Mageshwari Vs. Assistant Commissioner of Income Tax

Mageshwari vs Assistant Commissioner of Income Tax

Disposition Appeal allowed Court Karnataka Decided Nov 04, 1992

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Citation: sooperkanoon.com/384281
Court: Karnataka High Court
Judge: K.A. Swami, Ag. C.J. and N.D.V. Bhat, J.
Decided On: Nov 04, 1992
Case Number: W.A. Nos. 1977 and 1978 of 1992
Subject: Direct Taxation
Disposition: Appeal allowed

Case Summary

AI-generated summary - not the official court judgment text.

CONSTITUTION OF INDIA - Articles 226 & 227 - Right of revision not right of appeal - Failure to seek revision, not bar for exercise of Writ Jurisdiction - Delay in invoking Writ Jurisdiction not ground to deny relief, in cases of want of authority or jurisdiction to pass order impugned. ;It is a settled position...

Key legal issue: Direct Taxation
Outcome / disposition: Appeal allowed
Acts & sections: Constitution of India - Articles 226 and 227; Income Tax Act, 1961 - Sections 139(8), 217 and 264

Parties & Advocates

Appellant / Petitioner

Mageshwari

Advocate G. Chander Kumar, Adv.

Respondent

Assistant Commissioner of Income Tax

Advocate H. Raghavendra Rao, Adv. and ;M.V. Seshachala, Standing Counsel

Legal References

Acts: Constitution of India - Articles 226 and 227; Income Tax Act, 1961 - Sections 139(8), 217 and 264
Reported In: ILR1992KAR3603

Excerpt

.....is not a right and it cannot at all be equated to the right of appeal; therefore, failure to invoke revisional jurisdiction or avail the remedy of revision, by itself would not disentitle a party aggrieved to invoke the jurisdiction of this court under articles 226 and 227 of the constitution; nor such failure is a bar for exercise of jurisdiction under articles 226 and 227 of the constitution. the delay in approaching this court, in a matter where there is no authority vested in the assessing authority to levy penal interest, by itself, is not a ground to deny relief under articles 226 and 227... similarly, the conduct of the assessee in not co-operating with the department in the matter of re-assessment also cannot be made a ground to deny the relief, because the unacceptable or unreasonable conduct of the assessee will not in any way confer jurisdiction upon the authority to pass an order levying penal interest. ;income tax act, 1961 (central act no. 43 of 1961) - sections 139(8) & 217 read with section 264 - levy of penal interest - if without authority, amenable to writ jurisdiction though revision not preferred; non-cooperative conduct of assessee not ground to deny relief. - section 3-d (4): [mohan shantanagourdar,j] the word courts referred therein held, the word courts refers to section 3-d of the national highway act, 1956, refers to courts, subordinate to high court and the same will not include the high court and the supreme court. sub-section (4) of section 3-d will not be applicable to high courts and the apex court of the country. the words any court used in sub-section (4) of section 3-d of the act will not be applicable to the high courts and the supreme court of india. the said provision will have to be read down to exclude high court and supreme court from the word court. acquisition proceedings are upheld. - that the appellant did not at all co-operate with the department in the re-assessment proceedings and the efforts made by..........has made two prayers; (1) to quash the orders of attachment of the properties and bringing them for sale as per annexures 'l' and 'o' dated 16.4.1992 and 19.8.1992 respectively, produced in the writ petitions, and (2) to quash that portion of the order of assessment dated 30.11.1990 made for the assessment year 1984-85 relating to levy of penal interest under section 139(8) and 217 of the income tax act, 1961 (hereinafter referred to as the 'act') produced as annexure 'a' in the writ petition. it is submitted that whether the properties attached should be sold or not would depend upon the validity or otherwise of the aforesaid order of assessment relating to levy of penal interest; because the tax assessed has been paid. it is also contended that the order of assessment made for the assessment year 1984-85 in so far it levies penal interest is not appealable, as the assessee is not aggrieved by the quantum of assessment. in other words, it is submitted that when the quantum of assessment is not challenged and the appeal challenging the validity of levy of penal interest alone, cannot be maintained having regard to the provisions contained in section 246 of the act; therefore the appellant-petitioner is entitled to invoke the jurisdiction of this court under articles 226 and 227 of the constitution. 2. regarding the validity of the penal interest levied under the assessment order, dated 30.11.1990 made for the assessment year 1984-85, it is submitted that the assessment order is passed in a re-assessment proceeding, as such, in a re-assessment proceeding, penal interest cannot at all be levied, as held by this court in charles d'souza v. commissioner of income-tax, karnataka-ii, : [1984]147itr694(kar) and affirmed by the supreme court in slp (civil) 8215 of 85: commissioner of income tax v. charles d'souza, (1990) 186 itr 28. 2.1. on the contrary, it is contended by sri raghavendra rao, learned standing counsel for the department, that no doubt it is not open to.....

