SMT SHOBANA UMADHARAN vs. THE INCOME TAX OFFICER

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WP(C)/20176/2023HC KeralaKLHC01044141202321 June 2023Author: HONOURABLE MR.JUSTICE C.S.DIAS8 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the third respondent's order (Ext.P5) was erroneous and wrong. The Court noted that a Division Bench of the Kerala High Court, in Ext.P7 judgment, had categorically declared that Section 200A(1)(c) of the Income Tax Act, 1961, has no retrospective operation for assessments prior to June 1, 2015. Despite this binding precedent being brought to the notice of the third respondent, as reflected in paragraph 3 of the impugned order, the third respondent failed to follow the ratio decidendi of the High Court's judgment and instead relied on a decision of the Gujarat High Court, which has only persuasive effect. Consequently, the High Court set aside Ext.P5 order and directed the third respondent to reconsider the revision petition (Ext.P4) afresh, after adverting to the judgments in Exts.P6 and P7, and affording the petitioner an opportunity of being heard. All further proceedings pursuant to Ext.P1 notice were deferred until such reconsideration.

What were the facts?

The petitioner, Smt. Shobana Umadharan, an assessee, faced a delay in filing quarterly TDS returns for financial years 2012-13 and 2014-15. The second respondent processed these returns and levied late fees under Section 234E read with Section 220(2) of the Income Tax Act, 1961. The petitioner claims to have learned of these levies only in 2021 through a demand notice from the first respondent, having not received earlier orders. As statutory appeal and rectification periods had expired, the petitioner filed a revision petition before the third respondent under Section 264 of the Act. The petitioner's primary argument was that Section 200A(1)(c), which was incorporated on June 1, 2015, lacked retrospective application, thus precluding the collection of late fees for earlier periods. The third respondent dismissed the revision petition, relying on a Gujarat High Court decision, despite the petitioner bringing to its notice a Division Bench judgment of the Kerala High Court (Ext.P7) holding that Section 200A(1)(c) does not apply to assessments prior to June 1, 2015.

What were the issues?

1. Whether the levy of late fee under Section 234E of the Income Tax Act, 1961, is permissible for financial years prior to June 1, 2015, considering that Section 200A(1)(c) was incorporated on that date and allegedly lacks retrospective application? (Question of law turning on Section 200A(1)(c) and Section 234E). Assessee's Contentions: - Section 200A(1)(c) was incorporated only on June 1, 2015, and does not have retrospective application. - Therefore, the revenue authorities are not empowered to collect late fees under Section 234E for periods prior to the incorporation of Section 200A(1)(c). - The third respondent erred by dismissing the revision petition and relying on a Gujarat High Court decision, while failing to advert to the binding Division Bench judgment of the Kerala High Court (Ext.P7) which held that Section 200A(1)(c) has no retrospective operation for assessments prior to June 1, 2015. Revenue's Contentions: - The judgment records no specific contentions for the revenue regarding the retrospective application of Section 200A(1)(c) or the validity of the late fee levy.

Which sections of the Income-tax Act were involved?

Section 200A(1)(c),Section 234E,Section 220(2),Section 264

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS WEDNESDAY, THE 21ST DAY OF JUNE 2023 / 31ST JYAISHTA, 1945 WP(C) NO. 20176 OF 2023 PETITIONER 1 SMT SHOBANA UMADHARAN AGED 63 YEARS D/O BHARATHAN SOUPARNIKA CREATIONS RAVIMANGALATH PUTHUPALLY NORTH KAYAMKULAM, ALAPPUZHA KERALA, PIN - 695027 BY ADV DIVYA RAVINDRAN RESPONDENTS: 1 THE INCOME TAX OFFICER WARD-TDS, AAYAKAR BHAVAN ALAPHUZHA, KERALA, PIN - 688001 2 DEPUTY COMMISSIONER OF INCOME TAX TDS, CPC ,AAYKAR BHAVAN, SECTOR-3, VAISHALI, GHAZIABAD, UTTAR PRADESH, PIN - 201010 3 THE COMMISSIONER OF INCOME TAX (TDS) CR BUILDING, I.S PRESS ROAD, KOCHI., PIN - 682018 4 CENTRAL BOARD OF DIRECT TAXES NORTH BLOCK, NEW DELHI, PIN - 110002 REPRESENTED BY ITS CHAIRMAN SRI CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.06.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC No.20176 of 2023 2 C.S.DIAS, J. ------------------------- W.P.(C.) No.20176 of 2023 ------------------------- Dated this the 21st day of June, 2023

JUDGMENT The writ petition is filed, to quash Ext.P5 order passed by the third respondent and for the reconsideration of Ext.P4 revision petition afresh, after adverting to Exts.P6 and P7 judgments.

2.

