THARU AND SONS vs. ASSISTANT COMMISSIONER OF INCOME TAX

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WP(C)/11027/2020HC KeralaKLHC01028357202004 June 2020Author: HONOURABLE MR. JUSTICE AMIT RAWAL8 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, without expressing any opinion on the merits of the case, disposed of the writ petition by directing the Assistant Commissioner of Income Tax (1st respondent) to consider and decide all the pending rectification applications (Exts.P2 to P6). The court ordered that this decision should be made within two months of receiving a copy of the writ petition, after affording the petitioner an opportunity of hearing, and by issuing a speaking order. The speaking order should clarify whether the petitioner is entitled to the credit of TDS as per Form 16A or not. The demand notices (Exts.P14 and P14A) were to be kept in abeyance until the adjudication of these rectification applications. The interim stay was explicitly stated to be only until the disposal of the rectification applications.

What were the facts?

The petitioner, Tharu and Sons, a partnership firm engaged in contract work, including with Southern Railway, filed a writ petition before the High Court of Kerala. The petition sought to quash demand notices (Exts.P14 and P14A) issued by the Assistant Commissioner of Income Tax. The petitioner claimed that while they filed income tax returns taking credit for Tax Deducted at Source (TDS) evidenced by Form 16A issued by Southern Railway, this credit was not given during assessment. This issue persisted from assessment year 2008-09 onwards. Consequently, the petitioner filed multiple rectification applications under Section 154 of the Income Tax Act for various assessment years (2008-09 to 2014-15), which remained pending.

What were the issues?

1. Whether the High Court should entertain a writ petition challenging demand notices when rectification applications under Section 154 of the Income Tax Act are pending before the Assessing Officer? (Mixed question of law and fact, concerning the jurisdiction of the High Court and the efficacy of statutory remedies). Assessee's Contention: The petitioner argued that the Income Tax Department had not taken any decision on their numerous rectification applications filed since 2010, despite the issuance of Form 16A by the deductor (Southern Railway). They contended that a decision on these applications was necessary before demand notices could be enforced. Revenue's Contention: The Assistant Commissioner of Income Tax submitted that the petitioner was not entitled to the credit as claimed. However, the revenue did not dispute the pendency of the rectification applications and suggested that the writ petition could be disposed of by directing the respondent to decide these applications.

Which sections of the Income-tax Act were involved?

Section 194C,Section 154

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL THUR AY, THE 04TH DAY OF JUNE 2020 / 14TH JYAISHTA, 1942 WP(C).No.11027 OF 2020(C) PETITIONER/S: THARU AND SONS 418/2, KARIPPAYI ROAD, RAJAGIRI P. O., KALAMASSERY, ERNAKULAM - 683 104, REPRESENTED BY ITS MANAGING PARTNER MR. ANTONY THARU. BY ADV. SRI.ANIL D. NAIR RESPONDENT/S: 1 ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1, ALUVA. 2 THE DIVISIONAL MECHANICAL ENGINEER SOUTHERN RAILWAY, DRM'S OFFICE, THYCAUD, THIRUVANANTHAPURAM. OTHER PRESENT: SRI DINESH RAO SC FOR RAILWAY, SRI CHRISTOPHER ABRAHAM SC FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 04.06.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.11027 OF 2020(C) ..2.. JUDGMENT Dated this the 4th day of June 2020 The petitioner, a partnership firm, carrying on contract work with different clients, including the Southern Railway; one of the major clients, has approached this Court for quashing of Exts.P14 and P14A, the demand notices raised by the Income Tax Department.

2.

In support of the aforementioned prayer, it has been alleged that on account of the business/work of the Southern Railway, on receipt of the payment from them, there was a deduction as per the provisions of Section 194 C of the Income Tax Act and accordingly, Form 16A was issued. On that basis the petitioner filed the income tax returns by taking credit on the tax deducted at source (TDS) as evidenced by Form 16A. But when the assessment was done, it was found that no such credit was given. The petitioner had been facing such problem

WP(C).No.11027 OF 2020(C) ..3.. from 2008-09 onwards. After completion of the assessment, the petitioner had preferred Ext.P1 application under Section 154 of the Act for rectification of the assessment order, while producing the TDS certificates issued by the Southern Railway pertaining to the assessment year 2008-09. This position continued for every year and the petitioner had been filing applications under Section 154 of the Act for the assessment years 2009-10, 2010-11, 2012-13, 2013-14 and 2014-15, as evidenced from Exts.P2 to P6. 3. The learned counsel for the petitioner submits that the rectification application, Ext.P1 was filed way back on 19.11.2010. It is also submitted that the petitioner had filed Exts.P2 to P6 rectification applications respectively on 16.02.2011 (for the assessment year 2009-10), 10.12.2013 (for the assessment year 2010-11), 31.03.2015 (for the assessment year 2012-13),

