The petitioner is a contractor engaged in the collection of cashew from the plantations belonging to the Forest Department. While making payments to him for the work done, the respondents collected tax at source and paid him only the balance amounts. The tax clearance certificates evidencing the collection of tax at source from payments made to the contractors are normally prepared and handed over to the contractors immediately on effecting the collection. Thereafter, the contractors are expected to file returns to the Income Tax Department together with copies of the certificate showing collection of tax at source, so that credit can be given in their assessments, for the amounts so collected from the payments due to the contractors. In the case of the petitioner, for the assessment year 1999-2000, although the tax collection certificates were issued to the petitioner as early as on 27.4.1998 and 19.5.1998, the petitioner did not file his return under the Income Tax Act till 10.9.2003. Ideally, the petitioner ought to have filed his return of his income for the said W.P.(C).NO.11701/2008 2 assessment year on or before 31.7.1999, or at least a belated return by 31.3.2001. In the instant case, admittedly, the return was filed only on 10.9.2003. Since there was no return filed within time for the said assessment year, and an amount of Rs.36,304/- was collected from the petitioner by way of tax by the person effecting payments to him, and it was the case of the petitioner that he did not have sufficient income in the said year as would justify the payment of tax to the extent of Rs.36,304/-, he approached the respondent authorities with a petition for condonation of delay in filing of the return for the assessment year 1999-2000, so that an assessment could be done for the said year and as a consequence, the petitioner could claim a refund of the tax paid in excess for the said year. The application for condonation of delay came to be considered by the 1st respondent, who proceeded to reject the same on the ground that the petitioner had not succeeded in showing sufficient cause for the condonation of the delay. The decision of the High Court of Karnataka, that was relied upon by the petitioner in support of his contention that the delay ought to be condoned, was also not considered by the authority. In the writ petition, the petitioner impugns Ext.P10 order of the 1st respondent. W.P.(C).NO.11701/2008 3
2. A statement has been filed on behalf of the respondents, wherein Ext.P10 order of the 1st respondent is sought to be justified for the reasons contained therein. In particular, it is pointed out that the petitioner had not properly explained the delay occasioned by him in filing the return. It is pointed out that the power to condone delay has to be exercised taking into account the facts and circumstances in each case and since, in the instant case, the 1st respondent was not convinced of the reasons projected by the petitioner for the delay, Ext.P10 was passed rejecting the claim of the petitioner.
3. I have heard Sri.M.V. Bipin, the learned counsel appearing on behalf of the petitioner as also Sri.Jose Joseph, the learned Standing counsel appearing on behalf of the Income Tax Department.
4. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I find that the petitioner is a person who has been consistently filing returns with the Income Tax Department every year in connection with his business. Ext.P1 income tax clearance certificate, which is produced by the petitioner in the writ petition, would reveal that the income tax assessments W.P.(C).NO.11701/2008 4 were done in respect of the petitioner from 1994-95 till 1998-99. For the assessment year 1994-95 to 1997-98, the total income assessed was nil and the petitioner did not have to pay any tax for the said years. For the assessment year 1998-99, the total income assessed was in a sum of Rs.4,840/- and the tax paid by the petitioner was an amount of Rs.8,538/-. The higher amount of tax paid obviously is a reference to the amounts, that were collected from the petitioner at source in connection with the contract that the petitioner had in the said year with the Forest Department. For the assessment year 1999-2000, although it is not in dispute that there is a delay occasioned by the petitioner in the filing of the return, it is the specific case of the petitioner that the petitioner's father had not been keeping well and required medical attention, and it was under those circumstances that the petitioner was not able to file his return along with the copies of the tax collected at source certificates obtained by him. The 1st respondent, who considered the application for condonation of delay, was expected to look into the genuineness of the reasons given by the petitioner for seeking condonation of delay in filing the return. In Ext.P10 order, while the 1st respondent disbelieves the reasons given by the petitioner, I am of the view that W.P.(C).NO.11701/2008 5 insofar as the petitioner is a person who has been filing returns in time during the previous assessment years, and the delay occasioned in filing the return in the assessment year 1999-2000 was an isolated instance, the petitioner could not be treated at par with habitual offenders while considering the application for condonation of delay. On the peculiar facts of this case, I am of the view that the discretion vested in the 1st respondent, under Section 119 (2b) of the IT Act, ought to have been exercised in favour of the petitioner, taking into account the fact that the petitioner was a person who was not otherwise liable to pay any amount by way of tax in respect of his income for the said year, and the amounts collected at source for the said year would ordinarily be due to him by way of refund once the assessment was completed. Thus, taking a lenient view in the matter, and considering the fact that the petitioner is not a habitual offender when it comes to complying with the procedure prescribed for filing returns under the IT Act, I quash Ext.P10 order and direct the 2nd respondent to complete the income tax assessment of the petitioner for the assessment year 1999-2000, by treating the delay in filing the return as condoned, and by taking into account Ext.P2 series of certificates produced by him and after verifying the accounts W.P.(C).NO.11701/2008 6 produced by the petitioner to substantiate his declaration of total income. The 2nd respondent shall pass consequential orders as directed in this judgment within a period of three months from the date of receipt of a copy of this judgment after hearing the petitioner. I make it clear that if the assessment proceedings completed by the 2nd respondent, as directed in this judgment, results in the grant of any amount by way of refund to the petitioner, the petitioner will not be entitled to claim any interest on the amount paid to him by way of refund.
A.K.JAYASANKARAN NAMBIAR JUDGE prp