High Court of KeralaSingle Judge2019-01-03Disposed of with directions to await the Divisi...

Dr. R. P. Patel v. Assistant Commissioner of Income Tax, Circle - I, Kottayam & Commissioner of Income Tax, Kottayam

Case / Petition Number:WP(C).No. 14220 of 2009; WP(C).No. 18294 of 2009

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Justice Devan Ramachandran
Judgment Date: 2019-01-03
Court Decision / Holding: Writ petitions disposed of by directing the Department to await the judgment in W.A. No. 352/2005 and follow its terms. Recovery of amounts is to be made only in accordance with that judgment, and refunds may be available if the appellate decision favours the petitioner and permits refunds of already recovered sums. The Court also notes that the petitioner’s reliance on the earlier Single Judge ruling and Bahuleyan v. State of Kerala is acknowledged, but final relief awaits the Division Bench’s determination. WP(C) Nos. 14220/2009 and 18294/2009 are disposed accordingly.
Final Disposition: Disposed of with directions to await the Division Bench’s decision in W.A. No. 352/2005 and to act according to its outcome; rights to refunds if applicable will depend on the appellate judgment.

Parties to the Case

Appellants / Petitioners

Dr. R. P. Patel

Respondents

Assistant Commissioner of Income Tax, Circle - I, Kottayam
Commissioner of Income Tax, Kottayam

Legal Representation & Advocates

Counsels for Petitioners

• Ramesh Cherian John

Counsels for Respondents

• Jose Joseph

Case Synopsis & Summary

This writ petition (two petitions, WP(C) Nos. 14220/2009 and 18294/2009) was heard together as they concern the same assessee and common issues across three assessment years. The petitioner, Dr. R. P. Patel, contends that his returns for the years 1991-92, 1992-93 and 1993-94 were filed within time under Section 143(1)(a) of the Income Tax Act, but following a search certain Indira Vikas Patras were seized, leading to re-opening under Section 147 and completion of reassessments with added liability and interest under Sections 234B and 234C. In 1998 the Kar Vivadh Samadhan Scheme was introduced; he applied for settlement and, though entitled to full relief, received only partial relief, prompting O.P. No. 7661/1999 and a succeeding judgment reported as 273 ITR 386. The Department then stayed the Single Judge’s relief in W.A. No. 352/2005 and pressed for recovery of the disputed amounts. While the petitioner relied on Bahuleyan v. State of Kerala, the court observed that the controversial issues extend to benefit already granted by the Single Judge and the pending appellate decision. The Hon’ble Judge directed the Department to await the outcome of the Division Bench decision in W.A. No. 352/2005 and to act in accordance with its terms, including potential refunds if the appeal favours the petitioner. Consequently, the writ petitions are disposed of in terms of awaiting the appellate judgment and compliance thereafter.

Provisions of Law Cited

Section 143(1)(a) of the Income Tax ActSection 147 of the Income Tax ActSection 234B of the Income Tax ActSection 234C of the Income Tax ActKar Vivadh Samadhan Scheme (Finance Act, 1998)Section 264 of the Income Tax Act

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner submits that he filed the returns within time under Section 143(1)(a) for three assessment years and that reassessment under Section 147, following a search, led to additional liability including interest under Sections 234B and 234C. He relied on the Kar Vivadh Samadhan Scheme (Finance Act, 1998) for settlement and contends that, although he was entitled to full relief, only partial relief was granted, leading to earlier proceedings (O.P. No. 7661/1999) and a subsequent judgment (273 ITR 386) granting relief on interest. The stay of the Single Judge’s decision in W.A. No. 352/2005 by the Division Bench and the Department’s continued recovery prompted his challenge. He cites Bahuleyan v. State of Kerala to support his view that law should bind the Department during appellate proceedings. He argues for awaiting the Division Bench’s decision to avoid further litigation and for refunds if the appellate outcome is in his favour.

Contentions of Respondents

The respondents contend that because the learned Single Judge’s order has been stayed in the Division Bench, the department is entitled to recover the amounts disputed. They maintain that the Division Bench in W.A. No. 352/2005 could set aside or limit the relief, and until then, the Department should follow the stay order and recover the sums as allowed by law. They emphasize the finality of the reassessments and the need to follow the appellate process to determine the extent of relief, if any, pending the outcome of the pending appeal.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
273 ITR 386	273 ITR 386	Positive	Judgment on interest relief for the petitioner; the current court notes that the Single Judge granted relief on interest as per this decision.
Bahuleyan v. State of Kerala	2007 (4) KLT 402	Mentioned Only	Cited by petitioner as supportive authority; court references it but does not rely on it as controlling or dispositive.