WP(C).No.11027 OF 2020(C) ..4.. 23.03.2016 (assessment year 2013-14) and 06.03.2018 (for the assessment year 2014-15) and all applications are pending. The petitioner again filed a consolidated representation, showing the statements of the rectification applications vide Ext.P12 dated 09.06.2016, which is also pending consideration. Despite the pendency of the aforesaid applications, the petitioner received Exts.P14 and P14A demand notices, to make the payment for the assessment years referred above. It is contended that the concerned officer of the Income Tax Department had not taken any call or decision on the rectification applications; particularly when Form 16A had been issued. It is yet to be decided whether the petitioner is correct or not, but there has to be a decision, in accordance with law.

4.

Issue notice before admission. Sri.Christopher Abraham, learned Standing Counsel for the Income Tax Department submits that the petitioner is not entitled to WP(C).No.11027 OF 2020(C) ..5.. the credit as submitted, but do not deny the status of the pendency of the applications as evidenced from Exts.P2 to P6 and stated that the writ petition can be disposed of by directing the 1st respondent to decide the rectification applications; Exts.P2 to P6 (supra).

5.

Having heard the learned counsel for both parties and without expressing any opinion on merits, I dispose of this writ petition by issuing directions to the 1st respondent to consider and dispose of all the rectification applications at Exts.P2 to P6; the particulars of which have already been given and the status of which is evident from Ext.P12 dated 09.06.2016, after affording an opportunity of hearing to the petitioner, by issuing a speaking order, as to whether the benefit of the credit on account of Form 16A TDS, the petitioner is entitled to or otherwise, within a period of two months from the date of receipt of a copy of this writ petition. Till such time, the demand raised at WP(C).No.11027 OF 2020(C) ..6.. Exts.P14 and P14A shall be kept in abeyance. It is also made clear that the interim stay is only till the adjudication of the rectification applications. The writ petition is disposed of accordingly. AMIT RAWAL SB/08/06/2020 JUDGE

WP(C).No.11027 OF 2020(C) ..7..

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF LETTER DATED 19.11.2010 FOR THE ASSESSMENT YEAR 2008-09. EXHIBIT P2 TRUE COPY OF SEC.154 RECTIFICATION APPLICATION FILED FOR THE YEAR 2009- 10. EXHIBIT P3 TRUE COPY OF SEC.154 RECTIFICATION APPLICATION FILED FOR THE YEAR 2010- 11. EXHIBIT P4 TRUE COPY OF SEC.154 RECTIFICATION APPLICATION FILED FOR THE YEAR 2012- 13. EXHIBIT P5 TRUE COPY OF SEC.154 RECTIFICATION APPLICATION FILED FOR THE YEAR 2013- 14. EXHIBIT P6 TRUE COPY OF 143(1) INTIMATION FOR THE ASSESSMENT YEAR 2014-15. EXHIBIT P7 TRUE COPY OF 143(1) INTIMATION FOR THE ASSESSMENT YEAR 2015-16. EXHIBIT P8 TRUE COPY OF INCOME TAX REFUND STATUS FOR THE ASSESSMENT YEAR 2016-17. EXHIBIT P9 TRUE COPY OF INCOME TAX REFUND STATUS FOR THE ASSESSMENT YEAR 2017-18. EXHIBIT P10 TRUE COPY OF THE INCOME TAX REFUND STATUS FOR THE ASSESSMENT YEAR 2018- 19. EXHIBIT P11 TRUE COPY OF THE INCOME TAX REFUND STATUS FOR THE ASSESSMENT YEAR 2019- 20. WP(C).No.11027 OF 2020(C) ..8.. EXHIBIT P12 TRUE COPY OF LETTER DATED 9.6.2016 FOR THE ASSESSMENT YEAR 2008-09 SUBMITTED BY THE PETITIONER. EXHIBIT P13 TRUE COPY OF LETTER DATED 15.5.2019 ISSUED BY THE 1ST RESPONDENT TO THE 2ND RESPONDENT. EXHIBIT P14 TRUE COPY OF LETTER DATED 12.2.2020 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P14 A TRUE COPY OF LETTER DATED 12.5.2020 ISSUED BY THE 1ST RESPONDENT.

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