IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 29TH DAY OF MAY 2013

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Administrator
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 29TH DAY OF MAY 2013
BEFORE
THE HON'BLE MR. JUSTICE ARAVIND KUMAR
WRIT PETITION NOS.13232 OF 2013 &
15844-845/2013 (T-IT)


BETWEEN:
M/s. Bangalore Plants First Private Limited
A company incorporated under the
Provisions of the Companies Act, 1956,
Having its registered office at No.221, 3rd B Main,
Health Layout, Srigandhadakavalu,
Bangalore-560091
Represented by its Director
Ms. K. Rajeshwari
...PETITIONER

(By Sri.P.Dhananjaya, Advocate)

AND:

1. The Commissioner of Income Tax
Karnataka I, Bangalore,
Central Revenue Building, 1st Floor,
Queen's Road,
Bangalore-560 001

2. The Deputy Commissioner of Income Tax
Circle-11(2), Nrupathunga Road,
Opposite to R.B.I,
Bangalore-560 001

3. The Addl. Commissioner of Income Tax
Circle-11(2), Nrupathunga Road,
Opposite to R.B.I,
Bangalore-560 001
2


4. The Income Tax Officer
Ward No.11 (2), Nrupathunga Road,
Opposite to R.B.I,
Bangalore-560 001

5. Centralized Processing Center,
Income Tax Department
Electronics City Post Office, Hosur Road,
Bangalore-560 100
...RESPONDENTS

(By Sri.K.V.Aravind, Adv.)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES
226 & 227 OF THE CONSTITUTION OF INDIA WITH A
PRAYER TO QUASH THE ORDER DATED 16.01.2013
PASSED BY THE 1ST RESPONDENT VIDE ANNEXURE-P.

THESE PETITIONS COMING ON FOR PRELIMINARY
HEARING THIS DAY THE COURT MADE THE FOLLOWING:


ORDER

Assessee is seeking for issue of writ of certiorari the order dated 16.01.2013 passed by 1st respondent at Annexure-P, whereunder prayer of the assessee for condonation of delay in filing revised returns for the assessment years 2007-08, 2008-09 and 2009-10 came to be dismissed.



2. Heard Sri. P. Dhananjaya, learned counsel appearing for petitioner and Sri. K.V.Aravind, learned panel counsel appearing for respondents/revenue.

3. Petitioner is a company incorporated under the Companies Act, 1956 and is said to be carrying on the business of growing, producing, cultivating and sale of flowers, plants and seeds and other floriculture products. Petitioner is registered under the Karnataka Value Added Tax Act, 2003 and is filing the returns as contemplated under the said Act. Petitioner is an income tax assessee and has been filing returns of incomes for the assessment years 2002-03 onwards. It is not in dispute that for the assessment years 2002-03 to 2004-05 returns of income was filed on the due dates declaring the income earned by it as an "agricultural income" and same came to be accepted by the revenue.

4. For the assessment years 2007-08, 2008-09 and 2009-10 returns of incomes were filed on 31.10.2007, 30.09.2008 and 30.09.2009 respectively. Said returns of incomes filed by assessee came to be accepted and intimation came to be issued to assessee by the revenue under Section 143(1) of the Act as per Annexure-E, F and G respectively. Petitioner contends that they raised a suspicion and doubt about the sincerity and the work of their auditor and as such, they got verification of the records through another chartered Accountant and on such verification it was revealed that income derived by the assessee has been reflected in the returns of income as "business income" instead of "agricultural income" and this mistake had erroneously crept- in in the returns of income filed by their Chartered Accountant on behalf of the assessee. On account of said erroneous classification of returns of income filed for the assessment years referred hereinabove, applications seeking for rectification of assessment orders were filed under Section 154 of the Income Tax Act, 1961, as per Annexure-M, M1 and M2. Simultaneously, applications were also filed seeking condonation of delay to file revised returns by invoking Section 119(2) of the Income Tax Act. Copies of those applications are at Annexure-N, N1 and N2 respectively, which came to be filed on 30.03.2012. Said applications came to be considered by 1st respondent and it came to be rejected on the ground that assessee itself had declared the income under the head "business" in its returns of income and as such intimation under Section 143(1) for the assessment year 2007-08 had been despatched which came to be received by the assessee on 11.02.2009 and it is thereafter return of income for the assessment year 2009-10 had been filed on 30.09.2009. As such, it was contended that classification of income was within the knowledge of assessee. Same reason has been assigned by the Commissioner for rejecting the applications for condonation of delay for all the 3 years. It is this order which is sought for being quashed in the present writ petitions.



5. Sri P. Dhananjaya, learned counsel appearing for assessee fairly submitted that though several grounds have been urged in the writ petition, he has confined his submission to the fact that in the impugned order 1st respondent had sought a report from the assessing officer, whereunder it has been opined by the Assessing Officer that assessee is growing mother plants in approximately 3 acres of land and virtually having agreed with the submission of assessee's he should have condoned the delay and technicalities should have yielded to administering substantial justice, and as such, 1st respondent ought to have condoned the delay in accepting revised returns and larger relief to which assessee was entitled to ought not to have been denied. On these ground he seeks for quashing of the impugned order.



