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1/13 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF OCTOBER, 2017 BEFORE THE HON’BLE Dr.JUSTICE VINEET KOTHARI W.P.No.28376/2017 (T-IT) BETWEEN
M/s. SHARAVATHY CONDUCTORS PRIVATE LIMITED REP. BY ITS MANAGING DIRECTOR SRI. KAARDAM PATEL AGED ABOUT 47 YEARS No.23, BCI ESTATE, 6TH MAIN OLD MADRAS ROAD BENGALURU-560016.
...PETITIONER
(BY SRI S. ANNAMALAI, & SRI. M. LAVA, ADVOCATES FOR SRI. SHANKAR .A, ADVOCATE)
AND
THE CHIEF COMMISSIONER OF INCOME TAX, BENGALURU-2 OFFICE OF THE CHIEF COMMISSIONER OF INCOME TAX, BENGALURU-2 C.R. BUILDING, QUEENS ROAD BENGALURU-560 001.
THE PRINCIPAL COMMISSIONER OF INCOME TAX, BANGALORE-6 BMTC BUILDING, 80 FEET ROAD 5TH FLOOR, 6TH BLOCK KORAMANGALA, BENGALURU-560 095.
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THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 6(1)(1), BMTC BUILDING 85 FEET ROAD, KORAMANGALA BENGALURU-560 095.
...RESPONDENTS
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER PASSED BY THE R-1 DTD:5.7.2016 VIDE ANNEXURE-A & ETC.
THIS PETITION COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Mr. S. Annamalai, & Sri. M. Lava, Advs. for Mr. Shankar A, Adv., Petitioner.
The petitioner-assessee, aggrieved by the impugned order passed by Respondent No.1-Chief Commissioner of Income Tax, Bengaluru, (for short ‘Respondent No.1) rejecting the application of the petitioner seeking the condonation of delay in filing the revised return of income for the Assessment Year 1997-98 under Section 119(2)(b) of the Income Tax Act, 1962 (for short 'the Act').
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The operative portion of the impugned order dated 05.07.2016 is quoted below for ready reference:
“4.2 On perusal of the facts and circumstances of the applicant’s petition, it is to state that, the instant case doesn’t fall under the purview of the Board’s Circular for the following reasons;
i. Board’s Circular No.9/2015 specifies that, the claim of refund/supplement claim of refund should be arisen as a result of excess tax deducted/collection at source/or excess advance tax payment and/or excess payment of self-asst tax as per the provision of Act. Whereas in the instant case, the supplement claim of refund has arouse on account of claim of deduction u/s 80HHC which was claimed afresh in the revised return of income.
ii. As per the decision of the Ho’ble Supreme Court in the case of Goetz Indian Limited Vs. CIT (284 ITR 323(SC)(2006)), a deduction not claimed in the Original Return of Income can be claimed only by way of Revised Return of Income. In the instant case, the applicant claimed deduction u/s 80HHC in revised return of income which was filed
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beyond the time limit mentioned in Sec.139(5).
iii. Whether the deduction u/s 80HHC can be claimed, when the deduction u/s 80IA is already claimed is debatable in view of Sec.80IA(9) of IT Act, the Return of Income filed may be revised u/s 139(5) only when there is a bonafide omission or an inadvertent mistake. But a Return of Income cannot be revised to claim debatable benefit or deduction. Since whether the deduction u/s 80HHC is allowable in addition to the deduction claimed u/s 80IA is debatable and not an inadvertent mistake or omission, the Revised Return of Income cannot be acted upon.
iv. Further, whether an assessee is eligible for both the deduction u/s 80IB as well as 80HHC is disputed and the Hon’ble Suprement Court in the case ACIT, Bengaluru Vs. Micro Labs Limited (2015) 380 ITR 1(SC) has referred the matter to the larger bench, since there was difference of opinion among the Members of the Division Bench. The same is pending before Hon’ble Suprement Court.
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v. This fact clearly shows that the claim of deduction u/s 80HHC when the deduction/s 80IA was already claimed is debatable. The applicant may be eligible for deduction u/s 80HHC in view of decision of Hon’ble Supreme Court in the case of CIT Vs. Silver and Arts Palace 259 ITR 684 (supra). But the applicant has already claimed deduction u/s 80IA of IT Act in the revised return of income also and therefore, it is debatable. Hence a debatable claim cannot be the matter of condonation petition.
The CCIT can condone the delay in filing the return by exercising the delegated jurisdiction as per the Board Circular in 9/201 dated 09.06.2015. The exercise of power is confined to the authority delegated and cannot go beyond the delegated jurisdiction. Since, the claim of refund is supplementary, it violates the conditions prescribed in the circular for condoning the delay in filing the Revised Return of Income.
5.1 Since, it is apparent from the reasons as discussed supra, the facts of the case do not fall under the purview of Board’s Circular, the applicant’s petition u/s 119(2)(b) for condonation of delay in filing the revised
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return of income for the Asst. Year 1997-98 is hereby rejected.
Sd/- (NUTAN WODEYAR) Chief Commissioner of Income-tax Bengaluru-2, Bengaluru.”
Learned counsel for the petitioner has relied upon the terms of the Circular No.9/15 dated 09.06.2015 to submit that the Respondent No.1 has wrongly invoked Clause 6 of the said Circular and has refused to condone the delay even though the case of the petitioner does not fall under the said Clause 6 of the Circular.
