IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.
TUESDAY, THE 31ST DAY OF MAY 2022/10TH JYAISHTA, 1944
W.A NO.78 OF 2020
AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C).NO.8524/2019 OF
HIGH COURT OF KERALA
APPELLANTS/RESPONDENTS 1, 2 & 3:
1 INCOME TAX OFFICER
INCOME TAX DEPARTMENT, WARD-4, KANNUR,
AAYAKAR BHAVAN, CHOVVA POST, KANNOTHUMCHAL,
KANNUR-670006.
2 THE PRINCIPAL COMMISSIONER OF INCOME TAX,
KOZHIKODE 670 006.
3 THE CENTRALIZED PROCESSING CENTRE
REPRESENTED BY ITS AUTHORISED OFFICER,
INCOME TAX DEPARTMENT, POST BAG NO.2,
ELECTRONIC CITY POST OFFICE, BANGALORE-560100.
BY SRI.CHRISTOPHER ABRAHAM, SC, INCOME TAX DEPARTMENT
RESPONDENT/PETITIONER/RESPONDENTS 4, 5 & 6:
1 PAYYANNUR SREE SUBRAMANYA SWAMI TEMPLE
REPRESENTED BY ITS EXECUTIVE OFFICER, SS TEMPLE,
PAYYANUR-670307.
2 UNION OF INDIA,
REPRESENTED BY ITS SECRETARY TO GOVERNMENT,
MINISTRY OF FINANCE, NEW DELHI-110001.
W.A.NO.78 OF 2020 :: 2 ::
3 THE MALABAR DEVASWOM BOARD,
REPRESENTED BY ITS SECRETARY, HOUSEFED COMPLEX,
P.O.ERANHIPALAM, KOZHIKODE-673006.
4 THE SENIOR MANAGER,
THE KANNUR DISTRICT CO-OPERATIVE BANK,
PAYYANUR BRANCH, PAYYANUR, KANNUR-670307.
BY ADV.SRI.MAHESH V RAMAKRISHNAN
BY ADV.SRI.B.RAMACHANDRAN, CGC
BY ADV.SRI.R.LAKSHMI NARAYAN, SC, MALABAR DEVASWOM
BOARD
BY ADV.SRI.M.SASINDRAN, SC, KANNUR DISTRICT
CO.OP. BANK
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
31.05.2022, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
W.A.NO.78 OF 2020 :: 3 ::
JUDGMENT
A.K. Jayasankaran Nambiar, J.
This is an Appeal preferred by the Income Tax Department against the judgment dated 01.07.2019 of the learned Single Judge in W.P.(C).No.8524/2019. The brief facts necessary for disposal of this Writ Appeal is as follows:
The writ petitioner is an institution coming within the definition of the Madras Hindu Religious & Charitable Endowments Act, 1951, and for administration and overseeing the functions of the Institution, there is a board of Trustees constituted under the provisions of the said Act. The issue projected in the writ petition arose out of the assessment under the Income Tax Act [hereinafter referred to as the 'IT Act'], in relation to the petitioner for the assessment years 2014-15 and 2015-16. It would appear that based on the returns submitted by the petitioner for the said years, the Centralized Processing Centre of the Income Tax Department processed the returns and determine the net tax payable by the petitioner at Rs.29,69,290/- and Rs.28,44,340/-
W.A.NO.78 OF 2020 :: 4 :: respectively. Aggrieved by the said intimation received by it, the
petitioner preferred rectification application before the Department inter alia on the contention that the assessment of income on the petitioner had been erroneously made treating the petitioner as a 'trust', whereas in fact, the petitioner had to be seen as a management body entitled to the benefit of Section 10(23BBA) of the IT Act, and hence, its entire income was to be excluded from the computation of total income under the IT Act. When no action was taken by the respondents on the rectification application preferred by the petitioner and notices were received demanding the payment of assessed tax, the petitioner approached this Court through the writ petition aforementioned seeking to quash the intimation letters received by it and for a declaration that the income of the petitioner was entitled for unconditional exemption under Section 10(23BBA) of the IT Act. There was also an incidental prayer for a direction to the respondents to refund the amounts recovered from the petitioner.
2. A counter affidavit has been filed by the respondent Income Tax Department, wherein, the stand taken was that the claim for exemption under Section 10(23BBA) of the IT Act had not been raised by the petitioner in the returns filed by it for the relevant assessment W.A.NO.78 OF 2020 :: 5 ::
years. It is stated that inasmuch as the petitioner had filed its returns by indicating that it was a 'trust', the benefit of any exemption under the IT Act was denied on the finding that it had not complied with the necessary procedural requirements for getting the exemption in respect of a trust. In substance, the averments in the statement are to the effect that it was only on account of the erroneous declaration by the petitioner assessee that the petitioner was assessed to the higher amounts indicated in the intimation served on it.
