DAISY vs. PRINCIPAL COMMISSIONER OF INCOME TAX

Heard Sri.S.Krishnamoorthy, learned counsel for the petitioner and Sri.Christopher Abraham, learned Standing Counsel for the Income Tax Department.

This writ petition has been filed under Article 226 of the Constitution of India impugning the order dated 26.05.2017 passed under Section 119(2)(b) of the Income Tax Act, 1961(herein after referred to as ‘IT Act’) by the Commissioner of Income Tax, Thiruvananthapuram, whereby the application filed by the petitioner under Section 119(2)(b) of the IT Act has been rejected

The petitioner filed return of the income for the assessment year 2012-13 on 19.08.2015, showing ‘nil’ total income. The due date for filing the return was 31.07.2012. When the return was filed beyond the prescribed time limit, the same was processed under Section 139 of the IT Act.

Circular No.9/2015 dated 09.06.2015 prescribes the conditions for condonation of delay in processing the claim for refund by an assessee. The said circular has been placed on record with the writ petition as Ext.P10. The powers of acceptance or rejection of the applications within the monetary limits, had been delegated to the Principal Chief Commissioner of Income Tax. However, such power has to be exercised on following two conditions; i. At the time of considering the case under Section 119(2)(b), it shall be ensured that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits; ii.

The aforesaid circular further provides that a belated application for supplementary claim of refund can be admitted for condonation provided other conditions as referred to above, are to be fulfilled. Those conditions are; (i) The income of the assessee is not assessable in the hands of any other person under anyof the provisions of the Act; (ii) No interest will be admissible on belated claim of refunds; (iii) The refund has arisen as a result of excess tax deducted collected at source and/or excess advance tax payment and/or excess payment of self-assessment tax as per the provisions of the Act.

Learned counsel for the petitioner submits that the Commissioner of Income Tax instead of considering the application of the petitioner for condonation of delay on merit has considered the whole case on merit, and rejected the claim without condoning the delay. He, therefore, submits that this approach of the Commissioner of Income Tax rejecting the claim of the petitioner without touching on the merit of the application for condonation of delay, is incorrect and not as per the provisions of the Act or the circular mentioned above. He further submits that in view thereof, the writ petition may be allowed and the matter may be remitted to the Commissioner of IT or deciding the application for condonation of delay a fresh.

In support of his contention, learned counsel for the petitioner has relied on the judgment of this Court passed in the case of Pala Marketing Co-operative Society Ltd.v. Union of India and others [2008(1) KHC 637].

On the other hand, learned counsel for the Revenue Department has submitted that without considering the merit of the claim, the application for condonation of delay regarding hardship cannot be considered. The authority has to record to the satisfaction for accepting or rejecting the claim of the assessee should be genuine. When the authority finds the claim of the assessee is not genuine and bonafide, then there is no question of condoning the delay. He has further submitted that the circular relied on by the learned counsel for the petitioner ie.,9/2015, itself provides that, while considering the application under Section 119(2)(b) of the IT Act, the authority is required to consider the claim of the assessee on merit, and also the claim for condonation of delay. If the claim of the assessee is not found genuine on merit, then there is no question of condonation of delay in filing the claim/refund. The submission of the learned counsel for the revenue is that the Commissioner of Income Tax has not found the claim of the petitioner or assessee just and proper, and, therefore, there was no question of allowing the application of the petitioner or the assessee for condoning the delay in filing the application for refund.

I have considered the submissions of the learned counsel for the petitioner. It is not in dispute that the circular issued by the CBDT are binding on the Income Tax authorities. Paragraph 5 of circular No.9/2015 mentioned above specifically provides that the authority is required to show that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits. Therefore, the Income Tax authority which is empowered to condone the delay in filing the application for refund is to ensure itself that the claim of the assessee is genuine and bonafide. Therefore, I find not much substance in the submission of learned counsel for the petitioner that the commissioner was not required to enter into the merit of the claim of the petitioner and he should have confined himself to the genuine hardship of the petitioner while considering the application for condoning the delay in filing the application. So far as the judgment in the case of Pala Marketing Co- operative Society (supra) is concerned, nowhere it is said that while considering the application for condonation of delay, the authority is not required to consider the merit of the claim. Paragraph 4 of the said judgment, which has been relied on by the learned counsel for the petitioner on re production reads as under:

Even otherwise when the circular itself provides that the claim of the assessee has to be considered and the authority is required to reach to the satisfaction as to the genuineness of the claim, then only the question of condoning the delay in filing the refund application arises. Therefore, I find no substance in this writ petition, which is hereby rejected.

The writ petition is dismissed as above. DINESH KUMAR SINGH JUDGE AP A PPENDIX OF WP(C) 32420/2017