High Court of KeralaSingle Judge2012-06-27Writ petition disposed of; Ext.P4 set aside; ma...

R.M. JAYADEVAN v. DEPUTY COMMISSIONER OF INCOME TAX, INVESTIGATION CIRCLE I, CALICUT & ORS

Case / Petition Number:WP(C).No. 110 of 2007 (K)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: P.R. Ramachandra Menon
Judgment Date: 2012-06-27
Court Decision / Holding: Ext.P4 is set aside and the matter remitted to the 2nd respondent for fresh consideration and to pass appropriate orders in accordance with law, as expeditiously as possible, within three months from the date of receipt of a copy of the judgment. The writ petition is disposed of.
Final Disposition: Writ petition disposed of; Ext.P4 set aside; matter remitted to the second respondent for fresh, reasoned consideration within three months in light of law and facts.

Parties to the Case

Appellants / Petitioners

R.M. Jaya devan, M/S Premier Auto Service, East Nadakkavu, Calicut

Respondents

Deputy Commissioner of Income Tax, Investigation Circle I, Calicut
Chief Commissioner of Income Tax, C.R.Building, I.S.Press Road, Kochi-18
Joint Commissioner of Income Tax, Calicut Range, Calicut

Legal Representation & Advocates

Counsels for Petitioners

• Sri. T.M. Sreedharan
• Sri. V.P. Narayanan

Counsels for Respondents

• Sri. Jose Joseph, Senior Counsel for Income Tax
• Sri. George K. George, Senior Counsel for IT

Case Synopsis & Summary

This writ petition challenges Ext.P4, an order denying the petitioner waiver of interest under Sections 234A, 234B and 234C of the Income Tax Act for the assessment year 1995-96. The petitioner had filed a return showing total income of Rs.66,540 with tax under Section 140A paid at Rs.9,312. The 29.03.2000 assessment under Section 143(3) read with Section 147 attributed 3/10 of the income to the petitioner and 7/10 to KP Ahamed Kutty, a timber merchant, forming a joint liability scenario. The petitioner sought waiver under Circular F.No.400/234/95-IT(B) dated 23.05.1996 issued under Section 119(2)(a) of the IT Act; Ext.P3 was filed on 28.09.2000, but Ext.P4 (02.11.2006) denied relief on the basis of Circular dated 26.06.2006 and Board instructions. The petitioner contends Ext.P4 is not a speaking order and that there is discrimination because the KP Kutty case (Ext.P6) received relief while the petitioner did not. Respondents contend that the Circulars define eligibility and that extending relief does not erect a right to relief. The High Court ultimately set aside Ext.P4, remitting the matter to the second respondent for fresh, reasoned consideration within three months, upholding the principle that a decision must be law-and-fact based and not mechanically following circulars.

Provisions of Law Cited

Section 234ASection 234BSection 234CSection 119(2)(a) of the Income Tax ActSection 140ASection 143(3) read with Section 147

Legal Doctrines & Maxims

Benefit granted by mistake should not be perpetuated; writ of mandamus cannot compel grant of such mistaken benefit (Chandigarh Administration and another v. Jagjit Singh, AIR 1995 SC 705; Gursharan Singh v. NDMC, (1996) 2 SCC 459)
Writ petitions require a speaking order with reasons; genuineness and legality of decisions must be demonstrated rather than mere circular compliance (general administrative law principle)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends eligibility for waiver of interest under Secs. 234A, 234B and 234C is covered by Circular F.No.400/234/95-IT(B) dated 23.05.1996 issued under Sec.119(2)(a). The assessment for AY 1995-96 attributed 3/10 of income to the petitioner and 7/10 to KP Ahamed Kutty; Ext.P3 was filed on 28.09.2000 for waiver but Ext.P4 (02.11.2006) denied relief relying on Circular dated 26.06.2006. The petitioner argues Ext.P4 is not a speaking order and that the decision to rely on the later circular deprives him of equal treatment since Ext.P6 granted relief to the Kutty case for a similar factual milieu. The changes between the 1996 and 2006 circulars are minimal structurally; hence there is no rational basis to deny relief only to the petitioner. Reliance was placed on decisions emphasizing that benefits granted by mistake should not be perpetuated and that writs of mandamus cannot compel erroneous relief (Chandigarh Administration v. Jagjit Singh; Gursharan Singh v. NDMC), as well as on Jimmichan M. Varicatt and a companion decision. The petitioner seeks quashing Ext.P4 or remand for proper, reasoned consideration.

