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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF APRIL, 2022
PRESENT
THE HON’BLE MRS.JUSTICE S.SUJATHA
AND
THE HON’BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR
W.A.No.3797/2019 (T – IT)
BETWEEN :
R.RAMAKRISHNAN S/O SRI RAMASWAMI, AGED ABOUT 68 YEARS, R/AT NO.14, ARUNDEL WAY, CHERRYBROOK, NSW-2126 AUSTRALIA.
...APPELLANT
(BY SRI S.PARTHASARATHI & SMT.JINITA CHATTERJEE, ADVS.)
AND :
1 . THE CENTRAL BOARD OF DIRECT TAXES MINISTRY OF FINANCE DEPARTMENT OF REVENUE, D-1/35, NORTH BLOCK, NEW DELHI-110001
2 . THE INCOME-TAX OFFICER, WARD - 1(2), HMT BHAVAN, BELLARY ROAD, BANGALORE-560032.
…RESPONDENTS
(BY SRI K.V.ARAVIND, ADV.)
THIS W.A. IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT, PRAYING TO SET ASIDE THE JUDGMENT/ORDER 19TH AUGUST, 2019 IN W.P.NO.23502/2018
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(T-IT) PASSED BY THE LEARNED SINGLE JUDGE AND TO ALLOW THIS WRIT APPEAL.
THIS APPEAL COMING ON FOR HEARING, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T This intra Court appeal is filed by the assessee challenging the order dated 19.08.2019 passed by the Writ Court in W.P.No.23502/2018 whereby the Writ Petition filed by the assessee has been dismissed.
The appellant, an income tax assessee had filed return of income relating to the assessment year 2003-04 declaring NIL income after claiming the exemption of capital gains in terms of Section 54EC of the Income Tax Act, 1961 [‘Act’ for short]. It transpires that the appellant had sold the property on 03.08.2002 located at No.3304, HAL II Stage, Bengaluru through a registered sale deed. The appellant had invested Rs.25,00,000/- in Rural Electrification Corporation Ltd., [‘REC’ for short] bonds on 05.02.2003. The Assessing Authority having opined that the investment
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should have been made on or before 03.02.2003 denied the benefit of Section 54EC of the Act and had brought to tax the capital gains of Rs.24,99,120/-. Consequently, demand of Rs.6,98,003/- was raised which was fully paid by the appellant. Thereafter, the appellant had filed a Revision Petition under Section 264 of the Act before the Commissioner of Income Tax, Bengaluru-I challenging the levy of tax on capital gains with a prayer to condone the delay of two days in making the payment of Rs.25,00,000/- [Rupees Twenty Five Lakhs] in REC Bond contending that the appellant was in Australia at that time and accordingly, there was a short delay for advising the remittance to REC Bond. However, the Commissioner declined to condone the delay of two days in making the investment in specified bonds.
Being aggrieved by the said order, the appellant filed an application before the Central Board
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of Direct Taxes – first respondent vide application dated 25.04.2011 seeking for condonation of delay of two days in investing the money in the bonds and to direct the second respondent to entertain the application under Section 154 of the Act and to grant the appropriate relief. The first respondent rejected the application vide order dated 13.12.2017. The said order was assailed in the Writ Petition which came to be dismissed. Hence, this Writ Appeal by the assessee.
Learned counsel for the appellant submitted that the application filed under Section 119[2][b] of the Act was rejected by the first respondent only on the ground of limitation placing reliance on the CBDT Circular No.9/2015 dated 09.06.2015. The delay in investing the amount in bonds was only of two days and a genuine ground was put forth for condoning the said delay of two days which was unintentional. The learned Single Judge failed to appreciate the factum that the application under Section 119[2][b] of the Act was made
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by the assessee on 24.05.2011. At that time, there was no time limit prescribed for filing such application. The Board Circular No.9/2015 dated 09.06.2015 has provided a period of six years from the end of the assessment year for which the application/claim was made. Clause [4] of the said Circular was referred to. Learned counsel further submitted that application of the Circular dated 09.06.2015 retrospectively by the first respondent is unjustifiable. Hence, the learned Single Judge ought to have interfered with the impugned order of the first respondent dated 13.12.2017. Learned counsel thus argued that the benefit given by the statute cannot be taken away by the Circular. Reliance was placed on the judgment of the Hon’ble Apex Court in the case of Commissioner of Income Tax V/s. Gemini Distilleries [(2017) 399 ITR 0343 (SC)].
