ERNAKULAM DISTRICT GOVERNMENT COLLEG EMPLOYEES CO-OPERATIVE SOCIETY LIMITED NO. E 844 vs. INCOME TAX OFFICER

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WP(C)/13837/2020HC KeralaKLHC01035222202003 August 2020Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found merit in the petitioner's submission that the respondent authority failed to consider the actual issue raised in the rectification application. The Court noted that the respondent proceeded under the assumption that the application sought to re-examine the merits of the disallowance of the deduction under Section 80P, whereas the actual issue was the correctness of the observation in the assessment order that the return was filed beyond time. The Court held that the petitioner's contention that the return was filed within time was the core of the rectification application. Consequently, the Court quashed the impugned communication (Ext.P12) and directed the respondent to consider the rectification application afresh after hearing the petitioner. The respondent was ordered to pass fresh orders within three months from the date of receipt of the judgment.

What were the facts?

The petitioner, Ernakulam District Government College Employees Co-operative Society Limited, filed a writ petition challenging a communication (Ext.P12) from the Income Tax Officer (ITO). The ITO had refused to consider the society's application for rectification under Section 154 of the Income Tax Act. The society contended that the rectification was sought to correct a mistake apparent from the record, specifically the ITO's assumption that the return was filed belatedly. The society asserted that the return was filed within the prescribed time, and this factual error was the sole basis for the disallowance of the deduction under Section 80P of the Income Tax Act. The ITO, however, apparently misunderstood the rectification application as seeking to re-examine the merits of the Section 80P deduction.

What were the issues?

1. Whether the respondent authority erred in not considering the rectification application filed under Section 154 of the Income Tax Act, 1961, by misinterpreting the grounds raised therein? The assessee (petitioner) argued that the rectification application was filed to correct a "mistake apparent from the record" as contemplated under Section 154. This mistake was the assessing officer's erroneous assumption that the return of income was filed belatedly, which led to the disallowance of the deduction under Section 80P. The assessee clarified that the application was not about the merits of the Section 80P deduction itself, but about the factual inaccuracy regarding the filing date of the return. The revenue (respondent) did not present any arguments as recorded in the judgment. The ITO's action, as described, was to refuse consideration of the rectification application on the grounds that the issue did not fall within the scope of rectification, implying a misunderstanding of the assessee's submission.

Which sections of the Income-tax Act were involved?

Section 154,Section 80P

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 A.K.JAYASANKARAN NAMBIAR MONDAY, THE 03RD DAY OF AUGUST 2020 / 12TH SRAVANA, 1942 WP(C).No.13837 OF 2020(D) PETITIONER: ERNAKULAM DISTRICT GOVERNMENT COLLEGE EMPLOYEES CO- OPERATIVE SOCIETY LIMITED NO. E 844, MAHARAJAS COLLEGE, ERNAKULAM REPRESENTED BY ITS SECRETARY. BY ADVS. SMT.A.K.PREETHA SRI.C.ANIL KUMAR RESPONDENT: INCOME TAX OFFICER NON CORP WARD 1(5), OFFICE OF INCOME TAX OFFICER, CENTRAL REVENUE BUILDING, IS PRESS ROAD, KOCHI -682018. BY ADV.SRI.CHRISTOPHER ABRAHAM,SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.08.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P(C).No.13837 of 2020 2

JUDGMENT

The petitioner has approached this Court aggrieved by Ext.P12 communication that was issued to it stating that the application for rectification could not be considered since the issue involved did not come within the scope of a rectification application. In the Writ Petition, the petitioner impugns Ext.P12 order, inter alia, on the contention that the application under Section 154 was preferred seeking the correction of a mistake that was apparent from the record, in that the respondent assumed in the order impugned in the rectification application that the return had been filed belatedly when it was actually filed within time. The petitioner would clarify that the deduction under Section 80P of the Income Tax Act was disallowed by the assessing authority solely on the ground that the return was not filed in time whereas, it is her specific case that the return was actually filed in time and it was in order to correct this mistake that was apparent from the record that the rectification application was filed. The respondent authority, however, assumed that what was being urged in the rectification application was the permissibility of the deduction under Section 80P of the Income Tax Act on merits, and not the factual aspect as regarding whether or not the return was filed within time.

2.

I have heard Smt.A.K.Preetha, the learned counsel for the petitioner and Sri.Christopher Abraham, the learned Standing counsel for the respondent.

3.

On a consideration of the facts and circumstances of the case and the submissions made across the Bar,I find force in the submissions of the learned counsel for the petitioner that the respondent failed to consider the actual issue that was raised in the rectification application, and proceeded on the assumption that what was agitated in the rectification application was the merits of the disallowance of the deduction under Section 80P of the Income Tax Act. The issue urged in the rectification application was the propriety of the observation in the assessment order that the return had been filed beyond time, whereas it is the specific contention of the petitioner that the return was filed within time.

4.

Under the said circumstances, I quash Ext.P12 communication of the respondent, and direct the respondent to consider the rectification application under Section 154 of the Income Tax Act, afresh, after hearing the petitioner. The respondent shall pass fresh orders, as directed, after hearing the petitioner, within an outer time limit of three months from the date of receipt of a copy of this judgment. The petitioner shall produce a copy of the writ petition together with a copy of the judgment before the respondent for further action. A.K.JAYASANKARAN NAMBIAR

JUDGE mns/3.8.2020

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE RETURN FILED BY THE PETITIONER ON 28/11/2018. EXHIBIT P2 TRUE COPY OF THE COMMUNICATION DATED 12/2/2019 ISSUED BY THE CENTRAL PROCESSING CENTER, INCOME TAX DEPARTMENT, BENGALURU DATED 12/02/2019. EXHIBIT P3 TRUE COPY OF THE RESPONSE SUBMITTED BY THE PETITIONER ON 5/3/2019. EXHIBIT P4 TRUE COPY OF THE ORDER F.NO.225/15/2019/ITA.11, GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE (CBDT) DATED 27/2/2019. EXHIBIT P5 TRUE COPY OF THE ORDER DATED 31/05/2019 PASSED BY THE JURISDICTIONAL OFFICER (TRUE COPY OF THE RELEVANT PAGE) EXHIBIT P6 TRUE COPY OF THE RECTIFICATION REQUEST SUBMITTED BY THE PETITIONER DATED 10/06/2019 (TRUE COPY OF THE RELEVANT PAGE) EXHIBIT P7 TRUE COPY OF THE COMMUNICATION RECEIVED BY THE PETITIONER. EXHIBIT P8 TRUE COPY OF THE APPLICATION SUBMITTED BY THE PETITIONER DATED 22/06/2019. EXHIBIT P9 TRUE COPY OF THE ORDER DATED 28/06/2019. EXHIBIT P10 TRUE COPY OF THE CORRECTION CARRIED OUT IN SCHEDULE VIA ALONG WITH THE REQUEST FOR RECTIFICATION DATED 25/07/2019. EXHIBIT P11 TRUE COPY OF THE ORDER DATED 6/08/2019. EXHIBIT P12 TRUE COPY OF THE ORDER ITBA/ADM/S/26/2020- 21/1027321771(1) DATED 17/6/2020 ISSUED BY THE 1ST RESPONDENT. RESPONDENTS EXHIBITS:NIL //TRUE COPY// P.A TO JUDGE

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