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Extracted Judgment Text

Exact text extracted from official judgment records.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **THURSDAY, THE 03RD DAY OF JANUARY 2019 / 13TH POUSHA, 1940** ## **WP(C).No. 14220 of 2009** ## **PETITIONER:** **DR.R.P.PATEL,HAHNEMAN HOUSE, COLLEGE ROAD, KOTTAYAM. BY ADV. SRI.RAMESH CHERIAN JOHN** ## **RESPONDENTS:** |**1**|**ASST.COMMISSIONER OF INCOME TAX,**| |---|---| ||**CIRCLE - I, KOTTAYAM.**| |**2**|**THE COMMISSIONER OF INCOME TAX,**| ||**KOTTAYAM.**| ||**BY ADV. SRI.JOSE JOSEPH**| **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03.01.2019 ALONG WITH WP(C).18294/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WPC 14220 & 18294/09 2 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **THURSDAY, THE 03RD DAY OF JANUARY 2019 / 13TH POUSHA, 1940** ## **WP(C).No. 18294 of 2009** ## **PETITIONER:** **DR.R.P.PATEL,HAHNEMAN HOUSE, COLLEGE ROAD, KOTTAYAM.** **BY ADV. SRI.RAMESH CHERIAN JOHN** ## **RESPONDENTS:** |**1**|**THE ASST. COMMISSIONER OF INCOME TAX,**| |---|---| ||**CIRCLE-I, KOTTAYAM.**| |**2**|**THE COMMISSIONER OF INCOME TAX,**| ||**KOTTAYAM.**| ||**BY ADV. SRI.JOSE JOSEPH**| **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03.01.2019 ALONG WITH WP(C).14220/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WPC 14220 & 18294/09 3 ## **W.P.(C)Nos.14220 & 18294 of 2009** ## **JUDGMENT** These two writ petitions are being disposed of jointly since they relate to the same assessee, the petitioner herein and because the issues are common, though relating to three different assessment years. 2. The petitioner says that he had filed his returns, for the assessment years 1991-92, 1992-93 and 1993-94, within time under Section 143(1)(a) of the Income Tax Act ('the Act' for short) and that there was subsequently a search at his premises during which certain Indira Vikas Pathras were seized, leading to the re-opening of his assessments under Section 147 of the Act. He says that the Department, thereafter, completed the assessment under Section 143(3) read with Section 147 of the Act and that certain additional amounts were assessed against him, including interest under Sections 234B and 234C, for the three assessment years. 3. According to the petitioner, in the year 1998, the 'Kar Vivadh Samadhan Scheme' was introduced through the Finance Act, 1998 and that he had applied for settlement of the liability under the WPC 14220 & 18294/09 4 said Scheme. The petitioner says that even though he made the application as per the mandate of the Scheme and even though he was fully entitled to all the benefits under it, only a partial relief was given, compelling him to approach this Court by filing O.P.No. 7661/1999, consequentially leading to a judgment by a learned Single Judge of this Court, which is reported in 273 ITR 386. The petitioner says that though his contentions against levy of interest under Sections 234B and 234C of the Act have been accepted in this judgment, certain other benefits were denied, thus forcing him to file W.A.No.352/2005, which is stated to be still pending before this Court. 4. As per the petitioner, since the judgment of the learned Single Judge was stayed in W.A.No.352/2005, it was interpreted by the Department to assert that even the interest portion found in his favour in the said judgment would become recoverable and that steps were taken by them to do so. The petitioner says that he was, therefore, constrained to file these writ petitions, relying upon the judgment of this Court in **Bahuleyan v. State of Kerala** (2007 (4) KLT 402) and that notwithstanding the suspension of the operation of the judgment of the learned Single Judge, the declaration of law WPC 14220 & 18294/09 5 therein still continues to bind the second respondent herein. The petitioner adds that, in fact, W.A.No.352/2005 had already been heard by a Division Bench of this Court and is now reserved for judgment and that if this appeal is allowed, then the demand made against him would be of no consequence and in the alternative, even if the appeal is dismissed, then he would still obtain the benefits as have already been granted by the learned Single Judge in 273 ITR 386. 5. I have heard Sri.Remesh Cherian John, learned counsel appearing for the petitioner and Sri.Jose Joseph, learned Standing Counsel appearing for the respondents. 6. The facts involved in these cases are not very much in dispute, that a learned Judge has, in the judgment reported in 273 ITR 386, already granted benefit to the petitioner, as far as the levy of interest is concerned, is also not disputed. The only point of controversy is that the judgment of the learned Single Judge has been stayed in W.A.No.352/2005 and the Department, therefore, maintains that they are entitled to recover the amounts impugned in these writ petitions. 