Sri H C Byregowda, S/O Late ChikannA. Vs. Director General of Income Tax, and anr. - Court Judgment

Excerpt:
[mr. justice huluvadi.g.ramesh,j.] this writ petition is filed under articles 226 and 227 of the constitution of india praying to quash the orders passed by the 2nd respondent / karnataka state transport appellate tribunal in revision petitions nos. 17/2007, 18/2007, 1.26/2007 and 127/2007 dt.5th april 2007 (under annex-n to the writ petition) by issue of a writ in the nature of certiorari and grant all consequential benefits.1. petitioner is assailing the order of .m porition of interest by die director general of income tax, bangalore on the ground that, without considering the application of the petitioner to waive the interest as per s.234 a , b and c of the income tax act for assessment years 2000-01 10 2006-07 and also imposing interest for the said years staling that advance tax has not beer, paid for the particular period, is bad and has also sought for quashing the: same and. for issuance of a writ of certiorari to juash the order dated 16.3.2009 annexure i. passed under s.119 (2)(a) of the income tax act and for a direction to the 2nd respondent to consider the amount seized and the deposit made by the petitioner in computing the interest charged under s.234 a, 234 b and 234 c of the act.2. as per the date of events, there was a search conducted on the premises of the petitioner on 29.3.2006. according to the respondents,within one month from the date of search conducted, petitioner ought to have furnished the returns, in stead, after receiving the notice under s.153a of the act calling tor filing return of the income, alter waiting for nine long months, petitioner made an application for copy of (he seized materials as such, the case of the petitioner cannot be considered to waive of the interest charged on the advance tax calculated, deemed to have been paid.3. when a search was conducted, huge amount is shown to have been seized from the custody of the petitioner. based on the returns filed subsequently, the impugned order has been passed by the respondent authority charging heavy interest. the respondent authority has not considered extending exemption under s.234 a, b and c of the act. the reasoning given by the respondent authority is that, the assessee has not stated anything that due to unavoidable circumstances, he cannot pay the advance rax -is -rich, opining that he does not deserve any relief regarding waiver of interest on the advance tax or to extend concession and since it was made inevitable for the assessee to concede for the amount in his hands based on the search conducted, he had to disclose additional income and it cannot be treated as voluntary disclosure and, there is irrefutable evidence as per s. 132 of the income tax act. as such, admitting these facts, pursuant to the notice under s. 153a of the act, petitioner filed returns. the authority opining that it is no: a deserving case for extending concession and it is also not a voluntary disclosure of income, has imposed heavy interest on the amount, after computing the income and after calculating die interest thereon, as such. petitioner is before this court.4. petitioner's coun.vi has rened upon the decision in the case of kakumanu sudershan ran vs chief commissioner ofincome tax & anr- 1998 itr 444 v;234 where the assessee could not file the returns due to unavoidable cirenin: lance: and filed an application to treat the returns filed by him as voluntary on the ground of non-availability of the materials which were seized at the hands of the department and that he could not calculate the amount of advance tax on the total return of income as the documents were with the departmeni and accordingly, sought tor quashing the proceedings and extending opportunity to the assessee.5. learned counsel for die respondent has relied upon another decision of this court in the case of t p indarkamar ix income tax officer - (2009) 29 dtr 311 to contend that where the precise tax liability prescribing the amount determined by the assessing office l speculative and it could have been either less or more and the assessee on his own, in the wake of his need to avoid further probe and scrutiny offered the amount, it can easily be inferred that the assessee is obviously striking a balance to avoid bigger liability or harsh consequences.the division bench of the andt.ra pradesh high court in the former case cited supra, has noted the department's stand that the return could not be deemed to be a voluntary return as the same was filed pursuant to the notice issued under s.148 of the act about three years after the search and having also noted that that petitioner has not offered/disclosed his income, has opined, the mere fact that return was fiied and payment was made after the notice was issued for the purpose of regur'ahsing the voluntary disclosure did not detract from the applicability of the board's order. the division bench has further opined that tlie order of the chief commissioner was vitiated due to eton-application of mind on the relevant aspects placed before lum. moreover, the question of whether the returns filed was voluntary or hot is a debatable point and. in the circumstances of the case, it was held thu the chief commissioner ought to have passed a reasoned order.what is being noted in the case is. having already seized a huge amount, having calculated the amount of advance tax that was due and the total escape of income, opining that there is voluntary non-disclosure of income and non-payment of advance interest/tax, the amount seized was adjusted towards the tax liability plus the interest thereon. the case of the petitioner is, the documents were not available with him so as to assess and file the returns as such, there was delay in filing the returns and he has got a very good case to substantiate and explain the fact and also to seek for. xvaivcr/reduction of the interest charged as per s.234 a to c of the income tax act. since already amount has been appropriated by the department and no prejudice will be caused to the department, to arrive at a just conclusion with regard to the disclosure of income and pavmcri' of advance tax thereon and also the interest, the order passed by the director general of income tax requires to be set aside and an opportunity should be given to the petitioner to have his say in the matin-on the documents which he later secured, which documents were seized by the department, and pass appropriate orders in accordance with law. accordingly, petition is allowed, impugned order is set aside. matter is remitted to the director general of income tax for disposal of the matter, in accordance with law: after affording an opportunity of being heard to the petitioner. petitioner to appear before the director general of income tax on 5th april 2011.

