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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF JUNE, 2018
BEFORE
THE HON’BLE MR. JUSTICE B. VEERAPPA
WRIT PETITION No.44116/2014 C/W WRIT PETITION Nos. 44117/2014,44118/2014, 44119/2014, 44120/2014(T-IT)
BETWEEN:
M/S NEW MANGALORE PORT TRUST PANAMBUR, MANGALORE-575010. REP. BY SRI.CHIVKULA RAMANI, FINANCIAL ADVISOR & CHIEF ACCOUNTANT OFFICER. ... PETITIONER (common in all the petitions)
(BY SRI M.V. SHESHACHALA, SENIOR COUNSEL FOR SRI ARAVIND V. CHAVAN, ADVOCATE)
AND:
COMMISSIONER OF INCOME TAX C.R.BUILDINGS, N.G.ROAD, ATTAVARA, MANGALORE-575001.
ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), C.R.BUILDINGS,
2 N.G.ROAD, ATTAVARA, MANGALORE-575001. ... RESPONDENTS
(common in all the petitions)
(BY SRI E. I. SANMATHI, ADVOCATE )
****
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE ORDER DATED 27.5.2011 VIDE ANNEXURE-F, PASSED BY THE R-2 DECLINING TO AWARD INTEREST ON REFUND AND CONSEQUENTIAL REVISION ORDER DATED 26.3.2014 PASSED BY THE R-1 VIDE ANNEXURE-G.
THESE WRIT PETITIONS COMING ON FOR FINAL HEARING THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R
All these writ petitions are filed by the common petitioner – M/s New Mangalore Port Trust for writ of certiorari to quash the order dated 27.5.2011 as per Annexure-F passed by the 2nd respondent declining to award interest on refund and consequential revision order dated 26.3.2014 passed by the 1st respondent as per Annexure-G and issue a writ of mandamus directing the
3 respondents to award interest on the refund granted in accordance with law.
The amount of refund as per the order of the Assessing Officer and the date of Demand for the different assessment years in these writ petitions are as under:
WP No. Assessment year Amount of refund Date of demand
44116/2014 2003-04 Rs.14,22,18,130.00 19.02.2010 44117/2014 2004-05 Rs. 7,65,59,764.00 19.02.2010 44118/2014 2005-06 Rs.11,18,19,414.00 31.03.2005 44119/2014 2006-07 Rs.35,93,73,090.00 22.03.2007 44120/2014 2007-08 Rs.29,41,93,320.00
The question involved in all these writ petitions is one and the same. These writ petitions pertain to different assessment years and the amount of refund varies in these writ petitions. For the sake of convenience, the facts as in Writ Petition No.44116/2014 are referred to in the order.
In these writ petitions, the petitioner – assessee is a Trust owned by the Government of India. It carries on
4 the operations of shipping. The entire income of the assessee was exempted under Section 10(20) of the Income Tax Act (‘the Act’ for short) up to 31.3.2003. Thereafter the petitioner in these writ petitions filed an application under Section 12A of the Act, claiming exemption w.e.f 1.4.2003. The Commissioner of Income Tax rejected the application filed under Section 12A of the Act in these writ petitions by an order dated 28.8.2006 (Annexure-B). Aggrieved by the said order passed by the Commissioner of Income Tax, the petitioner filed appeal before the Income Tax Appellate Tribunal, Bangalore Bench ‘B’. The Tribunal considering the entire material on record by an order dated 28.9.2007 (Annexure-C) allowed all the appeals and held that petitioner is entitled to registration under Section 12A of the Act w.e.f. 1.4.2003. That is the subject matter of appeal filed by the Commissioner of Income Tax before this Court in ITA No.146/2008.
5 5. This Court in ITA No.146/2008 after hearing both the parties by an order dated 7.10.2014 has recorded a finding that the Tribunal has taken pains to set out the facts of the case, the relevant provisions, the amendment, the object with which the trust is established, the judgments on which reliance is placed and later has rightly come to the conclusion that the delay is a bonafide one and therefore, it requires to be condoned. It has also taken note of the parliamentary legislation which was passed by the Government Major Ports, the nature of work the assessee is carrying on, the way in which they are protecting the interest of the country, the lengthy coast line in the west and in the east and held that therefore, it is entitled to registration under Section 12A of the Act. The order passed by the Tribunal is flawless and there is no justification to interfere with the said order. Accordingly, the appeal came to be rejected by this Court.