The relevant Clause, as a matter of fact, in the said Circular is Clause 5. The said Circular No.9/15 dated 09.06.2015 is quoted below in extenso for ready reference:
“SECTION 119 OF THE INCOME-TAX ACT, 1961 – INCOME-TAX AUTHORITIES – INSTRUCTIONS TO SUBORDINATE AUTHORITIES – CONDONATION OF DELAY IN FILING REFUND CLAIM AND CLAIM OF CARRY
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FORWARD LOSSES UNDER SECTION 119(2)(B)
CIRCULAR 9/2015 [F.NO.312/22/2015-OT], DATED 9-6-2015
In supersession of all earlier Instructions/Circulars/Guidelines issued by the Central Board of Direct Taxes (the Board) from time to time to deal with the applications for condonation of delay in filing returns claiming refund and returns claiming carry forward of loss and set-off thereof under section 119(2)(b) of the Income-tax Act, (the Act) the present Circular is being issued containing comprehensive guidelines on the conditions for condonation and the procedure to be followed for deciding such matters.
The Principal Commissioners of Income- tax/Commissioners of Income-tax (Pr.CsIT/CsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims is not more than Rs.10 lakhs for any one assessment year. The Principal Chief Commissioners of Income-tax/Chief Commissioners of Income-tax (Pr.CCsIT/CCsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims exceeds Rs.10 lakhs but is not more than Rs. 50 lakhs for any one assessment year. The applications/claims for
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amount exceeding Rs.50 lakhs shall be considered by the Board.
No condonation application for claim of refund/loss shall been entertained beyond six years from the end of the assessment year for which such application/claim is made. This limit of six years shall be applicable to all authorities having powers to condone the delay as per the above prescribed monetary limits, including the Board. A condonation application should be disposed of within six months from the end of the month in which the application is received by the competent authority, as far as possible.
In a case where refund claim has arisen consequent to a Court order, the period for which any such proceedings were pending before any Court of Law shall be ignored while calculating the said period of six years, provided such condonation application is filed within six months from the end of the month in which the Court order was issued or the end of financial year whichever is later.
The powers of acceptance/rejection of the application within the monetary limits delegated to the Pr. CCsIT/CCsIT/Pr.CsIT/CsIT in case of such claims will be subject to following conditions:
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i. At the time of considering the case under Section 119(2)(b), it shall be ensured that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits.
ii. The Pr.CCIT/CCIT/Pr.CIT/CIT dealing with the case shall be empowered to direct the jurisdictional assessing officer to make necessary inquiries or scrutinize the case in accordance with the provisions of the Act to ascertain the correctness of the claim.
A belated application for supplementary claim of refund (claim of additional amount of refund after completion of assessment for the same year) can be admitted for condonation provided other conditions as referred above are fulfilled. The powers of acceptance/rejection within the monetary limits delegated to the Pr.CCsIT/CCsIT/Pr. CsJT/CsIT in case of returns claiming refund and supplementary claim of refund would be subject to the following further conditions:
i. The income of the assessee is not assessable in the hands of any other person under any of the provisions of the Act.
ii. No interest will be admissible on belated claim of refunds.
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iii. The refund has arisen as a result of excess tax deducted/collected at source and/or excess advance tax payment and/or excess payment of self-assessment tax as per the provisions of the Act.
In the case of an applicant who has made investment in 8% Savings (Taxable) Bonds, 2003 issued by Government of India opting for scheme of cumulative interest on maturity but has accounted interest earned on mercantile basis and the intermediary bank at the time of maturity has deducted tax at source on the entire amount of interest paid without apportioning the accrued interest/TDS, over various financial years involved, the time limit of six years for making such refund claims will not be applicable.
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.
The Board reserves the power to examine any grievance arising out of an order passed or not passed by the authorities mentioned in para 2 above and issue suitable directions to them for proper implementation of this Circular. However,
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no review of or appeal against the orders of such authorities would be entertained by the Board.”
Having heard learned counsel for the petitioner, this Court is of the opinion that firstly, the condonation of delay is a discretionary matter and a fair exercise of discretion cannot be interferred with in exercise of the extra jurisdiction under Article 226 of the Constitution of India. This Court does not find anything arbitrary in the impugned order passed by Respondent No.1.
Moreover, admittedly, the claim of the petitioner both under Sections 80HHC and 80-IA of the Act, is an issue which is highly debatable. As is recorded in the impugned order also, the matter is pending before the larger Bench of the Supreme Court in the case of ACIT, Bengaluru vs. Micro Labs Limited (2015) 380 ITR 1(SC).
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In view of the same, it cannot be said to be a bonafide omission in the original return to make a claim of the deduction clearly admissible to the assessee. The issue being a debatable one, the revised return for that purpose could not have been filed by the assessee and Respondent No.1 cannot be faulted in rejecting such condonation of delay application.
The Clause-5(i) of the Circular No.9/15 clearly stipulates that the Authority concerned, in exercise of power under Section 119(2)(b) of the Act, shall ensure that the income/loss declared and/or refund claimed is correct and genuine and also that it is the case of a genuine hardship on merits. When the claim of rejection under Section 80HHC and 80-IA is a debatable issue, unless the law is finally declared in favour of the assessee by the Larger Bench of the Supreme Court (supra), it cannot said to be inadvertent mistake on the part of the assessee to make the claim as clearly admissible deduction
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under both these provisions of the Act.
The petitioner-assessee cannot seek the condonation of delay in filing the revised return for such purposes as a matter of right even though such claim is not clearly admissible in law on merits. The use of discretion by the Authority concerned, in such circumstances, rejecting the very application seeking the condonation of delay, cannot be said to be wrong in any manner.
Therefore, this Court finds the impugned order passed by Respondent No.1 in accord with the Guidelines laid down by the Central Board of Direct Taxes in Circular No.9/15 dated 09.06.2015 and the present writ petition found to be devoid of merit and the same is liable to be dismissed and the same is dismissed accordingly. No costs. Copy be sent to the Respondents.
Sd/- JUDGE TL