Madras High Court
N.C. Srinivasan vs Income-Tax Officer And Another on 2 February, 1994
Equivalent citations: [1995]217ITR236(MAD)
JUDGMENT Venkataswami, J.
1. In all these three writ petitions, the petitioner is common. The assessment years are 1975-76, 1976-77 and 1977-78. The petitioner is aggrieved by the common order of the second respondent, dated January 6, 1982, declining to grant the deduction claimed by the petitioner under section 80U(ii) of the Income-tax Act, 1961, on the ground that the petitioner being a charter accountant cannot be heard to say that he was not aware of the legal position under the statute, especially with regard to the deduction under section 80U of the Act.
3. The brief facts are following : The petitioner as mentioned above is a chartered accountant. Some time in January, 1974, he had a stroke on account of which he was partially disabled from attending to his regular work. In the hope that he would be alright in due course, he did not claim the benefit of section 80U(ii) of the Act while submitting the income-tax returns. Unfortunately, the ailment became worse and he was obliged to retire from the partnership. Further, the petitioner was under the impression that as per the provision, only permanent disability will entitle an individual to invoke section 80U(ii) of the Act. Subsequently, he came to know of the clarification issued by the Central Board of Direct Taxes to the effect that the section can be invoked even for partial disability. Taking advantage of that, he initially moved the Income-tax Officer for rectification under section 154 of the Act which was subsequently rejected on the ground that there was no error apparent on the face of the record to rectify the mistake. Thereafter, he moved the Commissioner of Income-tax under section 264 of the Act. This petition was filed on May 22, 1981. That application was rejected by the Commissioner observing as follows :
"The petitioner is a practising chartered accountant and is partner in more than six firms of chartered accountants. Therefore, it is difficult to hold that the petitioner was not aware of the legal position under the statute especially with regard to deduction under section 80U. The Central Board of Direct Taxes circular referred to above only lays down the procedural formalities to be observed in making a claim under section 80U. Therefore, it is difficult to hold that the petitioner was prevented by sufficient cause from filing the revision petition in time. The petitions are rejected as filed beyond limitation."
4. Mr. S. V. Subramaniam, learned counsel for the petitioner, submitted that the reason given by the Commissioner that the petitioner being a chartered accountant cannot be heard to say that he was not aware of the legal position is not justifiable. According to learned counsel for the petitioner, as soon as the petitioner became aware of the position, within a year, the application was filed before the Income-tax Officer and there was no undue delay on the part of the petitioner. He also cited two decisions to the effect that because the particular individual was a lawyer or a chartered accountant, he cannot be taken as knowing the provisions or of the notifications issued by the Department and there is possibility of the practitioner missing the circular or the provision of law. In Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi [1979] 118 ITR 507, the Supreme Court held as follows (headnote) :
"..... that the law is settled that mistake of counsel may in certain circumstances be taken into account in condoning the delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground. It is always a question whether the mistake was bona fide or was merely a device to cover an ulterior purpose such as laches on the part of the litigant or an attempt to save limitation in an under-hand way. The court must see whether, in such cases, there is any taint of mala fides or element of recklessness or ruse. If neither is present, legal advice honestly sought and actually given, must be treated as sufficient cause when an application under section 5 of the Act is being considered."
5. A Division Bench of the Gujarat High Court, in the course of judgment in Chokshi Metal Refinery v. CIT [1977] 107 ITR 63, has extracted the circular which reads as follows (at page 71) :
"Officers of the Department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly, in the matter of claiming and securing reliefs and in this regard the officers should taken the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund a relief is due to him. This attitude would, in the long run, benefit the Department, for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, the officer should -
(a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or the other;
(b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs."
6. The above extracted circular may not the petitioner on the facts. The decision of the Supreme Court is, however, helpful to the petitioner in challenging the order of the Commissioner.
7. Mr. N.V. Balasubramaniam, learned counsel, appearing for the respondents, however, submitted that having regard to the fact that the assessments were completed long earlier and the petitioner having not complied with the provisions of section 80U(ii) of the Act by producing the necessary certificate at the time of filing the returns, the officer cannot be blamed for not granting the deduction. It is true that the petitioner did not produce the certificate at the time of filing the return and the petitioner has given the reason why he did not produce the said certificate at the time of filing the return and it was only after becoming aware of the notification the application under section 154 of the Act initially and under section 264 of the Act later were filed. On the facts of these cases, the reason given by the second respondent for rejecting the applications cannot be sustained in law.
7. Accordingly, the common order of the second respondent is set aside and he is directed to restore to his file the applications under section 264 of the Act and decide the same on the merits. The writ petitions are allowed. No costs.