Gujarat High Court
Jay Vijay Express Carriers vs Commissioner Of Income on 5 March, 2013
Author: Akil Kureshi
Bench: Akil Kureshi
JAY VIJAY EXPRESS CARRIERS....Petitioner(s)V/SCOMMISSIONER OF INCOME TAX-III....Respondent(s) C/SCA/12760/2012 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 12760 of 2012 ================================================================ JAY VIJAY EXPRESS CARRIERS....Petitioner(s) Versus COMMISSIONER OF INCOME TAX-III....Respondent(s) ================================================================ Appearance: MR TUSHAR P HEMANI, ADVOCATE for the Petitioner(s) No. 1 MS VAIBHAVI K PARIKH, ADVOCATE for the Petitioner(s) No. 1 MR KM PARIKH, ADVOCATE for the Respondent(s) No. 1 NOTICE SERVED for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date : 05/03/2013 ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Heard learned advocates for the parties.
Petitioner has challenged order dated 6.2.2012 passed by the Commissioner of Income-Tax in exercise of powers under Section 119(2)(b) of the Income Tax Act, 1961 ( the Act for short). Such challenge arises in following factual background:-
2.1 For the assessment year 2005-06 the petitioner filed return of income on 24.10.2005 declaring nil income. In such return, the petitioner had claimed freight charges of a total of Rs.29,97,526/-. The Assessing Officer, framed scrutiny assessment of such return on 28.12.2007 after putting the petitioner to notice that out of the total freight expenditure, the petitioner had not deducted tax at source for total payments of Rs.17,84,323/-. The Assessing Officer in such assessment order disallowed the expenditure to the above extent under Section 40(a)(ia) of the Act.
Against such order of assessment, the petitioner preferred appeal before Commissioner(Appeals). The petitioner s appeal, however, came to be dismissed by the Appellate Commissioner on 23.9.2010. In such order with respect to disallowance of the freight expenditure, Commissioner (Appeals) observed that:-
3. As mentioned in preceding paras, though several opportunities were given to the appellant, time and again, to attend the hearings, he failed to do so leading one to the impression that the appellant has no objection to the additions made by the Assessing Officer. Since there is nothing on record to shed light on the grounds of appeal except the assessment order wherein, the issues have been discussed at length, I see no reason to interfere with the order of the Assessing Officer and confirm the same.
4. The petitioner thereafter filed a revision petition before the Commissioner under Section 264 of the Act. On 23.11.2010, in such revision petition sole ground raised was with respect to disallowance of the freight expenditure. Such revision petition came to be dismissed by the Commissioner by his order dated 21.3.2011. He held that the Assessing Officer was correct in making such disallowance.
He, however, observed that the credit for the tax deducted at source may be allowed in the year in which the same was deposited in the Government treasury and the corresponding expenses may be allowed as a deduction in that year. We may record relevant portion of the revisional order of the Commissioner as under:-
6. I have considered the submissions made by the learned A.R. of the assessee, the reports of the assessing officer and the facts of the case, I find that on facts and in law, the action of the assessing officer was correct and requires no interference. However, the credit for the tax deducted at source may be allowed in the year in which the same is deposited into the Government treasury and the corresponding expenditure may be allowed as a deduction in that year. (emphasis supplied by us) We may notice that while these proceedings were going on, the petitioner deposited tax deducted with the Revenue exchequer on 29.3.2008. For the assessment year 2008-09 the petitioner filed return of income on 28.9.2008. In such return, admittedly the petitioner had not made any claim for freight expenditure on the ground that TDS was deposited with the exchequer during the year under consideration.
The petitioner, however, filed a revised return for the assessment year 2008-09 on 28.3.2011. Since such revised return was concededly time barred (last date for such revised return being 31.3.2010), the petitioner also filed on 28.3.2011 a petition before the Commissioner under Section 119 of the Act requesting that necessary orders may be passed admitting claim of refund and admitting the revised return filed on 28.3.2011.
