Commissioner of Income Tax vs Shah Ravindra Derogarh

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Akil Abdul Hamid Kureshi, J.—The Revenue has challenged an order passed by the Income-tax Appellate Tribunal dated September 13, 2013, as at annexure A to the petition. Brief facts are as under:

The respondent-assessee was a workman. For the assessment year 2001-02, he filed his return which was done beyond the time limit specified under section 139(1) of the Income-tax Act, 1961 ("the Act" for short). In such return, which he filed on November 17, 2003, he had claimed a refund of Rs. 16,589. It seems that almost simultaneously he had also filed an application under section 119(2) of the Act before the Commissioner seeking condonation of delay in filing the return. For many years the return with the refund claim as well as his application for condonation of delay in filing the return remained pending before the Commissioner. He, therefore, sent a reminder on August 29, 2008, and stated as under:

"I have filed an application for condonation of delay in filing the return of income for the assessment year 2001-02 which was beyond the time limits of section 139(1) of the Income-tax Act 1961. Simultaneously the return of income was also filed in Ward-4, Nadiad claiming a refund of Rs. 16,589 relevant to Acknowledgment No. 2241011266, dated November 17, 2003. The matter is pending till date only because the application under section 119(2)(b) filed on November 16, 2003 is pending with the Commissioner of Income-tax-II, Baroda.

I am a poor illiterate villager knowing nothing on income-tax matters and it would be an act of kindness if the matter is disposed of in my case with necessary directions to the Income-tax Officer concerned considering the fact that refund is pending for more than four years."

The Commissioner finally passed an order on February 21, 2009, and rejected the petitioner''s application under section 119(2) of the Act. He observed that the petitioner''s application of ignorance of law was not a valid excuse. No genuine hardship was also demonstrated.

The respondent thereupon approached the Income-tax Ombudsman taking up the issue of rejection of his application for condonation of delay. The Ombudsman disposed of such application by an order dated December 5, 2012. In such order, while upholding the order of the Commissioner, the Ombudsman disapproved the stand adopted by the Commissioner before the Ombudsman. The relevant portion of the order reads as under:

"7. As the order under section 119(2)(b) of the Act has already been passed on January 22, 2009, and the matter decided against the applicant, the decision of the Commissioner of Income-tax acts as a res judicata in the present case and, therefore, lends finality to the issue. In spite of the apparent hardships faced by the applicant (he has mentioned in his application before us that he is a wage earner) the Commissioner of Income-tax''s decision is a conclusive one. The present application calling for the grant of the refund cannot be entertained by us.

Before concluding, I would like to record here that the present Commissioner of Income-tax-II, (Shri Shyam Kumar) Vadodara''s letter mentioned is clothed in a most aggressive language and somewhat incorrect analysis. The present Commissioner of Income-tax is well advised to avoid using intemperate language before a superior forum when facts are not correctly reported by him. He should refrain in future from questioning the jurisdiction/competence of the said authority or even attempt to give a judgment on the same. It is not his case to question whether a person, apparently a layman, with an unaddressed grievance, has a right to bring the matter before an authority empowered to grant him a hearing. The Commissioner of Income-tax is advised to keep in mind that patience is a virtue and the principles of natural justice is to hear the other side. Agitation of an unredressed grievance before the higher authorities cannot partake of the nature of ''repetitive litigation'' or ''contumacious'' one averred by him. It is indeed a right of the aggrieved person to do so. The admissibility or otherwise of the claim is for decision by that authority and not any authority below like Commissioner of Income-tax under reference here. A strong note of displeasure is conveyed to him as a cautionary measure."

The respondent thereupon filed an appeal before the Income-tax Appellate Tribunal. The Tribunal, by an order dated May 15, 2012, dismissed such appeal holding that the same was not maintainable since the order passed by the Commissioner under section 119(2)(b) of the Act was an administrative order. The respondent filed application for rectification before the Tribunal. The Tribunal on such application referring to the decision of this court Commissioner of Income Tax Vs. Patel Maheshbhai Dahyabhai, allowed the rectification application in part making the following observations:

"3. We have heard the rival submissions and perused the material on record. From the order dated January 5, 2009, passed under section 119(2)(b) we find that the application of the assessee was rejected for the reason that the return was filed almost three years from the due date. The assessee''s submission is that the delay was not of three years but of eight months and seventeen days. It was further the submission of the learned authorised representative that the delay be directed to be condoned in view of the fact that the assessee is a retired labourer who is ignorant about the income-tax laws. The learned Departmental representative has not brought any contrary facts to contradict the submissions of the learned authorised representative.

