THE REQUEST SUBMITTED ONLINE DATED 26/01/2024. Exhibit P6 A COPY OF THE APPLICATION FILED UNDER SECTION 119(2)(B) FOR CONDONATION OF DELAY SUBMITTED BEFORE THE 1ST RESPONDENT DATED 15/03/2024. Exhibit P7 A COPY OF THE ACKNOWLEDGEMENT SHOWING RECEIPT OF EXHIBIT P6 APPLICATION FOR CONDONATION OF DELAY. W.P.(C)Nos.19223 of 2024 and conn.cases 10 APPENDIX OF WP(C) 19397/2024 PETITIONER’S EXHIBITS Exhibit P1 TRUE COPY OF THE LEASE DEED DATED 19/04/2018. Exhibit P2 TRUE COPY OF THE RETURN AND COMPUTATION DATED 18/2/2022. Exhibit P3 TRUE COPY OF THE ORDER ALLOWING REFUND FOR THE ASSESSMENT YEAR 2020-2021. Exhibit P4 TRUE COPY OF THE INTIMATION DATED 27/12/22 TO THE PETITIONER. Exhibit P5 TRUE COPY OF THE APPEAL IN FORM NUMBER 35 DATED 23/1/2023 TOGETHER WITH THE GROUNDS OF APPEAL. Exhibit P6 TRUE COPY OF THE APPLICATION FOR RECTIFICATION DATED 20/1/2023. Exhibit P7 TRUE COPY OF THE APPLICATION FILED UNDER SECTION 119(2)(B) FOR CONDONATION OF DELAY SUBMITTED BEFORE THE 1 ST RESPONDENT DATED 20/03/2024. Exhibit P8 TRUE COPY OF THE ACKNOWLEDGEMENT SHOWING RECEIPT OF EXHIBIT P7 APPLICATION FOR CONDONATION OF DELAY. W.P.(C)Nos.19223 of 2024 and conn.cases 11 APPENDIX OF WP(C) 20056/2024 PETITIONER’S EXHIBITS Exhibit P1 A COPY OF THE LEASE DEED DATED 19/04/2018. Exhibit P2 A COPY OF THE RETURN AND COMPUTATION DATED 29/10/2018. Exhibit P3 A COPY OF THE REFUND ORDER ALLOWING REFUND FOR THE ASSESSMENT YEAR 2016-17. Exhibit P4 A COPY OF THE SCREENSHOT FROM THE INCOME TAX PORTAL STATING THAT THE RETURNS FILED BY THE PETITIONER IS INVALID AS PER SECTION 139(9) OF THE INCOME TAX ACT 1961. Exhibit P5 A COPY OF THE REQUEST SUBMITTED ONLINE DATED 26/01/2024. Exhibit P6 A COPY OF THE APPLICATION FILED UNDER SECTION LL9(2)(B) FOR CONDONATION OF DELAY SUBMITTED BEFORE THE 1ST RESPONDENT DATED 13/03/2024. Exhibit P7 A COPY OF THE ACKNOWLEDGEMENT SHOWING RECEIPT OF EXHIBIT P6 APPLICATION FOR CONDONATION OF DELAY. W.P.(C)Nos.19223 of 2024 and conn.cases 12 APPENDIX OF WP(C) 20090/2024 PETITIONER’S EXHIBITS Exhibit P1 A COPY OF THE LEASE DEED DATED 19/04/2018. Exhibit P2 A COPY OF THE RETURN AND COMPUTATION DATED 26/10/2022. Exhibit P3 A COPY OF THE INCOME TAX RETURN ALLOWING REFUND FOR THE ASSESSMENT YEAR 2020-2021. Exhibit P4 A COPY OF THE INTIMATION DATED 14/12/22 TO THE PETITIONER. Exhibit P5 A COPY OF THE RESPONSE TO DEFECTIVE NOTICE DATED 29/12/22. Exhibit P6 A COPY OF THE INTIMATION DATED 15/12/2023 INVALIDATING THE RETURN. Exhibit P7 A COPY OF THE APPLICATION FILED UNDER SECTION 119(2)(B) FOR CONDONATION OF DELAY SUBMITTED BEFORE THE 1ST RESPONDENT DATED 20/03/2024. Exhibit P8 A COPY OF THE ACKNOWLEDGEMENT SHOWING RECEIPT OF EXHIBIT P7 APPLICATION FOR CONDONATION OF DELAY.

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