3. The learned Single Judge, who considered the matter, took note of the averments in the statement filed on behalf of the Income Tax Department, especially the averments therein that suggested that no declaration was necessary if the claim of the petitioner was for an exemption under Section 10(23BBA) of the IT Act, and found that inasmuch as there was no dispute by the Department with regard to the entitlement of the petitioner for the benefit under Section 10(23BBA) of the IT Act, the petitioner was entitled to the benefit of the said Section as also to a refund of the tax already collected from it. For the purposes of securing a refund of tax already collected from it, the petitioner was given liberty to apply to the Commissioner of Income Tax under Section 264 of the IT Act, for passing a W.A.NO.78 OF 2020 :: 6 ::
consequential order in view of the declarations in the judgment.
4. It would appear that when, pursuant to the aforesaid judgment of the learned Single Judge, no further action for refund of the amounts due to the petitioner were forthcoming from the Department, the petitioner preferred a Contempt of Court Case [Con.Case(C).No.2580/2019], which was later closed on the Department reporting compliance with the directions in the judgment of the learned Single Judge in the writ petition. Immediately thereafter however, the Department preferred the present Writ Appeal impugning the judgment of the learned Single Judge. In the Writ Appeal, the grievance of the Department appears to be that the learned Single Judge did not provide an opportunity to the Revenue to examine the entitlement for exemption when an alternate claim for exemption, as a charitable institution, was available to the petitioner assessee as also when no claim for exemption under Section 10(23BBA) of the IT Act was made by the petitioner in its returns of income for the relevant period.
5. We have heard Sri.Christopher Abraham, the learned Standing counsel for the appellant Income Tax Department as also W.A.NO.78 OF 2020 :: 7 ::
Sri.Mahesh V. Ramakrishnan, the learned counsel for the respondent/writ petitioner.
6. Before us, it is the submission of the learned Standing counsel for the Income Tax Department that the learned Single Judge ought not to have issued a direction based on a declaration of the entitlement of the petitioner for exemption under Section 10(23BBA) of the IT Act. According to him, this was an aspect that had to be considered by the Assessing Authority for an effective adjudication based on factual materials perused by him at the time of completing the assessment.
On a consideration of the said submissions of the learned Standing counsel for the Income Tax Department, the appellant herein, we find that the grievance projected in the Writ Appeal does not arise for consideration by this Court. As already noticed, at the time when a Contempt of Court Case was filed by the writ petitioner alleging non-compliance of the directions in the judgment impugned in this Writ Appeal, the appellant itself proceeded to consider the revision petitions preferred by the writ petitioner in the meanwhile, and pass orders dated 24.9.2019 for the assessment years 2014-15 W.A.NO.78 OF 2020 :: 8 ::
and 2015-16. In the orders passed for the said assessment years, under Section 264 of the IT Act, the Principal Commissioner of Income Tax, Kozhikode, effectively set aside the earlier intimations issued to the writ petitioner for the said assessment years, and directed the Assessing Officer to verify and pass necessary orders in accordance with law on the contention raised by the petitioner as regards its entitlement for exemption under Section 10(23BBA) of the IT Act, after affording due opportunity to the petitioner assessee. Acting on the directions of the Principal Commissioner of Income Tax, the Assessing Authority concerned, by orders dated 12.12.2019, found that the petitioner assessee was in fact entitled to the benefit of exemption under Section 10(23BBA) of the IT Act, and accordingly, that no tax was payable by the petitioner assessee for the said assessment years. The amounts already collected from the petitioner assessee were held to be refundable together with interest under Section 244A of the IT Act. It is not in dispute before us now that the assessee has since received the said amounts by way of refund as well. It is also not in dispute that the proceedings of the Commissioner under Section 264 of the IT Act and the subsequent proceedings of the Assessing Authority, in compliance with the directions of the Principal Commissioner, were not the subject matter of any proceedings W.A.NO.78 OF 2020 :: 9 ::
initiated at the instance of the Department, and were not provisional in nature subject to the outcome of the Writ Appeal. In that view of the matter, we feel that there is nothing left to be adjudicated in the Writ Appeal preferred by the Department. We are also of the view that, at any rate, the orders passed by the Principal Commissioner under Section 264 of the IT Act and the consequential orders passed by the Assessing Authority giving effect to the said orders of the Principal Commissioner effectively manifest the concept of fairness in taxation that the State is bound to observe especially in cases where it comes to its notice that an assessee has committed a mistake while filing its returns before the Department. In this connection, we refer to the Circular No.14 (XL-35) dated 11.04.1955 of the Central Board of Direct Taxes, which mandates that Officers of the Department must not take advantage of the ignorance of an assessee as to his rights rather it has to seen as one of the duties of the Officers of the Department to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and towards this end, the Officers have to take initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. The said Circular of the Income Tax Department was apparently issued so as to inspire confidence in an W.A.NO.78 OF 2020 :: 10 ::
assessee, who would thereafter be convinced that he would get a fair deal from the Department. Thus, we find no merit in the Writ Appeal, and the same is accordingly dismissed.
Sd/-
A.K.JAYASANKARAN NAMBIAR JUDGE Sd/-
MOHAMMED NIAS C.P.
JUDGE prp/2/6/22