Contentions of Respondents

The respondents contend that the petitioner misreads the circulars; Sub-clauses (a)-(d) of the 1996 Circular relate to 234A, 234B, and 234C, while residual Sub-clause (e) pertains to 234A only. Circulars were superseded by the 2006 Circular; the 7/10 share of capital gains in the Kutty matter is not a mandate to grant relief to the petitioner. The 26.06.2006 Circular and Board instructions apply to grant of relief; Ext.P4 being a non-speaking order is not fatal but the practical effect is that eligibility remains unsettled; reliance on earlier decisions, including Jimmichan Varicatt, is not dispositive. The case law and policy indicate that extending relief cannot be done mechanically and must be grounded in the facts, law, and the circulars in force; thus, the petition should fail or be remanded for proper consideration.

Cited Precedents (4)

Case Name	Citation	Treatment	Explanation
Chandigarh Administration and another v. Jagjit Singh and another	AIR 1995 SC 705	Positive	Cited to establish that benefits granted by mistake cannot be perpetuated and a writ of mandamus cannot compel such relief.
Gursharan Singh and Others v. New Delhi Municipal Committee and others	(1996) 2 SCC 459	Positive	Supports the proposition that relief cannot be granted on mistaken or arbitrary grounds and underscores caution in perpetuating benefits.
Chief Commissioner of Income Tax & Anr. v. Jimmichan M. Varicatt	[(2011) 330 ITR 338 (Ker)]	Mentioned Only	Cited in relation to related issues; no direct application made in the reasoning presented.
W.P.(C) No.12494 of 2004(K)	—	Mentioned Only	Referenced as a related decision; not a controlling authority in the reasoning presented.