6 6. In the meanwhile, the Assessing Authority by an order dated 24.3.2006 exercising the powers under Section 143 of the Act raised a demand of Rs.41,06,58,029/-. Thereafter the assessee filed Revision Petition before the Commissioner of Income Tax. The Commissioner of Income Tax allowed the revision by an order dated 27.9.2010 (Annexure-E) and directed the Assessing Officer to make fresh assessment in view of registration of the petitioner under Section 12A of the Act in respect of the impugned assessment years. The order passed by the Commissioner directing to grant exemption also reached finality. Thereafter the Assessing Officer by an order dated 27.5.2011 (Annexure-F) has given effect to the order of the Commissioner of Income Tax, Mangalore and granted refund of Rs.14,22,18,130/-. However the Assessing Officer held that the petitioner is not entitled for interest on refund amount in view of the provisions of Section 244A(2) of the Act. It was held that the entire delay was
7 attributable to the assessee and therefore no interest can be awarded. Aggrieved by the said order, the petitioner filed Revision under Section 264 of the Act before the Commissioner of Income Tax, who after hearing both the parties by the impugned order dated 26.3.2014 (Annexure- G) rejected the revision confirming the order passed by the Assessing Officer. Hence the present writ petitions are filed.
I have heard the learned counsel for the parties to the lis. 8. Sri M.V. Seshachala, learned senior counsel appearing for the petitioner vehemently contended that the impugned orders passed by Respondent Nos.1 and 2 rejecting to award interest on the refund amount, are erroneous and contrary to the material on record. He would further contend that the 1st respondent exercised jurisdiction illegally and unlawfully by not taking into account the relevant material on record. He would also contend that the respondents have erroneously attributed
8 all the delay on the assessee and refused to award interest on the refund, which is impermissible. He would further contend that the 1st respondent – revisional authority has committed an error in holding that the assessee should obtain a new Permanent Account Number as a charitable trust i.e., AOP, when the certificate of registration issued u/s 12AA of the Act, did not prescribe such a procedure and in fact, exempted the petitioner from obtaining any such new number if it had already obtained the same and recorded a perverse finding contrary to the materials on record. Therefore the order passed by the revisional authority cannot be sustained. He would further contend that the respondents while interpreting Section 244A(2) of the Act, has failed to take into consideration the period to be excluded which was attributable to the delay caused by the revenue and the same should have been decided by the Prl. Chief Commissioner or Commissioner, whose decision would have contributed to the correct interpretation
9 regarding grant of interest on refund. Both the authorities have not considered the same. He would further contend that in view of the provisions of Sections 244A(1), 244A(2) 244(1A) and 153 of the Act, if the proceedings resulting in the refund are delayed, period of delay for which interest is payable shall be decided by the Prl. Chief Commissioner or the Commissioner. Therefore the impugned orders passed by Respondent Nos.1 and 2 cannot be sustained. Hence he sought to quash the impugned orders by allowing the writ petitions.
Per contra, Sri E.I. Sanmathi, learned standing counsel for the respondents sought to justify the impugned orders passed by Respondent Nos.1 and 2 in all these writ petitions. He would further contend that it is for the assessee to satisfy the provisions of Section 244 A(2) of the Act, which he has not discharged and therefore the order passed by the authorities cannot be interfered by this Court.
10 10. I have given my anxious consideration to the arguments advanced by the learned counsel for the parties and perused the material available on record carefully.
It is an undisputed fact that in all these petitions, the petitioner - assessee is a Trust. It is owned by the Government of India and it carries on the operations of shipping. The entire income of the assessee was exempted under Section 10(20) of the Act up to 31.3.2003. It is also not in dispute that the assessee filed an application on 31.3.2006 under Section 12A of the Act claiming exemption w.e.f 1.4.2003 and the same was rejected by the Commissioner of Income Tax by an order dated 28.8.2006 (Annexure-B).
The said order passed by the Commissioner of Income Tax was the subject matter of appeal before the Income Tax Appellate Tribunal, Bangalore Bench ‘B’ in ITA No.924/2006. The Tribunal considering the entire material
11 on record, recorded a finding that the assessee falls within the provisions of Section 2(15) of Act ever since its inception. Further when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay, as per the ratio of the Hon’ble Supreme Court in the case of COLLECTOR, LAND ACQUISITION vs. MST. KATIJI & OTHERS reported in 167 ITR 471. Therefore, considering all the facts and the ratio laid down by the Hon’ble Supreme Court, the Tribunal condoned the delay and directed the Commissioner of Income Tax, Mangalore to grant registration under Section 12A w.e.f. 1.4.2003. The Tribunal also taken note of the fact that the assessee was granted exemption under the provisions of Section 10(20) of the Act till 31.3.2003. Accordingly, the appeal came to be allowed.
