Shayona Pulp Conversion Mills P. Ltd. vs Commissioner of Income Tax,

The first petition is filed to challenge the order

of the Commissioner of Income Tax made in the

proceeding filed by the present petitioner under section

119(2)(b) of the Income Tax Act, 1961 and that was in

respect of the refund of income tax for the assessment

year 2004-2005. The second petition is filed by the same

petitioner in respect of assessment year 2005-2006. Both

the sides are heard.

The petitioner is a Private Limited Company

and it had prayed for refund of excess income tax paid by

it for the aforesaid assessment years. As there was the

delay caused in filing the claims, the claims were filed

along with applications for condonation of delay. The

Commissioner of Income Tax has considered various

Circulars of the Board and also the instructions. The

Commissioner has held that the conditions given in the

Circulars and the instructions are not fulfilled and further

it is not a fit case for condonation of delay under section

119(2)(b) of the Income Tax Act. Thus, prima facie merits

of the claim are also touched by the Commissioner. It

cannot be disputed that for consideration of application

for condonation of delay both, sufficient cause and

existence of some arguable case need to be made out.

It is the case of the petitioner-company that the

liability to pay income tax for the year 2004-2005 was nil

and there was business loss which was to be carried

forward of Rs.1,11,81,188/-. The return of income tax was

filed on 9-9-2005 and then for the assessment year 2005-

2006 the return was filed on 29-10-2005 and carried

forward loss was assessed at Rs.1,12,116/-. For both the

assessment years the assessee, petitioner-company had

paid MAT under section 115JB of the Income Tax Act

through self assessment, like tax of Rs.2,72,300/- for

assessment year 2004-05 and Rs.48,720/- for assessment

year 2005-06 and in those returns no refund was claimed.

It is the contention of the petitioner-company that due to

financial problems faced by it, it had applied to State Bank

of India for one time settlement in respect of the

outstanding loan taken for the business and the bank had

considered positively the request made and relief to the

extent of Rs.4,93,87,291/- was given and out of that there

was the remission of Rs.1,35,78,000/- towards the

principal amount of term loan. It is the contention that in

profit and loss account the waiver of principal was duly

credited but inadvertently it remained to be excluded from

the computation of MAT. It is contended that if this

amount was excluded, it could have shown business loss

of Rs.73,34,378/- for the assessment year 2004-05. The

petitioner-company had actually shown the book profit of

Rs.64,53,855/- for the assessment year 2005-06. It is

contended that as the petitioner was entitled to carry

forward the losses, for the assessment year 2005-06 the

book profit under section 115JB would have been nil.

It is the case of the petitioner-company that as

it was sick industry, it could not submit its application

within time prescribed for rectification or filing of revised

returns and the mistake was detected late and so the

delay was caused. Thus, the petitioner-company had

prayed for refund of income tax of Rs.2,72,300/- and

Rs.48,720/-.

In the order of the Commissioner it is

mentioned that under the Board''s Circulars and

instructions the refund cannot be given as petitioner had

paid MAT by self assessment and it was not a case of

TDS/TCS and also the payment of advance tax. For claim

of interest it is mentioned that such claim is not

permissible under section 119(2)(b) of the IT Act. It is also

observed that the returns of income tax for the

assessment years 2004-2005 and 2005-2006 were not the

first time returns and the original returns were filed on 9-

9-2005 and 29-10-2005 respectively and admittedly in

those returns refund was not claimed. With the previous

returns there was certificate of C.A. and with the new

returns certificate of another C.A. was produced by the

petitioner-company.

In section 237 of the Income Tax Act provision

is made for refund of income tax paid in excess. In section

239 of the Act the limitation period is given which is one

year from the last date of the assessment year and revised

returns were also required to be filed within one year.

When such period of limitation is prescribed under the

Act, the application was filed on 12-5-2009, many years

after the expiry of the period prescribed for filing the

claim.