Full Judgment

K.A. Swami, Ag. C.J.

1. As the Appeals lie in a very narrow compass they are admitted and heard for final disposal. These two Appeals are preferred against the order dated 15th September 1992 passed by the learned Single Judge in Writ Petitions Nos. 27240 and 27471 of 1992. The learned Single Judge has rejected both the Petitions on the ground that the properties which are brought for sale for recovery of the amount due under the Assessment Orders produced as Annexures 'A' and 'A-1' in the Writ Petition do not belong to the assessee and further the petitioner-assesses has filed the objections to the same, as such, the authorities are required to consider the objections and take appropriate action in accordance with law. But the grievance made by Sri G.Chander Kumar, learned Counsel for the appellant, is that in the Writ Petitions, the petitioner has made two prayers; (1) to quash the orders of attachment of the properties and bringing them for sale as per Annexures 'L' and 'O' dated 16.4.1992 and 19.8.1992 respectively, produced in the Writ Petitions, and (2) to quash that portion of the order of assessment dated 30.11.1990 made for the assessment year 1984-85 relating to levy of penal interest under Section 139(8) and 217 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') produced as Annexure 'A' in the Writ Petition. It is submitted that whether the properties attached should be sold or not would depend upon the validity or otherwise of the aforesaid order of assessment relating to levy of penal interest; because the tax assessed has been paid. It is also contended that the order of assessment made for the assessment year 1984-85 in so far it levies penal interest is not appealable, as the assessee is not aggrieved by the quantum of assessment. In other words, it is submitted that when the quantum of assessment is not challenged and the appeal challenging the validity of levy of penal interest alone, cannot be maintained having regard to the provisions contained in Section 246 of the Act; therefore the appellant-petitioner is entitled to invoke the jurisdiction of this Court under Articles 226 and 227 of the Constitution.

2. Regarding the validity of the penal interest levied under the assessment order, dated 30.11.1990 made for the assessment year 1984-85, it is submitted that the assessment order is passed in a re-assessment proceeding, as such, in a re-assessment proceeding, penal interest cannot at all be levied, as held by this Court in CHARLES D'SOUZA v. COMMISSIONER OF INCOME-TAX, KARNATAKA-II, : [1984]147ITR694(KAR) and affirmed by the Supreme Court in SLP (Civil) 8215 of 85: Commissioner of Income Tax v. Charles D'Souza, (1990) 186 ITR 28.

2.1. On the contrary, it is contended by Sri Raghavendra Rao, learned Standing Counsel for the Department, that no doubt it is not open to the petitioner-appellant to prefer an appeal only against the order levying penal interest; nevertheless, she has a right to approach the authority under Section 264 of the Act, by way of Revision and seek revision of the assessment order in so far as it levies penal interest; that the assessment order was passed as long back as on 30th November 1990 whereas, the petitioner-appellant has approached this Court only in the year 1992 after a lapse of about a little less than two years; therefore, he is guilty of laches and has also not availed the remedy of revision. It is therefore submitted that the appellant is not entitled to invoke the jurisdiction of this Court under Articles 226 and 227 of the Constitution; that it is not a case in which this Court can exercise the jurisdiction in favour of the appellant-petitioner having regard to the unexplained delay of more than two years; that the appellant did not at all co-operate with the Department in the re-assessment proceedings and the efforts made by the Department to serve notice on the appellant failed, therefore the notice Was required to be affixed on the premises of the petitioner-appellant; as such, the conduct of the appellant-petitioner should also be taken into consideration while exercising the jurisdiction under Articles 226 and 227 of the Constitution.

3. As far as the merits of the claim of the petitioner-appellant is concerned, it is fairly submitted by the learned Standing Counsel for the Department that the matter is covered against the Department by a Decision of a Division Bench of this Court in : [1984]147ITR694(KAR) , which is also affirmed by the Supreme Court.

