Karnataka High Court
Sri Dinakar Uillal vs Commissioner Of Income Tax on 24 February, 2010
Author: Ram Mohan Reddy
Bench: Ram Mohan Reddy
VVEVV
IN THE HIGH COURT OF KARNATAKA, .
DATED THIS THE 24th DAY OF IJ*'»EpBRU2f1'{{"it';.::O'4_?.:!)' 1f.)v".V "
BEFORE
THE I-ION'BLE MR.JUsTIc;5:_
WRIT PETITION 1\.I0.137A'9j:0F'r200.9!'fTfIT).E
BETWEEN
EA'iL1:>1v2i15La:. N~..G. Road.
Sri. Dinakar Ulial. V 1 H '
Prop. M/s DevchanCE««..COns'Eru<:ti--Ohs'~ " 2
Aged about 51.y.ea.rs,f _ _ _ E «--
Thokkottu Perfnaxs-f;ui*V. . "
Mangalore ~5575..O"}7'.:_;,_ 3 V
..PETITIONER
[By Sajia Lava. Advs.)
AND{U. ' V ' U ' "
CO!j1''}I''l'.i_ASSiOI'1<i1I'__bf Inc:o'me»'I'e;1x.
C_:R:: E3__u11r3;1ng, };'i~'«E?.lOO1-.
' V ]V.\/i:>11'1ga_lO1'Es O01 .
H '--{ Es'y.ST'i.'VM3VLA'E:=SEs%Tacha1ia, Adv.)
..RE3SPON D ENT
' .. Writ. Petition is fiied under Ariicies 226 and 227
O01' i}'1€'7~=.COE1SU'{.Llf.iOI1 Of lnctia praying 1,0 issue a writ: Of
£761'-I;.1<:)1"a1*i and :set--asI'de the Ordel" Of the rOsp()nden1 E0 the
' €XT.Ii"I'}E it is Ewld against. The petitioner in
5F.N'O.19/CIT/WING/OSWOQ dated }.5.5.2008. vide Anr1exure~
_._A.
THIS P}E7'l'}'l"!ON COP»/IiNG ON FOR I3RL.I"IEARING IN "B'
GROUP '}'I"iiS E-BAYC '}'I'"i{€ COURT MADE "INK i*'OLL,OV\7ING:
well--merited, fully justified and
interference. contends that.:'t.'he.gtrilrcularfinstriuction7.
being an external aid, imposing-._a condition "denying
interest on refund of
application to C(v)l«1Czl'OIl€'.."'fl:l.'%::'; 'ud'el._ay, 'for 'proper
administration of the destructive
of the overrides the
provisions contended that sub-
to the facts of the
of interest on refund since
the _ procle'edi'11gs'V--. relating to refund were delayed for
re'as~on.s avttributab'i'e'to the petitioner.
«A Plaiting heard the learned counsel for the
par"tiesf,_ perused the pleading and examined the order
impugned. the following two questions arise for decision
nfialdngz
{ii Whether the condition to deny interest: on
refund amount due to an assessee under the Act,
M
rcfundv.oi_"excess amount of tax paid by the assessee or
on h"is__ behalf for any assessment year. The form of
cl.ai_rn for refund and limitation are prescribed by
___Section 239 of the Act while delay in filing a belated
-6-
while admitting an application
delay in making a claim:
Section 237 of the
instruction No.12'/'2vl:):.O3g and
13/2006 dated. 2 '":Board'. is
inconsistent Section 244--A
of the
(ii) Vx'lé}et:helrg 'indt-l1'c._factts and circumstances, the
re_spond.e--n_t"'was_ujvust.itied in denying interest on
belated reefundyctlaimed for the assessment year
22 IA995--96;._y2bvy order impugned?
22 237 of the Act provides for claim of
return for refund claim in cases of genuine hardship
could be condoned by the 'Board under Section 119 of
M
n
___;
the Act. Interest on refund admissible sLib'1»--se<?ti:on. (I)
of under Section 2-ri4~A of the Act. while
invests in the Chief Con1missi'oner .or1,Comi*ni_ssiVonerV;'. 21 7.
graze./air
jurisdiction to deny interest: for"the._perio<:i=;inrefunciv, $015
reasons attributabie to the'a.s"sessee§'~ ._
8. The iini1'ta'ti.on_to gla-im for refund in
respect: of the.'--asses:stri'ent i9'9.3}96, as in the case
of the p.e:ti:t.iO"?7Ift_3:lT*;_ vi.rfc:1s:1'3...i.C}';j§f.'l»99T?' in accordance with
SeCt'ioi1 in the statute book. prior
to ainendi'inei'1"i; E537' 'No.18/2005. The petitioners
ciagini uwhezi' on 8.9.1997, was delayed by five
seven days which was sought to be
i"'~.e'ondoIied-._ filing the appiication on 2i.O9.i998
inu\}oi;i'nAg.S'eCt:ion i i9{2){b) of the Act. showing sufficient
2 ., AALi'é1tiS€.