7. The learned Standing Counsel for the respondents vehemently contends that since the judgment of the learned Single WPC 14220 & 18294/09 6 Judge has already been stayed by a Division Bench, the petitioner would not be entitled to any of the reliefs granted to him through the said judgment and therefore, that they are entitled to recover the entire amounts as demanded against him. 8. Even when I hear the learned Standing Counsel for the respondents as afore, the undeniable fact remains that through the judgment of the learned Single Judge, the petitioner has already obtained benefits as far as the levy of interest is concerned. It is only if the judgment is set aside that the petitioner would become liable to make payment of the said amounts. However, it is also undisputed that W.A.No.352/2005 has been filed by the petitioner and that the judgment of the learned Single Judge has not been challenged by the Department until now. Therefore, in normal circumstances, it is unlikely that the Division Bench would set aside the judgment of the learned Single Judge and even if the appeal is to be dismissed, which is the worst case scenario for the petitioner, the judgment of the learned Single Judge is likely to be approved. 9. Therefore, I see no reason why the Department should now attempt to recover the amounts from the petitioner as per the impugned demand, particularly when I am told that W.A.No.352/2005 WPC 14220 & 18294/09 7 has been heard by a Division Bench of this Court and reserved for judgment. It is also a matter of prudence and judicial discipline that the respondents await the judgment in the writ appeal because if the said appeal is allowed, then the petitioner would be entitled to the benefits greater than what has been granted to him by the learned Single Judge and if, on the contrary, the appeal is dismissed, then the petitioner would still be entitled to the benefits granted to him by the learned Single Judge. Consequently, I am of the view that the respondents should await the judgment in W.A.No. 352/2005, which, in my view, would avert further litigation and controversy in future. In the afore circumstances, I order these writ petitions and direct the respondents to await and act explicitly as per the judgment of the learned Division Bench in W.A.No.352/2005, so that it will then obtain clarity as to the nature of the reliefs that would finally become entitled to the petitioner. I make it clear that once the judgment in W.A.No.352/2005 is delivered, the Department will be entitled to, subject to its terms, to recover the amounts from the petitioner, as is permitted therein, after following the procedural mandate of the Act. WPC 14220 & 18294/09 8 At this time, the learned counsel for the petitioner submits that as per the instructions from the petitioner, the entire amounts towards interest have already been recovered from the petitioner and therefore, it may be clarified that in the event of W.A.No.352/2005 being ordered in favour of the petitioner, he would be entitled to seek refund of the amounts already recovered from him. It is needless to say that such liberty is available to the petitioner even without the orders of this Court, particularly because all issues are still pending before the learned Division Bench in W.A.No.352/2005. Sd/Devan Ramachandran, Judge tkv WPC 14220 & 18294/09 9 ## **APPENDIX OF WP(C) 14220/2009** **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE ORDER DATED 10.05.07 EXHIBIT P2 TRUE COPY OF THE ORDER DATED 26.2.99 EXHIBIT P3 TRUE COPY OF THE PETITION DATED 01.11.07** **TRUE COPY OF THE PETITION DATED 01.11.07 UNDER SECTION 264 OF THE ACT** **EXHIBIT P4 TRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE 2ND RESPONDENT** **EXHIBIT P5** **TRUE COPY OF THE ORDER U/S 264 OF THE ACT DATED 26.03.2009** /TRUE COPY/ P.S. TO JUDGE WPC 14220 & 18294/09 10 ## **APPENDIX OF WP(C) 18294/2009** **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE ORDER DATED 10.05.07 EXHIBIT P2 TRUE COPY OF THE ORDER DATED 10.05.07** - **EXHIBIT P3 TRUE COPY OF THE CERTIFICATE DATED 26.02.99 UNDER KAR VIVAD SAMADHAN SCHEME** **EXHIBIT P4 TRUE COPY OF THE PETITION U/S 264 OF THE INCOME TAX ACT DATED 01.11.2007 FOR THE ASST. YEAR 1991-92** **EXHIBIT P5 TRUE COPY OF THE PETITION U/S.264 OF THE INCOME TAX ACT DATED 01.11.2007 FOR THE ASST. YEAR 1993-94** - **EXHIBIT P6 TRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE 2ND RESPONDENT** **EXHIBIT P7 TRUE COPY OF THE ORDER OF THE 2ND RESPONDENT U/S 264 OF THE ACT DATED 26.03.09 FOR THE ASST. YEAR 1991-92** **EXHIBIT P8 TRUE COPY OF THE ORDER OF THE 2ND RESPONDENT U/S 264 OF THE ACT DATED 26.03.09 FOR THE ASST. YEAR 1993-94** /TRUE COPY/ P.S. TO JUDGE