SMT. DR. SUDHA KRISHNASWAMY vs CHIEF COMMISSIONER OF INCOME TAX

Before: SMT Dr. SUDHA KRISHNASWAMY

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF MARCH, 2018 BEFORE: THE HON’BLE MRS. JUSTICE S.SUJATHA WRIT PETITION Nos.15891-15893/2016 (T – IT) BETWEEN: SMT Dr. SUDHA KRISHNASWAMY W/O Dr. KRISHNASWAMY AGED ABOUT 50 YEARS R/AT No.385, TROY DEL WAY WILLIAMSVILLE, NEW YORK 14221 UNITED STATES OF AMERICA.

... PETITIONER

[BY SRI BALRAM R. RAO, ADV.]

AND: 1. CHIEF COMMISSIONER OF INCOME TAX

(INTL. TAXN), SOUTH ZONE, BANGALORE

CENTRAL REVENUE BUILDING, QUEEN’S ROAD

BANGALORE-560001, KARNATAKA.

COMMISSIONER OF INCOME TAX

(INTL. TAXN), SOUTH ZONE BANGALORE

INTERNATIONAL TAXATION, 6TH FLOOR R.P. BUILDING, NRUPATHUNGA ROAD BANGALORE-560001, KARNATAKA.

INCOME TAX OFFICER

WARD – 1(2), INTERNATIONAL TAXATION

6TH FLOOR, R.P. BUILDING

NRUPATHUNGA ROAD

BANGALORE-560001.

…RESPONDENTS

[BY SRI K.V.ARAVIND, ADV.)

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THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER DATED 08.10.2015 PASSED UNDER SECTION 119(2)(b) OF THE ACT FOR THE ASSESSMENT YEARS 2010-11, 2011-12 & 2012-13 IN ANNEXURE-G AND ETC.

THESE PETITIONS COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:- O R D E R

Petitioner has challenged the order dated 08.10.2015 passed under Section 119(2)(b) of the Income Tax Act, 1961 (‘Act’ for short) by the Chief Commissioner of Income Tax (Intl. Taxn), South Zone, Bengaluru, relating to the Assessment years 2010-11, 2011-12 and 2012-13, whereby the petition filed by the petitioner for condonation of delay to submit the returns have been rejected.

The assessee, a non-resident, residing permanently at the United States of America has filed a petition for condonation of delay under Section 119(2)(b) of the Act before the Chief Commissioner of Income Tax

- 3 - – respondent No.1 herein. It was contended that the assessee sold one vacant site at Tumkur on 06.02.2012 for consideration of Rs.52,06,000/- which resulted in a net capital gain of Rs.51,27,500/-. The assessee invested Rs.49,00,000/- in REC Bond claiming exemption under Section 54 EC of the Act. The assessee being non-resident, the purchaser of the property had deducted income tax as per provisions of Section 195 of the Act, which has resulted in a refund of Rs.10,85,730/- for the assessment year 2012-13. As regards assessment years 2010-11 and 2011-12, it was submitted that she had no taxable income and claimed that the entire refund is relating to TDS from interest and bank deposits at HSBC. Accordingly, the asseessee requested the respondent No.1 to condone the delay and direct the assessing officer to accept the returns for the aforesaid 3 years and process the return of income on merits and issue the refund orders. The respondent No.1 called for the report from the CIT (IT) Bengaluru

- 4 - who in her report submitted that the authorized representatives of the assessee appeared before the CIT (IT) Bengaluru and submitted that the assessee was not in a position to file her returns file her RsOI on time due to severe financial crisis in the United States of America and the injuries sustained by her in an accident, enclosing a medical report in support of the claim. Considering the report, respondent No.1 held that the medical certificate dated 11.12.2013 would not support the case of the petitioner since she suffered injuries owing to the accident occurred in December 2013 as well as the age related problems i.e., mental agony, depression etc. It was observed that the assessee had the professional advisor available to her and the required returns ought to have been filed within a stipulated period and accordingly rejected the application relating to the three assessment years in question. Aggrieved by the same, these writ petitions are preferred by the petitioner.