We find that the assessee is a retired labourer and is not fully conversant with tax laws. Considering the totality of facts and in the interest of justice we are of the view that considering the peculiar circumstances of the case the Commissioner of Income-tax may consider the case afresh including the issue of condonation of delay and after giving proper opportunity of hearing to the assessee pass the necessary orders. It will be pertinent to mention that on similar facts co-ordinate Bench of this Tribunal in the case of CIT v. Patel Maheshbhai Dahyabhai had given similar directions and the writ petition filed by the Revenue against that order of Tribunal has been dismissed by the hon''ble jurisdictional High Court, vide Commissioner of Income Tax Vs. Patel Maheshbhai Dahyabhai, .

Miscellaneous application is accordingly allowed."

It is this order of the Tribunal which the Department has challenged in the present petition. As pointed out by the counsel for the Revenue under very similar circumstances, this court in the above referred order Commissioner of Income Tax Vs. Patel Maheshbhai Dahyabhai, though found that the Tribunal ought not to have exercised the power of rectification in facts of the case refused to entertain the writ petition. The observation of the court reads as under (page 194):

"We have no hesitation in holding that the Tribunal''s order on rectification application suffered from serious legal defect. If in the original order, the Tribunal was of the opinion that the order passed by the petitioner was not appealable, in exercise of rectification powers the Tribunal simply could not have given directions to the Commissioner to pass fresh order on the respondent''s application. In essence, the Tribunal nullified the original order of the Commissioner and directed him to pass a fresh order after hearing the respondent. The Tribunal could have done this if the appeal was maintainable. When the Tribunal was of the opinion that the appeal was not maintainable, there was no question of giving such a direction, particularly in the order on application for rectification, the Tribunal did not come to any different conclusion. In other words, without holding that the appeal was maintainable, the order under challenge could not have been interfered with.

This petition, however, involves peculiar facts. The respondent-assessee, who was a labourer and retired more than 10 years back, did not have any taxable income under normal circumstances. He had perhaps in his entire life never filed any return of income. As a part of golden hand shake, he received a lump sum amount of Rs. 1,30,000. The employer deducted a hefty tax at source of Rs. 33,949. It appears that he was entitled to refund of such tax deducted at source. Under such circumstances, he filed his return for the assessment year 2000-01. Such return was delayed. Such return is ignored on the ground that no valid return is filed. His refund of Rs. 33,949 is withheld for the last about 10 years. It is for this purpose he prayed to the Commissioner that such delay be condoned. For the present, we are not commenting on the Commissioner''s approach while deciding such application. All that the Tribunal has in the impugned order done is to require the Commissioner to pass a fresh order. This the Tribunal was persuaded to do because in the order passed by the Commissioner under section 119(2)(b) of the Act, he was influenced substantially by the fact that according to him, the return was belated by three years. The respondent pointed out to the Tribunal that such delay was of about one year and three months. The Commissioner had mistakenly taken into account the date of filing of the application under section 119 of the Act.

Only to correct the Tribunal''s order, we are simply not prepared to call the respondent before us. The man has retired in the year 2000 as a labourer. He is seeking refund of small sum of Rs. 33,949 which for him is very substantial. Only to correct an apparent error committed by the Tribunal, we would not drag him before High Court. Even if we had issued notice and called him before us, we would have been persuaded to replace the Tribunal''s order by our order and same direction would have followed. Only to bring about some result in a correct manner, we would be wholly unjustified in asking a man of advanced age and of poor means before us. Response to a High Court notice comes at a considerable cost. In exercise of discretionary writ jurisdiction, we refuse to entertain this petition. This is the beauty of the writ jurisdiction and we would be failing in our duty, if we entertained the petition.