9. Section 119, as existing prior to the
amendment by Act 23/2004. reads thus:
AHA
""119. Instructions to :"
a_uthorities.-----(l] The Board
to time. issue such o1'ders. if1s{'.1*'s«1(:ti0n s--.g;3:;€I;w_
direcI':i0r1s to other I:r1c0r11Ve«V_'l':;:xhautheriiies V'
it may deem fit for ..prope'1' e1c1V.er_1}1;'11_is"€..1':"z':-'1't.i~z)r':1
of this Act, and suc'_::}"1"., aaV:11019itie$:V.anvéd an
other persons.;:'_empl§ye(;lVL"11:1afihe exechhon of
this Act, shah V such
orders.'.iii'11.$t1"L;L'eVfie:i1Vés of the
P1'"Ov'i~cife._vcl t.hat _h'0.. sL:eh. dfders, instructiorls or
"'-:1ii'e(ét'i<)11' :-2. f$.ha1i_ 'i,§i:.s:,1ed----~»
_{-:1.) x x X ..
(2) V%g?'i{h0L1t. prejudice to the generality of the
.. figl-egoing powerm
(b) the Board may, if it considers it desirabie
01" expedient so to do for avoidi:1g genuine
hardship in any case 01* class of Cases, by
M
-9-
general or speeiai order, authorise any
income 'i'a.x aL1t.hoi.-it,y. not being a
Commissioner (Appeals) to
application or claim for any
deduction. refund or anymother _
this Act after the
spe(:i;fied by or undei' th4i;:~:A"Act
such application of ariciV..(.ie'a1
same on merits in E-i('C.'..ti§)I':A.Ci'c1_I'1'C_,€ with' i:e1w;_.'3
A 'p~;?,ain'i»re'adi'1';g of the aforesiated si:atuio1'y
provisioim-«..it'visVL}eyoi1'd"hVcavi} of doubt that the Board, is
eifipowered Hf}!G1'1 ' time to time to issue
ofdefe _/ ti J;I;i3,{_3fiQl'1S / iilstructions to income Tax
A__uthoriiie«s;iV' as it: may deem: fit: for proper
adm'i;1i'1atrai.io1a of the Act; and more particularly under
(b) of SLibvS€CTLiOI1 (2) of Section 119, for avoiding.
I/, .
is . . . . ti"
__:genui13e hardship 111 any cirase, authorise 3any income
"Fax authority to adrzlii. an appimatiori or claim for any
exemption, "deduction refund or any other relief under
U4
-311
the Act after the expiry of the period or
under the Act for makirig such 'c1];)pli(?'c'1tlC)1'1'Hi')I'vCl£1ii'fi.é3:11ClV4_
deal with the same on merits»'i'n~aettordantxé with law.'
The statute does not indicate "vpes-tigirig a'j.duri.Sdief:_io.11'in
the Board to issue instruetiopris in. is
stated in Sectionr1_l9(2}['b}:l_:'itu""i_s well" settled that
ihstructions/circulars/.guid-el'ines_"ai=e'binding to the
extent they, ere':~nc)t§;Aineorisistent. the provisions of
the A(f?.".'~ .,
'Il_.4' tilt' is said that the power of the
Bojardis en'larged rvhere the provisions of the Act bar
i'ii1AAc;o'm.e Tax authorities from entertaining any
_ap_plit:'at_io'i*1wQ2"for claim of any exemption, deduction,
refuneli o'r":a11y' other reliefs due under the Act for the
V "re.as0Vn that the time limit specified For the making of
'At-Vstieh application or claim has expired. Thus, the Board
" is empowered to authorise the Commissioner or Income
Tax Officer to admit such application or claim even after
N
-17
instruczrtion or direction camiot override the
the Act which would be destnictive kriovvim
principles of law as the same:=_woLild} rea'1ly"--ahio.i;1itcto
fivinf owers to a dele'f:3{te_d aLit~ho'i'i.t f.;o"even altmeiicllli.