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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 P.R.RAMACHANDRA MENON** **WEDNESDAY, THE 27TH DAY OF JUNE 2012/6TH ASHADHA 1934** **WP(C).No. 110 of 2007 (K) -------------------------** **PETITIONER(S) :** **---------------------** **R.M.JAYADEVAN, M/S.PREMIER AUTO SERIVICE, EAST NADAKKAVU, CALICUT.** **BY ADVS.SRI.T.M.SREEDHARAN SRI.V.P.NARAYANAN** **RESPONDENT(S) :** - **------------------------** **1. THE DEPUTY COMMISSIONER OF INCOME TAX, INVESTIGATION CIRCLE I, CALICUT.** **2. THE CHIEF COMMISSIONER OF INCOME TAX, C.R.BUILDING, I.S.PRESS ROAD, KOCHI - 18.** **3. THE JOINT COMMISSIONER OF INCOME TAX, CALICUT RANGE, CALICUT.** **BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX BY SRI.GEORGE K. GEORGE, SC FOR IT** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27-06-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **AMV** **WP(C).No. 110 of 2007 (K)** ## **APPENDIX** |**PETITIONER(S) EXHIBITS**|**:**|| |---|---|---| |**EXHIBIT-P1.**|**:**|**COPY OF THE STATEMENT OF TOTAL INCOME**| |||**FURNISHED ALONG WITH THE RETURN ON**| |||**05.01.1997.**| |**EXHIBIT-P2.**|**:**|**COPY OF THE ASSESSMENT ORDER PASSED**| |||**U/S.143(3) R.W.S.147 DATED 29.03.2000 PASSED**| |||**BY THE FIRST RESPONDENT.**| |**EXHIBIT-P3.**|**:**|**COPY OF THE PETITION FOR WAIVER OF INTEREST**| |||**SUBMITTED BEFORE THE SECOND RESPONDENT**| |||**BY THE PETITIONER.**| |**EXHIBIT-P4.**|**:**|**COPY OF**<br>**THE ORDER NO.**| |||**CC.CHN/W1/CLT.64/2000-01 DATED 02.11.2006**| |||**PASSED BY THE SECOND RESPONDENT.**| |**EXHIBIT-P5.**|**:**|**COPY OF THE ORDER DATED 28.03.2000 PASSED**| |||**BY THE THIRD RESPONDENT.**| |**EXHIBIT-P6.**|**:**|**COPY OF ORDER DATED 25.05.2001 PASSED BY**| |||**THE 2ND RESPONDENT IN THE CASE OF**| |||**MR.K.P.AHAMMEDKUTTY.**| |**RESPONDENTS' EXHIBITS**|**:**|**NIL**| ## **/TRUE COPY/** ## **P.A.TO JUDGE** **AMV** ## **P.R.RAMACHANDRA MENON,J.** ## **---------------------------------------** ## **W.P. (C) NO. 110 of 2007 (K) ----------------------------------------** Dated this the 27[th] day of June, 2012 ## **JUDGMENT** The rejection of the claim for waiver of interest under Section 234A, 234B & 234C, by passing Ext.P4 order, while granting the benefit to the counterpart of the petitioner who had pursued the deal acting hand-in-hand with the petitioner vide Ext.P6, is the subject matter of challenge in this writ petition. 2. The petitioner is claiming for the benefit of the Circular bearing F.No.400/234/95-IT(B) dated 23.05.1996, which has been issued in exercise of the power conferred under Section 119 (2)(a) of the Income Tax Act. The case of the petitioner is that, in respect of the assessment year 1995 -96, return was filed, declaring a total income of Rs.66,540/- (Rupees Sixty six thousand five hundred and forty only), as borne by Ext.P1 showing the tax paid under Section 140A as Rs.9,312/- (Rupees Nine thousand three hundred and twelve only). However, Ext.P2 assessment order came to be passed on 29.03.2000, relying on some property deal pursued by the petitioner in association with one K.P.Ahamed Kutty, Timber Merchant at Calicut. The income **W.P. (C) NO. 110 of 2007 (K)** **2** generated from the said deal to an extent of 3/10 was attributed to the petitioner; while the remaining 7/10 was fixed against Mr.K.P.Ahamed Kutty. Petitioner filed in Ext.P3 petition for waiving of interest under Section 234A, 234B & 234C on 28.09.2000; but more than 'six years' after filing the same, it has been simply rejected as per Ext.P4 order dated 02.11.2006, holding that the petitioner does not satisfy the condition for waiver/redemption of interest as per the Board's instructions in the Circular F.No.400.29/2002-IT(B) dated 26.06.2006; which in turn is under challenge. 3. Mr.T.M.Sreedharan, the learned senior counsel appearing for the petitioner submits, with reference to the Ext.P6 order passed by another officer holding the same office, that in the case of similar petition for waiver of interest preferred by Mr.K.P.Ahamed Kutty, whose name is referred to in Ext.P2 assessment order and in respect of whom the capital gain to an extent of 7/10[th] share was taken for the assessment year 199596, relief was granted, observing that sustainable case has been **W.P. (C) NO. 110 of 2007 (K)** **3** made out, whereas such benefit sought for by the petitioner by filing Ext.P3 petition much earlier stands declined after six years, which is cited as arbitrary and an instance of discrimination as well. The learned counsel submits that Ext.P4 order is not at all a 'speaking order' and