It is on this petition that the Commissioner passed his impugned order. He observed that:
5. I have considered the submission of the assessee and facts on records as well as the comments of the A.O. The applicant is seeking extension of time for filing revised return. It has been stated that the revised return was not filed due to reasonable cause. It is, however, not explained as to what was the reasonable cause for not filing the revised return in time. It must be noted that the case was under scrutiny and this particular issue of non-deduction/ payment of tax was repeatedly confronted to the appellant. The appellant did not furnish information before the A.O which would have solved this issue then and there. It did not file a revised return despite the fact that it was aware of the issue. The assessee did not attend before CIT(A) despite several opportunities. Even in the present application it has not been spelt as to what was the reasonable cause in not filing the revised return. I also agree with the observation of the A.O that on merit and on fact of the case, the application of the assessee is not maintainable under Section 119(2)(b) of the I.T. Act. Under the circumstances, I do not find any merit in this application and the same is rejected.
At this stage, the petitioner has approached this Court filing the present petition that the respondent be directed to regularize the revised return filed by the petitioner for the assessment year 2008-09 on 28.3.2011.
Learned counsel for the petitioner Mr. Hemani submitted that the petitioner was pursuing remedies under the law for claiming deduction for the assessment year 2005-06. Under such circumstances, though tax deducted at source was already deposited with the exchequer on 29.3.2008, in the return of income filed for the year 2008-09, no claim for deduction was made. Subsequently, however, when the appeal against the assessment order for the assessment year 2005-06 was dismissed, the revised return came to be filed. He pointed out that the Commissioner also in his order under Section 264 of the Act had observed that deduction can be claimed in the year at which the tax at source was actually deposited with the Government. Counsel submitted that this was a case of undue hardship. Sufficient grounds were shown. The Commissioner should have exercised the powers vested in him under Section 119B of the Act. When the claim was otherwise genuine, undue technicalities should not prevent the assessee from claiming the benefit.
He relied on two decisions of this Court in the case of C.Parikh & Co. vs. Commissioner of Income-Tax, Baroda reported in [1980]122 ITR 610 and in the case of S.R. Koshti vs. Commissioner of Income-Tax reported in [2005]276 ITR 165, wherein in context of the revisional powers of the Commissioner under Section 264 of the Act, certain observations were made.
On the other hand, learned advocate Mr. Parikh for the Revenue opposed the petition contending that the petitioner had shown no grounds for condoning the delay. The Commissioner examined all aspects of the matter and come to a just conclusion that delay in filing revised return cannot be condoned for mere asking. He submitted that the petitioner had sufficient opportunities to claim the deduction in the year 2008-09, despite which no claim was made in the return filed and even the revised return was much belated.
Having thus heard learned counsel for the parties, we may recapitulate that for the assessment year 2005-06 when the deduction of freight expenditure of Rs.17,84,323/-
was disallowed by the Assessing Officer on the ground of non-deduction of tax at source, the petitioner contested such decision by initially filing appeal before the Commissioner(Appeals) and thereafter, also preferred revision petition. Both these proceedings came to be dismissed on merits. In the meantime, the petitioner actually deposited the tax amount on 29.3.2008. It is not in dispute that by virtue of the amendment in Section 40(a)(ia), introduced by Finance Act, 2008 but with effect from 1.4.2005, deduction would be available to the assessee in the year in which the tax deducted was paid by the assessee. We may notice that proviso to Section 40(a)(ia) as applicable at the relevant time with effect from 1.4.2005 added by virtue of Finance Act, 2008, read as under:-
Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted-
(A) during the last month of the previous year but paid after the said due date; or (B) during any other month of the previous year but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.
After the petitioner s claim for deduction in the year 2005-06 was declined by the Assessing Officer and the higher authorities, in the assessment year 2008-09, the petitioner made such a claim, of course, through revised return and not in the original. Such revised return was also beyond the last date permissible under the law. For doing so, the petitioner, therefore, preferred petition under Section 119(2)(b) of the Act, requesting Commissioner to condone such delay in filing the revised return.