Learned counsel for the Revenue justifying the impugned order submitted that the Circular dated 09.06.2015 would be applicable to all such
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applications/claims for condonation of delay under Section 119[2][b] of the Act which were pending as on the date of issue of the Circular as per Clause[8] thereof. Hence, rejecting the said application cannot be faulted with. No satisfactory reasons were assigned by the appellant for filing the application under Section 119[2][b] of the Act on 24.05.2011 albeit the assessment order passed on 24.08.2005 and the order under Section 264 of the Act passed on 21.07.2006. Having regard to the same, filing of the application under Section 119[2][b] belatedly cannot be condoned.
We have given our anxious consideration to the arguments advanced by the learned counsel appearing for the parties and perused the material on record.
The Writ Court has rejected the Writ Petition mainly referring to Clause [8] of the Circular dated 09.06.2015 which reads thus:
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“8. This circular will cover all such applications/claims for condonation of delay under section 119(2xb) which are pending as on the date of issue of the Circular.”
Indisputably, application under Section 119[2][b] of the Act was filed by the appellant – assessee on 24.05.2011 before the respondent No.1. Had the respondent No.1 considered the said application before issuance of the Circular dated 09.06.2015, certainly the said application would not have been rejected on the ground of delay i.e., beyond the period of six years as specified in the Circular dated 09.06.2015. It is also not in dispute that no provisions of the Act and Rule prescribes the period of limitation for filing the application under Section 119[2][b], it is only by virtue of the Circular dated 09.06.2015, period of limitation of six years has been prescribed for the first time.
At this juncture, it would be beneficial to refer to the judgment of the Hon'ble Apex Court in the
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case of Gemini Distilleries supra, wherein the CBDT Circular dated 09.02.2011 was considered inasmuch as its retrospective operation and held that the CBDT cannot issue any Circular having retrospective operation. No doubt, the validity of the Circular dated 09.06.2015 was not challenged directly by the appellant, applicability of the said Circular was the main issue before the Writ Court. In all fairness, if the matter is perceived in the angle of delay caused in adjudicating the application filed on 24.05.2011 much before the Circular dated 09.06.2015 coming into force, the resultant effect obviously would have been different. For the reasons best known to the Revenue, the said application was not disposed of within a reasonable period.
In the peculiar facts and circumstances of the case, the assessee should not suffer where no default was committed by him in submitting the
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application under Section 119[2][b] of the Act on 24.05.2011 i.e., when there was no period of limitation prescribed. No application could be denied on technical grounds. Given the circumstances, without dwelling upon this issue further, to balance the scales of justice, we deem it appropriate to set aside the order of the learned Single Judge as well as the order dated 13.12.2017 impugned and remand the matter to the respondent No.1 for re-consideration of the application filed on 24.05.2011 to take an appropriate decision on the merits of the case in accordance with law. This view is fortified by the judgment of the Hon'ble Apex Court in the case of Gemini Distilleries supra.
Hence, we pass the following: ORDER
i] Writ appeal is allowed in part.
ii] The order of the learned Single Judge is set aside and the matter is remanded to the first
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respondent to re-consider the matter in accordance with law and take appropriate decision in an expedite manner, keeping in mind the observations made herein above.
iii] All the rights and contentions of the parties are left open.
SD/- JUDGE
SD/- JUDGE
NC.