4. It may also be noticed at this stage, that the petitioner-appellant has produced the assessment orders for the years 1986-87, 1987-88 and 1988-89 as Annexures A-1, A-2 and A-3 under which also the penal interest is levied, but the levy of penal interest under the above assessment orders has not been challenged and the prayer is confined to the order of assessment pertaining to 1984-85 Assessment Year, having regard to the fact that the Act has been amended by Taxation Laws (Amendment) Act, 1984. Under this amendment, the old Explanation 2 to Sub-section (8) of Section 139 has been substituted by the new Explanation-2. The substituted Explanation-2, provides that where in relation to an assessment year, an assessment is made for the first time, under Section 147, the assessment so made shall be regarded as a regular assessment for the purpose of this Sub-section. Section 147 of the Act, relates to income escaping assessment. The present case is concerned with the assessment made for the assessment year 1984-85 covering the financial year ending with 31.3.1984. Whereas the amendment effected by the Taxation Laws (Amendment) Act, is with effect from 1.4.1985; therefore, it does not cover the assessment pertaining to the Assessment Year 1984-85. Hence, the Explanation-2 as substituted by Taxation Laws (Amendment) Act, 1984, cannot be taken advantage of by the Department in so far as the assessment order pertains to the Assessment Year 1984-85.

5. The next question for consideration is, when, in law, the assessing authority is not competent or has no authority to levy penal interest in the re-assessment proceeding and the assessee has no right of appeal against that portion of the order of assessment, which pertains to levy of penal interest and has not availed the remedy of revision under Section 264 of the Act, and has approached this Court, after a lapse of a little less than two years, would be a ground to deny the relief to the assessee under Articles 226 and 227 of the Constitution.

6. It is a settled position of law that the revision is not a right and it cannot at all be equated to the right of appeal; therefore, failure to invoke revisional jurisdiction or avail the remedy of revision, by itself would not disentitle a party aggrieved to invoke the jurisdiction of this Court under Articles 226 and 227 of the Constitution; nor such failure is a bar for exercise of jurisdiction under Articles 226 and 227 of the Constitution. The delay in approaching this Court, in a matter where there is no authority vested in the Assessing Authority to levy penal interest, by itself, is not a ground to deny relief under Articles 226 and 227. No doubt, the assessee has approached this Court after a lapse of about two years, but the delay of two years in the facts and circumstances of the case, when the authority has no jurisdiction at all to levy penal interest to the tune of Rs. 3,88,509/-, would not be a ground to deny relief. Similarly, the conduct of the assessee in not co-operating with the Department in the matter of re-assessment also cannot be made a ground to deny the relief, because the unacceptable or unreasonable conduct of the assessee will not in any way confer jurisdiction upon the authority to pass an order levying penal interest. Therefore, we are of the view that the contention urged on behalf of the Department that the assessee is guilty of laches and has not availed of the remedy of revision and her conduct has not been worthy of acceptance during the period of re-assessment proceedings as she failed to co-operate with the Department, would not be sufficient to deny the relief to the assessee, as the assessing authority has exercised jurisdiction, not vested in it, in imposing a penal interest.

7. For the reasons stated above, these Appeals are allowed. The order dated 30th November, 1990 passed by the Assistant Commissioner of Income Tax (Investigation), Circle IV(1), Bangalore, for the Assessment Year 1984-85 produced as Annexure 'A' in the Writ Petition, in so far it imposes the penal interest amounting to Rs. 3,88,509/- is quashed. In other respects, the said order is not disturbed.

8. The submission made by Sri Raghavendra Rao, learned Counsel for the Department, that unless the application filed as per Rule 11 of Schedule-II of the Act, is decided, the authorities will not proceed with the auction, is placed on record. In view of this, it is not necessary to quash the Sale Proclamation Notification because the validity of the same will have to be considered under Rule 11 of Schedule-II of the Act. We also further make it clear that the attachment effected by the authority is not, in any way, disturbed.

Same Court & Year Karnataka · 1992 Same Parties Mageshwari vs Assistant Commissioner of Income Tax Same Subject Direct Taxation Same Judge K.A. Swami, Ag. C.J. and N.D.V. Bhat, J. Acts & Sections Constitution of India - Articles 226 and 227; Income Tax Act,...

Direct Taxation