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Learned counsel Sri.Balram R. Rao, appearing for the petitioner, reiterating the grounds urged in the writ petitions would submit that the respondent No.1 failed to consider the satisfactory explanation offered by the petitioner for the delay caused in filing the returns for the assessment years in question. Genuine hardship explained by the petitioner ought to have considered by the authorities in pragmatic view rather than a pedantic approach. The assessee is entitled to refund and the rejection of the application for condonation of delay had disentitled her to claim the refund which she is otherwise legally entitled to.

Learned counsel Sri.K.V.Aravind appearing for the Revenue, justifying the impugned orders, submitted that the material on record discloses that the petitioner was not serious in filing the returns within the stipulated period. The medical certificate does not

- 6 - supports the case of the petitioner to condone the inordinate delay of 1232 days in filing the returns. However, it is submitted that if this Court permits the Authorities to consider the application filed by the petitioner for condonation of delay and to scrutinize the returns, a condition may be imposed to the petitioner to undertake before this Court that on such scrutiny, if the Authorities come to a conclusion that the petitioner is liable to pay the tax and a demand has to be raised, then the petitioner shall ensure that no objections shall be raised regarding limitation to raise the demand. Learned counsel has no objections to direct the Authorities to scrutinize the returns with the aforesaid observations.

I have given my anxious consideration to the arguments advanced by the learned counsel appearing for the parties and perused the material on record.

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In terms of Section 119(2) (b) of the Act, CBDT is vested with the powers to admit an application or claim for any exemption, deduction, refund or any other relief under the Act after the expiry of period prescribed under the Act for making such application or claim and appeal and to deal with the same on merits in accordance with law. Instruction No.12/2003 contemplates that the cases where delayed claims of refunds are being considered would be taken up for scrutiny. Similar instruction No.13/2006, interalia provides that no interest would be admissible on the belated refund claims. The phrase “genuine hardship” was interpreted by the Hon’ble Apex Court in B.M.MALANI V/S. COMMISSIONER OF INCOME TAX, reported in (2008) 10 SCC 617 it was held that the genuine hardship means a genuine difficulty. The phrase “genuine hardship” employed under Section 119(2) (b) of the Act should be construed liberally, particularly in matters of entertaining of applications seeking

- 8 - condonation of delay. The Bombay High Court in the case of BOMBAY MERCANTILE COOPERATIVE BANK LIMITED V/S. CENTRAL BOARD OF DIRECT TAXES reported in W.P.1544/2010 (D.D. 20.09.2010), has taken similar view. It is not the case of the petitioner that she is avoiding any scrutiny of the returns. On the other hand, it is the case of the petitioner that she is entitled for refund, being a non-resident owing to the recession at U.S. and the accidental injuries suffered, no returns were filed within the period prescribed. In the circumstances, it cannot be held that the petitioner has obtained any undue advantage of the delay in filing the income tax returns.

It is trite law that rendering substantial justice shall be paramount consideration of the Courts as well as the Authorities rather than rejecting on hyper-technicalities. It may be true that there is some lapse on the part of the petitioner, that itself would not

- 9 - be a factor to turn out the plea for filing of the return, when the explanation offered was acceptable and genuine hardship is established. Sufficient cause shown by the petitioner for condoning the delay is acceptable and the same cannot be rejected out-rightly on technicalities.

Considering the overall circumstances, the delay of 1232 days in filing the returns for the relevant assessment years in question is condoned subject to denial of interest for the delayed period if found to be entitled for refund. Respondent No.3 is permitted to scrutinize the returns in accordance with law subject to the condition that petitioner gives an undertaking before this Court that she will not raise objections on the aspect of limitation in the event any demand has to be made by the department rather than making refund, as claimed, if found so, on concluding the assessments.

- 10 - Such undertaking shall be filed before this Court within a period of six weeks from today.

With the aforesaid observations, writ petitions stand disposed of.

Sd/- JUDGE

NC.

SMT. DR. SUDHA KRISHNASWAMY vs. CHIEF COMMISSIONER OF INCOME TAX