The petitioner's case is as follows: (i) The petitioner is an assessee for several years. There was a delay on her part in filing quarterly returns for the financial years 2012-13 and 2014-15 as prescribed under Section 200 of Income Tax Act, 1961 (in short ‘Act’). (ii) The second respondent processed the TDS return filed by the petitioner and has levied late fee under Section 234E read with Section 220(2) of the Act. (iii) It is only in the year 2021, that the petitioner came to learn of the levy of late fee through a notice that was sent by the first respondent demanding payment of arrears of tax. The petitioner has not received the earlier orders. (iv) As Exts.P2 and P3 orders were passed in the years 2015 and 2016, and as the statutory period to file the appeals and the rectification applications has expired, the petitioner preferred a revision petition before the third respondent under Section 264 of the Act. (v) The petitioner’s principal contention is that Section 200A(1)(c) was incorporated only on 01.06.2015. The said

provision

does

not have retrospective application. Therefore, the authority is not empowered to collect late fee under Section 234(e) of the Act. (vi) However, the third respondent dismissed Ext.P4 revision petition, by the impugned Ext.P5 order, relying on the decision of the Gujarat High Court. (vii) In Ext.P5 order, the Joint Commissioner has specifically referred to Ext.P7 judgment passed by a Division Bench of this Court, wherein it is held that the above provision has no application to assessments prior to 01.06.2015. (viii) Although the said matter was brought to the notice of the third respondent, he has failed to advert to the decision of this Court, instead has relied on the decision of the Gujarat High Court which has only persuasive effect.(ix) Ext.P5 order is erroneous and palpably wrong and liable to be set aside. Hence, the writ petition.

3.

Heard; Smt.Divya Ravindran, the learned Counsel appearing for the petitioner and Sri.Christopher Abraham, the learned Counsel appearing for the respondents.

4.

The Division Bench of this Court in Ext.P7 judgment has categorically declared that Section 200A(1)(c) of the Act has no retrospective operation for assessments prior to 01.06.2015. 5. Even though the above decision was brought to the notice of the third respondent as reflected in paragraph 3 of the impugned order, under the head ‘comments of the Joint Commissioner, Income Tax (TDS), the third respondent has failed to follow the ratio decidendi of this Court in Ext.P7 judgment.

6.

I find the course adopted by the third respondent to be erroneous and wrong. When Ext.P7 judgment was brought to the notice of the third respondent, he was bound to follow the binding precedent.

7.

In the above background, in exercise of the powers of this Court under Article 226 of the Constitution of India, I set aside Ext.P5 order as prayed in the writ petition and direct the third respondent to reconsider the matter afresh after adverting to Exts.P6 and P7 judgments of this Court. Resultantly, I order the writ petition as follows: (i) Ext.P5 order is set aside. (ii) The third respondent is directed to consider and dispose of Ext.P4 revision petition, in accordance with law, after adverting to law laid down by this Court in Exts.P6 and P7 judgments, as expeditiously as possible, after affording the petitioner an opportunity of being heard. (iii) Until such time orders are passed on Ext.P4 revision petition as ordered above, all further proceedings pursuant to Ext.P1 notice shall stand deferred. C. S. DIAS JUDGE SKP/21-06

Appendix — schedule of exhibits
APPENDIX OF WP(C) 20176/2023 PETITIONER’S EXHIBITS: EXHIBIT-P1 THE TRUE COPY OF THE NOTICE DATED 20.04.2021 ISSUED BY THE 1ST RESPONDENT . EXHIBIT -P2 THE TRUE COPY OF THE DEFAULT SUMMARY FOR QUARTER 4 OF FORM 26 Q FOR FY 2012-13, ISSUED BY THE 2ND RESPONDENT, DATED NIL. EXHIBIT-P3 THE TRUE COPY OF THE DEFAULT SUMMARY FOR QUARTER 4 OF FORM 26 Q FOR FY 2014-15 ISSUED BY THE 2ND RESPONDENT, DATED NIL. EXHIBIT P 4 THE TRUE COPY OF THE REVISION PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT DATED 26.03.2022. EXHIBIT-P5 THE TRUE COPY OF THE ORDER PASSED UNDER SECTION 264 OF THE ACT DATED 20.12.2022 BY THE 3RD RESPONDENT EXHIBIT P6 THE TRUE COPY OF THE JUDGMENT IN W.P(C) NO. 1259/2022 DATED 24.03.2022 EXHIBIT P 7 THE TRUE COPY OF THE JUDGMENT IN W.A NO. 600/2017 DATED 22.10.2021, IN THE CASE OF M/S ORALI LITTLE FLOWER KURIES PVT LTD, AND CONNECTED MATTERS RESPONDENTS' EXHIBITS:NIL TRUE COPY P.A.TO JUDGE

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