12 13. It is also not in dispute that the above order passed by the Tribunal was the subject matter before this Court in ITA No.146/2008 filed by the Commissioner of Income Tax. The Division Bench of this Court by an order dated 7.10.2014 dismissed the appeal holding that the assessee is entitled for registration under Section 12A of the Act and there is no error committed by the Tribunal and the said order passed by this Court has reached finality. It is also not in dispute that the jurisdictional authority has issued certificate under Section 12AA of the Act declaring that the assessee is a charitable trust w.e.f. 1.4.2003 as per Annexure-D dated 27.7.2009.
The material on record clearly depicts that in view of pendency of the proceedings stated supra, the Assessing Authority passed an order on 24.3.2006 raising a demand. That was the subject matter of the revision before the Commissioner, who after hearing both the parties by an order dated 27.9.2010 (Annexure-E) allowed the revision
13 and directed the Assessing Officer to make fresh assessment in view of registration of the petitioner under Section 12A of the Act in respect of the impugned assessment years. The said facts are not in dispute.
Inspite of the order granting exemption by the Tribunal and certificate issued by the jurisdictional authority and confirmed by this Court, the 2nd respondent proceeded to pass the impugned order on 27.5.2011 (Annexure-F) and granted refund of Rs.14,22,18,130/- and observed that interest under Section 244A cannot be granted under Section 244A(2) and the question with regard to interest payable on the refund shall be decided by the Chief Commissioner or the Commissioner, whose decision is final. The same is affirmed by the revisional authority as per Annexure-G.
Both the authorities below have not at all considered the material facts stated supra in the proper
14 perspective and the orders passed by the Tribunal granting exemption w.e.f 1.4.2003 and confirmed by the Division Bench of this Court in ITA No.146/2008 on 7.10.2014. The respondent authorities have to decide from which date the petitioner - assessee is entitled for interest on the refund amount in view of the exemption granted by the Tribunal as long back on 28.9.2007 (Annexure-C) though the application filed on 27.3.2006 (Annexure-A). All these aspects are not considered by Respondent Nos.1 and 2. It is also relevant to state at this stage that in view of Sections 244A(1), 244A(2), 244(1A) and 153 and other relevant provisions of the Act, the Prl. Chief Commissioner or the Commissioner is the final authority to decide regarding the date from which interest on refund to be granted. In all these writ petitions, order of refund to the assessee is not at all challenged by the Revenue. There is no dispute with regard to the refund amount to the assessee. The order of refund is final. The dispute is only
15 with regard to the date from which interest on refund amount to be awarded i.e, either from the date of exemption or from the date of the application. The same has not been considered by the authorities below.
In view of the above, the impugned orders passed by the respondents as per Annexures-F and G cannot be sustained and the matters require re-adjudication by the authorities only on the interest payable on the refundable amounts of Rs.14,22,18,130/-, Rs.7,65,59,764/, Rs.11,18,19,414/-, Rs.35,93,73,090/- & Rs.29,41,93,320/- under Section 244A(2) of the Act after consideration of the material dates, orders passed by the Tribunal & this Court and the relevant provisions of the Income Tax Act.
For the reasons stated above, the writ petitions are allowed. The impugned orders dated 27.5.2011 passed by the 2nd respondent declining to award interest on refund as per Annexure-F and consequential Revision Order dated
16 26.3.2014 passed by the 1st respondent as per Annexure-G, in all these writ petitions are hereby quashed. The matters are remanded to the 2nd respondent - Assistant Commissioner of Income Tax for re-adjudication after giving effect to the orders passed by the Commissioner of Income Tax under Section 264 of the Act and for determination of interest under Section 244A of the Act on refund amounts mentioned supra and take decision to refer to the jurisdictional authorities in accordance with the provisions of the Act. The 2nd respondent shall take into consideration the material dates, orders passed by the Tribunal and this Court and the relevant provisions of the Income Tax Act and pass appropriate orders strictly in accordance with law.
Sd/-
JUDGE
Gss/-