MUPPATHADAM SERVICE CO-OPERATIVE BANK LTD vs. THE CENTRAL BOARD OF DIRECT TAXES, NEW DELHI

The facts, in a nutshell, for the determination of the writ petition are thus: (i) The petitioner is a Co-operative society registered under the Kerala Co-operative Societies Act, 1969. The petitioner is engaged in the business of providing credit facilities to its members and is eligible for deduction under Section 80P of the Income Tax Act, 1961(in short, ‘Act’). (ii)Due to the devastating and unprecedented floods that occurred in the State in the year 2018, the petitioner’s office got submerged and its entire files, records and computers got destroyed. Consequently, the petitioner could not get its accounts finalised or the tax audit completed. Therefore, the petitioner could not claim deduction under Section 80P of the Act. (iii) This Court, by Ext P1 judgment, directed the respondents that in respect of those assessees, who on account of difficulties faced by them due to the floods were unable to file their returns, and make a claim for deduction, exemption or refund, be permitted to submit an application under Section 119(2)(b) of the Act before the first respondent outlining their difficulties. If such an application was submitted within a period of two weeks from the date of judgment, the application has to be considered, that too, after affording the assessees an opportunity of being heard. (iv) Pursuant to Ext P1 judgment, the petitioner submitted Ext P2 application by e-mail to the first respondent. (v) Subsequently, the first respondent issued Ext P3 notification stating that the time period for the tax payers in Kerala, to file their return of income was extended till 28.02.2019. (vi) Even though the petitioner sent Ext P2 application, no notice was issued to the petitioner as directed in Ext P1 judgment. (vii)Later, the petitioner e-filed its return for the assessment year 2018-19 together with a tax audit report. But, by Ext P4 intimation, the petitioner’s claim for deduction was disallowed. (viii)Immediately, the petitioner filed an appeal challenging Ext P4 intimation before the Commissioner of Income Tax (Appeals) pointing out that they have already moved the first respondent and the same is pending consideration. Yet, the appeal was dismissed by Ext P5 order. (ix) The petitioner has challenged the said order before the Income Tax Appellate Tribunal. When

Heard; Sri. S.Arun Raj, the learned counsel appearing for the petitioner and Sri. Christopher Abraham, the learned Standing Counsel appearing for the respondents

This Court in Ext P1 judgment had, inter alia, directed the first respondent as follows: “I) In respect of those assessees who, on account of the difficulties faced by them, have not been able to file a return making a claim for deductions, exemptions or refunds, they shall be permitted to make an application under Section 119(2)(b) before the CBDT outlining the difficulties faced by them and making a prayer for extension of time for making the claim for deduction. The application shall be preferred within two weeks from the date of receipt of a copy of this judgment. This would effectively be an application seeking extension of time for filing the return itself since it is the return that would contain the claim for deduction, exemption or refund. The applications received by the CBDT shall be considered by the CBDT, taking note of the flood situation that affected the State of Kerala, and orders shall be passed thereon within an outer time limit of two months from the date of receipt of the applications by the CBDT, after affording an opportunity of hearing to the assessee concerned.” [emphasis given]

Consequent to Ext P1 judgment, the petitioner had submitted Ext P2 application before the first respondent on 05.01.2019. Since Ext P2 application was not considered by the first respondent, the petitioner filed W.P.(C)No.17942/2023 before this Court, which was disposed of by Ext P8 judgment, directing the first respondent to consider and dispose of Ext P2 application, immediately.

Pursuant to Ext P8 judgment, the first respondent has passed Ext P9 order holding thus: “With reference to above, I am directed to state that Board was in receipt of several representations from taxpayers of Kerala region in view of severe flood situations in Kerala in the year 2018. The said petition dated 05.01.2019 was also duly considered by Board and a general order u/s 119 dated 27.02.2019 was issued by CBDT, whereby due dates for filing ITR and audits reports was extended to 28.02.2019 for Kerala region. The same is brought to your kind attentin and attached with this letter for ready reference (copy enclosed).” [emphasis supplied]

A reading of the above extracted paragraph establishes that the first respondent has not afforded the petitioner an opportunity of being heard, as directed in Ext P1 judgment, which in turn is a violation of the directions of this Court.

Viewed in the above background, I am of the definite view that Ext P9 order is liable to be set aside and the first respondent be directed to re-consider Ext P2 application afresh, after affording the petitioner an opportunity of being heard.

At the said point of time, Sri.Christopher Abraham drew the attention of this Court to Circular No.13/2023 dated 26.07.2023, passed by the Government of India, Ministry of Finance, inter alia, conferring the powers of the first respondent on the Chief Commissioner of Income Tax(CCsIT)/Director General of Income Tax (DgsIT), to consider the applications for condonation of delay filed under Section 119(2)(b) of the Act, for return of income claiming deduction under Section 80P of the Act for the assessment years 2018-19 to 2022-23. The learned counsel submitted that, in view of the said circular and huge pendency of the matters before the first respondent, the Chief Commissioner of Income Tax may be directed to consider Ext P2 application afresh, treating the matter as a special case, particularly, in view of the directions passed in Ext P1 judgment.

Having considered the pleadings and materials on record and the findings rendered above, I am inclined to quash Ext P9 and direct the Chief Commissioner of Income Tax to re-consider Ext P2 application, in accordance with law, and Ext P1 judgment, after affording the petitioner an opportunity of being heard. Resultantly, I order the writ petition as follows: (i) Ext P9 order is quashed. (ii) The second respondent or his duly authorised and competent officer is directed to consider and dispose of Ext P2 application, following the directions passed by this Court in Ext P1 judgment, in accordance with law and as expeditiously as possible, after affording the petitioner an opportunity of being heard. (iii) Until such time orders are passed on Ext P2 application, all further proceedings pursuant to Ext P4 intimation shall stand deferred. C.S.DIAS,JUDGE DST/17.08.23 //// P.A.To Judge