In our opinion, in the facts of the present case, such petition ought to have been accepted. When the petitioner filed the return for the assessment year 2008-09, he was still pursuing his case for deduction of the freight charges for the assessment year 2005-06. In fact, when he filed return for the assessment year 2005-06, proviso to Section 40(a)(ia) was not in existence, which was brought in statute book by Finance Act, 2008 but with retrospective effect of 1.4.2005. The assessee, therefore, for whatsoever its worth, was contesting the disallowance in the relevant assessment year. It is true that by the time the assessee filed the return for the assessment year 2008-09 and by the time final date for filing revised return for such assessment year expired, proviso to Section 40(a)(ia) of the Act made the provision abundantly clear and despite which the petitioner did not make any claim in the said assessment year either in the original or in the revised return. However, in our opinion, in facts of this case, this would not be fatal to the petitioner s claims. Firstly, till the last date of filing the revised return for the assessment year 2005-06, the petitioner was still contesting the disallowance for the assessment year 2005-06. Secondly, the fact that such amount was already paid during the previous year relevant to the assessment year 2008-09, is not disputed. Thirdly, the petitioner is a small time transport operator. His entire freight expenditure during the previous year relevant to the assessment year 2005-06, was approximately 29.97 lakhs, disallowance of 17.84 lakhs thereof would constitute more than 50% thereof. Further the petitioner did demonstrate that in addition to causing undue hardship, reasons why such revised return could not be filed within time. Section 119(2)(b) of the Act empowers Central Board of Direct Taxes or Income Tax Authorities duly authorised in this behalf to admit an application of claim for any exemption, deduction, revision or any other relief under the Act for making such application or claim and deal with the same on merits, if the authorities consider it desirable and expedient to do so, for avoiding genuine hardship in any case or class of cases.
15. Paramount consideration, therefore, in exercise of power under Section 119(2)(b) of the Act is desirability or expedience for avoiding genuine hardship. Twin considerations before the Commissioner, therefore, would be whether to avoid genuine hardship, to exercise the power would be necessary and further even if there was a case of genuine hardship, whether it would be desirable or expedient to do so.
16. In our opinion, in the present case, there would be genuine hardship, if the time limit is not extended as otherwise, the entire claim of Rs.17,84,323/- would be destroyed. The petitioner would neither get deduction in the assessment year 2005-06 nor in the year 2008-09 as per then prevailing Section 40(a)(ia) of the Act. In our opinion, the petitioner was neither lethargic nor lacking in bona fides in making the claim beyond the period of limitation, which should have a relevance to the desirability and expedience for exercising such power. Before proceeding further we may caution that undoubtedly such powers are not to be exercised in a routine manner to extend limitation provided by the Act for various stages. We are conscious that such routine exercise of powers would neither be expedient nor desirable, since the entire machinery of tax calculation, processing of assessment and further recoveries or refunds, would get thrown out of gear, if such powers are routinely exercised without considering its desirability and expedience to do so for avoiding genuine hardship. In the present case, however, considering special facts, we are of the opinion that the Commissioner ought to have exercised such powers. It is true that the Appellate Commissioner recorded that the petitioner did not remain present in the appellate proceedings. However that by itself would not take away the petitioner s case for genuine hardship nor contrary to what is vehemently contended before us by the counsel for the Revenue, convince us to hold that filing of revised return beyond limitation lacked bona fides.
17. In the result, petition is allowed. Impugned order dated 6.2.2012 is quashed. Petitioner s revised return shall be admitted for being processed in accordance with law. We notice that before the Commissioner in the petition under Section 119(2)(b) of the Act, Assessing Officer had contended that the expenditure was disallowed only on the ground of non-deduction and deposit of tax at source. Genuineness of expenditure was not examined. It would be open for the Assessing Officer to do so.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) SUDHIR Page 10 of 10