the provisions of the law er12icted.by the
13. ThlZ'S viewed",:fSea;tri.on.7_fauthorises the
Board to issue i'1<ystr1..ic:i-iolrislLind directions to the
Iricome'"l72iX1;au'th;oi"it*ies.'forpropel' admiriistration of the
Act'. V";»'»_\ €:irc'ul3;r:is. adn'iAitifc_dly executive in character and
has to bt3glS'SL1(3'(_'l in of functioning of the Act and
object'v---*e--««that the provisions of the Act are
V _4adn1.ii1ist'ere(i. The Board may. in issuing a
'c'ir'cula_If."clarity a point of ambiguity in any provision of
law." Such clarification is not binding upon the Courts.
it c_an.i1(3t also run couni.er to the legisisative provisions
?and create rights or oblige-itioris which are contrary to
the statute. instructions really supplant the law and
not supplement. the law. lt is settled law tliat cir s
cannot impose any burden on the tax payer but can
deviate from the provisions of the Act if it is ben.efi.eial to
the assessee and has mitigated or relaxed{the'vi?ig_or-_.ofV
the law. V b
14. Section 244 A of the
of interest on refunds ar1d»re..z;1ds tlznss V l V --
(Prior to amendl:fne1'1t_» of
_ on on refundss (1) Where
becomes due to the
Act, he shall, subject to
'V the prlov£.soivon_s. of this section, be entitled to
in addittion to the said amount,
thereon calculated in the
maI1r1e1". 1'1amely:~
ell X X X
.. orb} xxx
{2} If the proceedings resulting in the refund
are delayed for reasons attributable to the
assessee. vt.»f1et.her wholly or in part,
iii
period of delay so attributable to
be excluded from the period for
interest is payable, and where ai-ny"questir>r';.VV
arises as to the period:=.A1to:-hie}
shall be decided byythe Chief:Comrri.iiss'ionerA."
or Commissioner
shall be final.
(3) x X x
(4) The provisi.oI1s- t'l1ois_set:tio'n' shall apply
in i'espeé1jt»i'oi'assessh1er1t,_s"forthe assessment
year" on the 151 day of April,
X1989, and §§'L1bSeqt£eI1t assessment years."
15"). hi it tihus Clear that. interest. on refunds
A upayable _Wb,_en an amount is due to the assessee under
._ to exclusion of the period of delay
o€:t:as.ioned and attributable to the assessee as may be
* decided by the Chief Commissioner or Commissioner of
ineome Tax whose decision is final. The statute
'loornpels the denial of interest on refund if the
p1'0(;:eedi1'1gs resL1lt,i1'1g in the refund are delayed for
_E.'1
reasons aitribiitable to the assessee. The_;v'p1'0\g'isi0'_a_4is
made applicable to £1SS€SSIIi€I1tS.'"f0'1'«::'~ti;i'€"_y'€:a1"fi
Commencing from 1.4. 1989.
16. Having not.i(7ed"'vi«i.fi1.e statutmfy 'proixisions,
indisputedly the iii'"'e'x.é;1'c:iS-<3' of its jijrisdiction
under Section 1 19 of tfi-eAV_A,iiti 670 dated
26.10.93, 'Oificer to admit appiicatiéii making a belated refu1: id9'"9V a resuit of tax and advance tax where
such. refu1id._d0e:5 net exceed Ten Thousand upto Rs. ijalihvi' with approvai of Chief Commissioner of 1 any assessment. year. Admittedly, there w"a_s r1_0'cdi'1dii.ioI1 to deny interest on refund arising out ii a belated claim.
17. The beiaied refund Ciairn of the petitioner
-":bei11g Rs.2i41_.505/-- made on 8.9.i997 and an application 21.9.1998 to eoncioiie the delay of five A (1 months and seven days, was required to be Cons'idered and orders passed thereon by the Boewd reasonabie time. However. the__B.oard _ps'sVse.o§»ai1V'_order« "
dated 8.1.2007 rejecting the rightly setmaside in WP fort fresh consideration by ordevr--dtit.ed"-2A8.1r2O0.8.,f§ I8. Undoubted.ly:."_~.th.e_fi£%o2ird instruction No. 12 /20033.'; _ £30; 1 i"e}atting to procedure for condone delay in eiaimirig rei'tmi%1, thi'e-.,Cf'hiei;Htliommissioner for Income Tax in claim from Rs. One Lakh toyfixire Eakhs."' to denied of interest on the belated iancfithat. however, the instructions would not cover zfises prior to assessment year 199697. Yet again the Board issued another set of ismsjtruction bearing No.13/2006 dated 22.12.2006, Verihaneing the eons_ide1*atior1 of refund limits upto Rs.5O ' "iakhs by Corr.
-.