The learned counsel for the petitioner took this

Court through the provision of Section 119(2)(b) of the

Income Tax Act and submitted that when the Board has

the power of issuing general or special order to authorise

to admit application or claim for such relief, after the

period specified by or under the Act, the Commissioner

ought to have exercised such power and ought to have

condoned the delay. It is already observed that the

Commissioner has touched the merits of the claim also by

referring some Circulars and instructions issued by the

Board and has held that the benefit given under those

Circulars and the instructions cannot be given in the

present matter. Further, the reason given for the delay

also is not acceptable. On the previous occasion also there

was certificate of the C.A. and admittedly the petitioner

had shown the aforesaid amount like remission in

principal amount of the term loan in profit and loss

account and the book profit of more than Rs. 64 lakh was

shown. If the business loss can be carried forward, there

was the opportunity for the petitioner if such entitlement

continues to get the benefit of that provision in

subsequent year also. But it appears that in the first

return filed the book profit was shown and on that basis

self assessment of the income tax was made. Though the

merits cannot be considered in detail while deciding

application for condonation of delay these things need to

be considered to ascertain as to whether there is arguable

prima facie case in favour of the applicant. That point is

not considered in detail and there is no need to do it in the

present proceeding also.

The provision section 119(2)(b) runs as under :

"119. Instructions to subordinate authorities.

(1) ....

(2) Without prejudice to the generality of the foregoing power, --

(a) ....

(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case of class of cases, by general or special order, authorise any income-tax-authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law."

The order issued by the Board by exercising

this power dated 26-20-1993 is on the record and it shows

that it is applicable to the excess tax deducted at source,

collected at source and payment of advance tax made

under the provisions of Chapters XVII-B, XVII-BB and

XVII-C respectively and the amount of refund does not

exceed Rs. one lakh for any assessment year. Thus, the

self assessment was not included in this order issued by

the Board. It appears that subsequently on 9-6-2015 order

came to be issued by the Board in which the category of

self assessment tax was included in the order which can

be made by the Board under section 119(2)(b) of the

Income Tax Act. Thus, the order came in existence

subsequently and the Commissioner had no power to

condone delay on the date when the order was made on

the application filed by the present petitioner.

The learned counsel for the petitioner placed

reliance on some observations made by the Division Bench

of this Court at Principal Seat in Writ Petition

No.3087/2006 ( Artist Tree Pvt. Ltd. v. Central Board of

Direct Taxes and Others ). The application in that matter

was filed on 7-4-2002 and it was the matter of tax

deducted at source. Thus, the observations made in that

case can be of no use in the present matter. Reliance was

placed on the observations made by Punjab & Haryana

High Court in the case reported as (2005) 1 RCR

(Criminal) 591 ( Jaswant Singh Bambha v. Central Board

of Direct Taxes And Others ). Reliance is also placed on

the case reported as 2010 (Supp.) Bom.C.R. 196 ( Sitaldas

K. Motwani v. Director General of Income Tax & Ors ) . On

the basis of the observations made in these cases it was

submitted for the petitioner that there is power with the

Board to issue such instructions or order and so the

Commissioner ought to have condoned the delay. On this

point, learned counsel for the respondent, Department,

placed reliance on some observations made by the Apex

Court in the cases reported as (1) 2008 AIR SCW 1461

( Singh Enterprises v. Commissioner of Central Excise,

Jamshedpur); and, (2) (2009) 5 SCC 791 ( Commissioner

of Customs and Central Excise v. Hongo India (P) Ltd .)

The cases of Apex Court are altogether on different points

and provisions of different law were involved in those

matters. Whenever there is special provision in special

enactment fixing the period of limitation even the Court

cannot extend that period and the provision of section 5 of

the Limitation Act cannot be applied in those cases. There

cannot be dispute over that proposition. In the present

matter, due to the provision like section 119(2)(b) made in

the Income Tax Act, it can be said that discretionary

power is given to the Board to issue such instructions and

only after that the assessing authority can use such power.

As in the past, at the time when the claim of the petitioner

was considered, there was no such instruction or order

from the Board, in the present matter such benefit cannot

be given to the petitioner. Thus, no case is made out for

interference in the order made by the Commissioner of

Income Tax. In the result, both the petitions stand

dismissed.