that the reliance placed on the Circular dated 26.06.2006 is not correct or sustainable. The stand taken by the respondents in paragraph 7 of the statement is sought to be assailed, pointing out that, the only reason for extending the benefit to Mr.K.P.Ahamed Kutty, vide Ext.P6, is apparently based on the earlier Circular, which is stated as super-ceded, by the Circular dated 26.06.2006. It is pointed out by the Learned counsel that, absolutely no distinction/difference is there between these two Circulars, but for the fact that Sub clause (e) to Clause 2 of 1996 Circular came to be incorporated as Sub clause (d) to clause 2 of 2006 Circular and that's all. 4. Sri.Jose Joseph, the learned standing counsel appearing for the respondents submits that the idea and understanding of the petitioner as to the eligibility to have **4** ## **W.P. (C) NO. 110 of 2007 (K)** waiver of interest under Section 234A, 234B & 234C and reliance sought to be placed on the previous Circular is wrong and misconceived. It is sated that, even going by the Circular sought to be relied on the petitioner that is Circular dated 23.05.1996, Sub clause (a) to (d) under clause 2 deal with a different situation. It is pointed out that, Sub clause (a) deals with Section 234A, while Sub clause (b) deals with an instance under Section 234B. Sub clause (c) is in relation to 234C, while Sub clause (d) specifically refers to a situation covered by 234B & 234C. The learned standing counsel submits that Sub clause (e) is only a 'residual clause' and according to the revenue, it pertains only to a circumstances covered by Section 234A. Reliance is sought to be placed on the decision rendered by the Division Bench of this Court in **Chief Commissioner of Income** **Tax & Anr. Vs.Jimmichan M. Varicatt [(2011) 330 ITR 338 (Ker)]** . Reference is also made to a decision rendered by this Court in W.P.(C) No.12494 of 2004(K). The Learned counsel further submits that, merely for the reason that some benefit has **W.P. (C) NO. 110 of 2007 (K)** **5** been extended to Mr.K.P.Ahamed Kutty, vide Ext.P6, if it is wrong and unsustainable, it cannot set a good precedent to be cited by others for extending similar benefit, in perpetuation of the mistake. 5. This Court is well aware of the position that, if any benefit has been given to somebody by virtue of a mistake, it is not liable to be perpetuated by issuing a writ of mandamus. The law in this regard has been made clear by the Apex Court on many an occasion including in **Chandigarh Administration and** **another vs. Jagjit Singh and another respondent reported in 1995 AIR Supreme Court 705** and so also in **Gursharan Singh and Others vs. New Delhi Municipal Committee and others in (1996) 2 SCC 459.** The question to be considered is, whether the correct legal and factual position has been considered by the concerned authority or not. 6. In the statement filed by the respondents it is contended in paragraph 7, that the benefit conferred to Mr.K.P.Ahamed Kutty, vide Ext.P6 is on the basis of the earlier **6** ## **W.P. (C) NO. 110 of 2007 (K)** Circular, i.e., Circular dated 23.05.1996, which came to be superceded by the time Ext.P4 order was passed in the case of the petitioner. Since no substantial difference is brought to the notice of this Court between these two Circulars, this is a matter which requires to be considered by the second respondent, more so, when 7/10[th] of the capital gains in respect of the assessment year 1995-96, stand attributed to Mr.K.P.Ahamed Kutty,while the petitioner remains to be mulcted with the residual extent of 3/10[th] alone. That apart, the claim for waiver was submitted by the petitioner vide Ext.P3, much before the claim petition preferred by Mr.K.P.Ahamed Kutty, whose case came to be considered first, passing favourable orders vide Ext.P6, while the case of the petitioner came to be kept in the cold storage for nearly six years, finally leading to Ext.P4. In any view of the matter, there is no much discussion in Ext.P4 with regard to the facts and figures and the relevant provisions of law, and also with regard to the benefit extended to the counterpart of the petitioner vide Ext.P6. **7** ## **W.P. (C) NO. 110 of 2007 (K)** 7. In the above circumstances, Ext.P4 is set aside and the matter is remitted to the second respondent for fresh consideration and to pass appropriate orders in accordance with law, as expeditiously as possible, at any rate within three months from the date of receipt of a copy of the judgment. The writ petition is disposed of. Sd/- ## **P.R.RAMACHANDRA MENON, JUDGE** AMV