Judgment:
1. Petitioner is assailing the order of .m porition of interest by die Director General of Income Tax, Bangalore on the ground that, without considering the application of the petitioner to waive the interest as per S.234 A , B and C of the Income Tax Act for assessment years 2000-01 10 2006-07 and also imposing interest for the said years staling that advance tax has not beer, paid for the particular period, is bad and has also sought for quashing the: same and. for issuance of a writ of certiorari to juash the order dated 16.3.2009 annexure I. passed under S.119 (2)(a) of the Income Tax Act and for a direction to the 2nd respondent to consider the amount seized and the deposit made by the petitioner in computing the interest charged under S.234 A, 234 B and 234 C of the Act.

2. As per the date of events, there was a search conducted on the premises of the petitioner on 29.3.2006. According to the respondents,within one month from the date of search conducted, petitioner ought to have furnished the returns, in stead, after receiving the notice under S.153A of the Act calling tor filing return of the income, alter waiting for nine long months, petitioner made an application for copy of (he seized materials as such, the case of the petitioner cannot be considered to waive of the interest charged on the advance tax calculated, deemed to have been paid.

3. When a search was conducted, huge amount is shown to have been seized from the custody of the petitioner. Based on the returns filed subsequently, the impugned order has been passed by the respondent authority charging heavy interest. The respondent authority has not considered extending exemption under S.234 A, B and C of the Act. The reasoning given by the respondent authority is that, the assessee has not stated anything that due to unavoidable circumstances, he cannot pay the advance rax -is -rich, opining that he does not deserve any relief regarding waiver of interest on the advance tax or to extend concession and since it was made inevitable for the assessee to concede for the amount in his hands based on the search conducted, he had to disclose additional income and it cannot be treated as voluntary disclosure and, there is irrefutable evidence as per S. 132 of the Income Tax Act. As such, admitting these facts, pursuant to the notice under S. 153A of the Act, petitioner filed returns. The authority opining that it is no: a deserving case for extending concession and it is also not a voluntary disclosure of income, has imposed heavy interest on the amount, after computing the income and after calculating die interest thereon, As such. petitioner is before this Court.

4. Petitioner's coun.vi has rened upon the decision in the case of Kakumanu Sudershan Ran Vs Chief Commissioner ofIncome Tax & Anr- 1998 ITR 444 V;234 where the assessee could not file the returns due to unavoidable cirenin: lance: and filed an application to treat the returns filed by him as voluntary on the ground of non-availability of the materials which were seized at the hands of the Department and that he could not calculate the amount of advance tax on the total return of income as the documents were with the Departmeni and accordingly, sought tor quashing the proceedings and extending opportunity to the assessee.

5. Learned counsel for die respondent has relied upon another decision of this Court in the case of T P Indarkamar IX Income Tax Officer - (2009) 29 DTR 311 to contend that where the precise tax liability prescribing the amount determined by the Assessing Office L speculative and it could have been either less or more and the assessee on his own, in the wake of his need to avoid further probe and scrutiny offered the amount, it can easily be inferred that the assessee is obviously striking a balance to avoid bigger liability or harsh consequences.

The division Bench of the Andt.ra Pradesh High Court in the former case cited supra, has noted the Department's stand that the return could not be deemed to be a voluntary return as the same was filed pursuant to the notice issued under S.148 of the Act about three years after the search and having also noted that that petitioner has not offered/disclosed his income, has opined, the mere fact that return was fiied and payment was made after the notice was issued for the purpose of regur'aHsing the voluntary disclosure did not detract from the applicability of the Board's order. The Division Bench has further opined that tlie order of the Chief Commissioner was vitiated due to Eton-application of mind on the relevant aspects placed before lum. Moreover, the question of whether the returns filed was voluntary or hot is a debatable point and. in the circumstances of the case, it was held thu the Chief Commissioner ought to have passed a reasoned order.

What is being noted in the case is. having already seized a huge amount, having calculated the amount of advance tax that was due and the total escape of income, opining that there is voluntary non-disclosure of income and non-payment of advance interest/tax, the amount seized was adjusted towards the tax liability plus the interest thereon. The case of the petitioner is, the documents were not available with him so as to assess and file the returns as such, there was delay in filing the returns and he has got a very good case to substantiate and explain the fact and also to seek for. xvaivcr/reduction of the interest charged as per S.234 A to C of the Income Tax Act.

Since already amount has been appropriated by the Department and no prejudice will be caused to the Department, to arrive at a just conclusion with regard to the disclosure of income and pavmcri' of advance tax thereon and also the interest, the order passed by the Director General of Income Tax requires to be set aside and an opportunity should be given to the petitioner to have his say in the matin-on the documents which he later secured, which documents were seized by the Department, and pass appropriate orders in accordance with law.

Accordingly, petition is allowed, impugned order is set aside. Matter is remitted to the Director General of Income Tax for disposal of the matter, in accordance with law: after affording an opportunity of being heard to the petitioner. Petitioner to appear before the Director General of Income Tax on 5th April 2011.