J z;
20. Therefore. in a proceeding to c,}.ai.{n..'re'f1ifid under Section 237, filed in time K Section 239 of the Act. 1*esuitin§ reasons attributable to the assessee; whetii.erV'Vwho;1iy'iof in part. the period of deiay'V'Vi'is_Ri::)_ beV"e:»:cVluVded':§from the period for which i11te_i"e--st decided by the Chief CO1'I11'I11'S$'iOI1€'I" ()f,:I_I'l.C()iTi'ld -iprovided under Sub--Sectioni_.: s;§;:mi':i "t'h'c§ Act. proceeding to ciaim refund undei*'~_Secti'onV'23s?'d the time prescribed by Section on the filing of an application ..Sec1;AiVoI'1~------i«19(2](b] to condone the deiay, and V *re's'a.iti-nig':.i'i*:._:Vrefund. is deiayed for reasons attributable 1;o"":hev--..'asse'?ssee, whether whoiiy or in part, the period of *d:3__lay to be excluded from the period for which
7.iVn'te:1rest is payable under Sub--Section (2) of Section N " '"2«<i4--A of the Act. M .iii
22. Sub-Section (4) of Section _.iih~e section applicable to assessments for..the:"vass.essnief1:.V year commencing from I_.~€i.1989.
relating io denial of i11t,e.t*e:c3?_t on 9' --rv_e'i°ur1d:a*''i'r1Apespfbcti of; belated claim, being fully i:og;gn.:r1 by'sL1'b'~'secifiion (2) of Section 244%. of ti1e_:Actt;.' it/;_'cant:of'~ibut be concluded that the 'Board.'. exereisii1»gVa.A' j'1,1ris§li:(§ti.oi1 under section 119 of Act could 9 fiot have issued ir1stru_(_:_t:VioI'is'/'oifgiversg/dii;eet:1oi1s/eircuiars, imposing a c0r1d:'i__tior_1-- Vde:13Iii'1'g>['*i;i'éerest on refund, so as to suppierneni {he law.» 9 Slouch a condition in derogation of the§'ste1iute,i1ot 'for a proper administratiori of the . Act' . _v 'F.haff'e.o13ditior1 by way of instruction contained in 13/2006 overricies sub-section (2) of Seitiiiori 2944~A of the Act and is in exe1'(:ise of a power 2 Airiiotvested in the Board. and hence inconsistent. The first question is answered in the affirmative. M .720.
was deiayed for reasons attributable to the assessee so as to exclude the period from filing the application to condone the deiaj~.in' belated return, upto 1.7.2008';:'wheneVé"._ghe'refii:iid'V'Vyva«s adjusted against the petiti.on_er's income dikes f"or°thea assessment year 1994-95.
25. Reiianee 'p1;_aeed.u* ;upon}._the decision in GUJARAT COMMISSIONER or 1NcoMe:;%rAx. 'rm 396] by the Assessing Authority t'heV"'petiifi'o'r1er interest on the refund elairnbgd/«theorder_:irr1_:f5'tig1r1ed, in my considered opinion, is 'fuI1ft1"101.i"1'f a;)p.i.ieation'°'oi" mind. i say so because, their A of the""Ghjarat High Court, having regard to the faets" of the ease. held that the Board was not V is jiistified in rejecting the claim for refund on the ground that a case of genuine hardship was not made out by it the petitioner and delay in claiming the relief was not satisfactorily explained. more particularly when the Elm returns could not be filed in time due to of the Officer who was looking afterthe taviati-dli_i»rnatters of. the petitioner therein. Their loirdshipls lu.rt,'h:e1' tiiat. the phrase 'genuine hardi:i;hli'pf in lSeetion T' Q._{Q.}£b]..3of Act should have been eons_t:r1:1'ecl 'libera1lly';__'l'h:it decision is not in relation to"dleonyi-ngi}li}ote'r.est.l on belated refund but a case o;fiI'«::_i'us2;illl'to' eoiidon_e t.hedlelay in filing the belated 7o:rder,_'inij;§ugnVedvfin so far as it relates to denying. 'intereetl*:}n"~.tl"re 'amount. of refund by merely foilowingéthe imposed in the Circular 670 ci.;i%i_¢ai'«26.1'o;ii.993_read with Instruction No.12/2003 2 ;'d.:;ttedv'80.i:l'{)_,_2003 and 13/2006 dated 22.12.2006 is =ocomrai3;r*;it<§o::iaw, arbitrary and unsustainable. The 2""
qnest'ion is E111SW€i'E3Cl in the iaegative.
27. in the result, the petition is allowed in part. The order dated l5~O5~2008 Annextn*e«"A" in so far as it rela1:es to denying int.ei.'est on Rs.2,4l.50.3/-» beiI e