In the result, the petition is dismissed." 6. Counsel for the Revenue also brought to our notice another order dated November 25, 2013, passed by this court in Special Civil Application No. 16524 of 2013 in case of CIT v. Parmar Kanubhai Somabhai [2014] 2 ITR-OL 517 (Guj) in which it was observed as under (page 522):

(5.4) However, from the aforesaid it can be said that the learned Tribunal seems to be of the view that the Commissioner may consider the case afresh including the issue of condonation of delay and after giving opportunity of hearing to the assessee and pass the necessary orders. Therefore, as such and without further entering into any technicality, it can be said that the learned Tribunal has set aside the order passed by the Commissioner and has remanded the matter to the Commissioner to pass a fresh order. Therefore, what is required to be considered is, whether the learned Tribunal is justified in passing the impugned order?

(5.5) As stated hereinabove, as such the learned Tribunal dismissed the appeal as not maintainable and as such rightly held that the appeal was not maintainable. Once the appeal itself was held to be not maintainable, it is not appreciable how the rectification application in an appeal which was held to be not maintainable, can be said to be maintainable. Under the circumstances, as such the rectification application in the appeal which was held not maintainable, ought not to have been entertained by the learned Tribunal, unless in a rectification application it was submitted that the learned Tribunal has committed an error in holding that the appeal is not maintainable and the learned Tribunal takes the view that the appeal was maintainable. In the present case, that is not so. Neither was there any contention that the appeal was maintainable against the order passed by the Commissioner nor in fact there is any finding given by the learned Tribunal in the impugned order that the appeal is held maintainable. Under the circumstances, as such the order passed by the learned Tribunal in rectification application/miscellaneous application is wholly without jurisdiction, as there cannot be any rectification/miscellaneous application in an appeal which was not maintainable before the Tribunal.

(5.6) Even otherwise the impugned order cannot be sustained and it suffers from serious legal defect. As stated hereinabove, if in the original order, Tribunal was of the opinion that the order passed by the Commissioner was not appealable, in exercise of rectification powers the Tribunal simply could not have given directions to the Commissioner to pass fresh order on the respondent''s application. As such by passing the impugned order in the rectification application, the Tribunal has nullified the original order of the Commissioner and directed him to pass a fresh order after hearing the respondent. When the Tribunal was of the opinion that appeal was not maintainable, there was no question of giving such a direction more particularly in the order on application for rectification, the Tribunal did not come to a different conclusion.

In view of the above, the impugned order passed by the learned Tribunal passed in rectification application cannot be sustained and the same deserves to be quashed and set aside and as observed hereinabove, the same is as such without jurisdiction. Under the circumstances, the impugned order dated May 3, 2013 passed by the learned Income-tax Appellate Tribunal in Miscellaneous Application No. 220/Ahd./2012 in I.T.A. No. 548/Ahd./2012 is hereby quashed and set aside. Rule is made absolute to the aforesaid extent. In the facts and circumstances of the case, there shall be no order as to costs."

Once again in the present writ petition we would not like to interfere for the primary reason that the question involved is of sum as small Rs. 16,000 claimed by way of refund by a retrenched/retired workman. His application for delay condonation was considered on incorrect factual premises. Had he against the order passed by the Commissioner on his application under section 119(2)(b) of the Act approached before this court, we would have in all probabilities directed the Commissioner to take a fresh decision. Considering these facts arising from the record, we refuse to exercise our discretionary writ jurisdiction. Before closing however, we cannot lose sight of one important aspect of the matter, viz., despite our earlier order dated May 2, 2013, being pointed out to the Tribunal in this case, the Tribunal still exercised its power of rectification and remanded the proceedings to the Commissioner. This, in our opinion, was a serious error. When this court had, in the order dated May 2, 2013, portion of which is reproduced in this order, had held that the Tribunal was correct in first order holding that the Commissioner''s order under section 119(2)(b) was not appealable before the Tribunal and that, therefore, such order did not call for rectification. The Tribunal referring to and relying on the same judgment of the respondent could not have repeated the same error in law. In any case, this position had been made beyond any controversy by a subsequent judgment of this court November 25, 2013 in case of CIT v. Parmar Kanubhai Somabhai [2014] 2 ITR-OL 517 (Guj). We, therefore, expect the Tribunal not to repeat such mistakes in future whenever similar applications come up for consideration, as we are told by the counsel for the Revenue that similar applications have been filed in fairly large numbers in other cases. Even from the order of the Ombudsman we notice that several similar applications have been decided by the Commissioner. Copy of this order may be forwarded to the Registry of the Income-tax Appellate Tribunal, at Ahmedabad. The writ petition is disposed of accordingly.