YERALA STATE FINANCIAL ENTERPRISES vs. DY.COMMR. OF INCOME TAX (ASSMT)

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OP/22855/1998HC KeralaKLHC01041318199804 November 2014Author: HONOURABLE MR.JUSTICE C.K.ABDUL REHIM4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the writ petition and quashed the impugned order (Ext.P6). The Court noted that an identical issue for a previous assessment year (1992-93) had been set aside and remanded by the same court in OP No. 16883/1997. In that prior case, the remand was ordered because the petitioner was not given an opportunity for a personal hearing before a decision was taken. Following the precedent set in the earlier case, the High Court directed the 2nd respondent (Commissioner of Income Tax) to re-consider the petitioner's petition (Ext.P5) with an opportunity for personal hearing. A fresh decision on the claim for interest on refund was to be taken through an appropriate speaking order within three months from the date of production of the judgment. The Court did not decide the merits of the claim for interest but remanded the matter for procedural fairness.

What were the facts?

The petitioner, Kerala State Financial Enterprises Ltd., filed a writ petition challenging an order (Ext.P6) passed by the 2nd respondent (Commissioner of Income Tax). This order rejected the petitioner's claim for interest on a refund for the assessment year 1994-95. The Revenue's contention was that the petitioner was not entitled to interest for the period from the due date of filing the return to the actual date of filing, citing Section 244A(2) of the Income Tax Act, which allows exclusion of periods attributable to the assessee for refund interest. The petitioner had previously filed an application under Section 154 (Ext.P3) and a petition before the Commissioner (Ext.P5). The assessment order was dated 20-11-1996 (Ext.P2), and the intimation under Section 143(1)(a) was dated 28-03-1996 (Ext.P1). The order under challenge (Ext.P6) was dated 10-02-1998.

What were the issues?

1. Whether the petitioner is entitled to interest on the refund for the assessment year 1994-95 for the period from the due date of filing the return till the actual date of filing, considering the provisions of Section 244A(2) of the Income Tax Act. Assessee's Contention: The petitioner argued that they are entitled to interest on the refund. They relied on a High Court judgment in OP No. 16883/1997 concerning the assessment year 1992-93, where an identical issue led to a remand for fresh consideration after personal hearing was denied. Revenue's Contention: The Revenue contended that the petitioner is not entitled to interest for the period from the due date of filing the return till the actual date of filing, as this period can be excluded under Section 244A(2) of the Income Tax Act when the delay is attributable to the assessee.

Which sections of the Income-tax Act were involved?

Section 244A(2),Section 143(1)(a),Section 154

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM TUESDAY, THE 4TH DAY OF NOVEMBER 2014/13TH KARTHIKA, 1936 OP.No. 22855 of 1998 (U) ------------------------- PETITIONER: ------------------ KERALA STATE FINANCIAL ENTERPRISES LTD. 'BHADRATHA', MUSEUM ROAD, THRISSUR, REPRESENTED BY ITS MANAGING DIRECTOR, MR. M.K. KARTHIKEYAN.

BY ADV. SRI.E.K.NANDAKUMAR RESPONDENTS: ----------------------- 1. DEPUTY COMMISSIONER OF INCOME TAX (ASSMT.) SPECIAL RANGE, JYOTHI COMPLEX, SRI KERALA VARMA COLLEGE ROAD JN.,THRISSUR. 2. COMMISSIONER OF INCOME TAX, KOCHI, I.S. PRESS ROAD, ERNAKULAM, KOCHI-682 018. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 04-11-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

OP No.22855/1998 APPENDIX PETITIONERS' EXHIBITS EXT.P1 - TRUE COPY OF THE INTIMATION UNDER SECTION 143 (1) (a) ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER DATED 28-03-1996. EXT.P2 - TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR 1994-95 TO THE PETITIONER DATED 20-11-1996. EXT.P3 - TRUE COPY OF THE PETITIONER'S APPLICATION UNDER SECTION 154 OF THE IT ACT DATED 19-12-1996 TO THE 1ST RESPONDENT. EXT.P4 - TRUE COPY OF THE ORDER OF THE 1ST RESPONDENT TO THE PETITIONER DATED 12-06-1997. EXT.P5 - TRUE COPY OF THE PETITION FILED BEFORE THE COMMISSIONER OF INCOME TAX DATED 12-08-1997. EXT.P6 - TRUE COPY OF THE ORDER OF THE 2ND RESPONDENT TO THE PETITIONER DATED 10-02-1998.

RESPONDENTS' EXHIBITS NIL True copy P.A. To Judge

C.K. ABDUL REHIM, J. ------------------------------------------------- O.P. No. 22855 OF 1998-U ------------------------------------------------- DATED THIS THE 4th DAY OF NOVEMBER, 2014. J U D G M E N T Challenge in this writ petition is against Ext.P6 order wherein the claim of the petitioner for payment of interest on the amount of refund with respect to the assessment year 1994-95 was rejected, stating that the petitioner is not entitled for interest for the period from the due date of filing of the return till the actual date of filing of the return. It is stated that under Section 244A (2) of Income Tax Act the period can be excluded from payment of interest since the reason for delay in refund is attributable to the assessee. 2. Learned counsel for the petitioner had placed a judgment rendered by this court in OP No. 16883/1997, dated 22-07-2005. It is evident that with respect to the very same issue relating to the assessment year 1992-1993, this court had ordered a remand for fresh consideration with notice to the petitioner and to pass a speaking order on the

O.P No.22855/1998

basis of the finding that before taking such decision no opportunity of personal hearing was given to the petitioner. 3. Considering the fact that an identical order was set aside and remanded for fresh consideration with respect to previous year, this court is inclined to follow the very same course in the present case also. 4. Therefore the writ petition is allowed and Ext.P6 is hereby quashed. The 2nd respondent is directed to re- consider Ext.P5 with opportunity afforded to the petitioner and to take a fresh decision with respect to the claim for payment of interest on refund, through an appropriate speaking order. 5. Needful steps in this regard shall be taken at the earliest possible, at any rate within a period of 3 months from the date of production of a copy of this judgment. Sd/- C.K. ABDUL REHIM JUDGE True copy P.A. to Judge

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