6. Per contra, Sri K.V. Aravind, learned panel counsel appearing for respondents would support the order passed by 1st respondent and elaborates his submission by contending that it is not in the domain of assessing officer to either accept the submission of assessee or reject it and he has to examine the returns of income filed and declaration made therein and he can either accept the returns of income filed by assessee under Section 143(1) as otherwise assessment order will have to be passed under Section 143(3) in the event of same being selected for scrutiny. He contends that in the instant case returns of income filed by assessee came to be accepted by Assessing Officer and intimation was delivered to petitioner under Section 143(1) of the Act and as such, no fault can be laid at the doors of Assessing Officer. He would also contend that as rightly pointed out by 1st respondent in the impugned order assessee was aware of classification of income after intimation was delivered under Section 143(1) for the assessment year 2007-08 on 11.02.2009 and being conscious of classification returns of income for the assessment year 2009-10 was filed by the assessee on 30.09.2009 declaring the income as "business income" and as such, assessee had knowledge about intimation and as such 1st respondent did not rightly entertain the applications for condonation of delay. Hence, he prays for dismissal of writ petition.



7. Having heard the learned Advocates appearing for the parties and on perusal of case papers, I am of the considered view that following point would arise for my consideration:

Whether 1st respondent was justified in rejecting the applications filed by the assessee seeking condonation of delay in filing the revised returns?

8. It is not in dispute that assessee is entitled to file revised returns within the period permitted or allowed under Section 139(5) of the Act. For the assessment years 2007-08, 2008-09 and 2009-10 assessee had time to file revised returns on or before one year from the end of assessment year i.e., 31.03.2009, 31.03.2010 and 31.03.2011 respectively. Undisputedly, for all these three years revised returns came to be filed on 30.03.2012 as per Annexure-N, N1 and N2 respectively. At this juncture, it would be appropriate to note the contention as well as grounds urged by assessee in writ petition for filing revised returns. Assessee has contended that they had engaged the services of Sri Ramnivas Bishnoi, Chartered Accountant of M/s. R.N.Bishnoi and Associtates, Bangalore, to look after the entire audit work of the company including filing of returns of income and to pursue the matter from the year 2003 and said firm was attending to the said audit work of the assessee. It is not in dispute that for the assessment years 2002-03 to 2004-05 assessee has filed returns of income declaring the income as "agricultural income". In the petitions/ applications filed seeking condonation of delay in filing revised returns it has been specifically contended that on 29.05.2009 a letter dated 04.05.2009 was filed by the assessee through its authorised representative seeking modification of intimation and it is also stated in the said application that they were pursuing the matter with Chartered Accountant from time to time and were informed by him that matter is under consideration by the department. A perusal of Annexure-N dated 30.03.2012 would also indicate that on enquiries assessee came to know that Visa extension sought by the Director of petitioner-company was refused by the concerned authorities on account of company being depicted as "dormant" in the records of Registrar of Companies, Karnataka and as such, enquiries were made by them through M/s.Addanki & Co., Chartered Accountants and on verification certain irregularities having occurred had surfaced and filing the returns of income by their previous Chartered Accountant was one of the incidents which had occurred erroneously. Even for the subsequent years i.e., 2011-12 returns of income has been filed depicting the identical income generated by the assessee as "agricultural income" i.e., in the revised returns.



9. The Hon'ble Apex Court in the case of BAJAJ TEMPO LTD. VS. COMMISSIONER OF INCOME-TAX reported in (1992) 196 ITR 188 (SC) has held that for promoting growth and development and while granting incentives, a taxing statute should be construed liberally with an object to achieve the act enacted in this regard and not to frustrate. It has been held in NAVNIT LAL C. JAVERI VS. K.K.SEN, APPELLATE ASSISTANT COMMISSIONER OF INCOME-TAX, BOMBAY reported in SC (1965) 56 ITR 198(SC) that though responsibility for claiming refund and reliefs rests with the assessee, ITO should draw the attention of assessee to this relief in which assessee appears to be clearly entitled to, which assessee has omitted to claim.



10. Keeping these contours laid down by Apex Court in mind when facts on hand are examined it would indicate that for the assessment years 2002-03 to 2004-05 assessee had filed the returns of income claiming the income earned by it as "agricultural income" and not as "business income". In view of the fact that applications were filed by the assessee seeking condonation of delay to file the revised returns came to be examined by 1st respondent and report was called from the jurisdictional assessing officer. Accordingly, a report came to be submitted by the ITO, Ward -11(1), Bangalore, whereunder it has been reported that petitioner-company is engaged in floricultural activities. Said ITO had also visited the land of the assessee and had found that operations were being carried out and he has reported that assessee is growing mother plants in approximately 3 acres of land. He has reported as under:

"3.1 It is submitted by the AO that he had visited the site of assessee's operations. It is reported that the assessee is growing mother plants in approximately three acres of land. The mother plant is reared on earth. The human labour are working for tilling of soil, watering and for other primary activities. Grafting is also done. There are two wells in the assessee's leased premises for supplying of water."

11. In fact 1st respondent - Commissioner has taken note of this report of the ITO and also the fact that Assessing Officer is agreeing with the submissions of petitioner- company viz., that it is engaged in carrying out agricultural activities. Still he refuses to condone the delay on the ground that assessee had such knowledge. It is not in dispute that for the assessment years 2002-03 to 2004-05 assessee had declared losses under the head agricultural income. The main ground on which the delay was not condoned was on account of intimation having been delivered by the department accepting the returns of income and assessee not taking steps to rectify the same. The reason assigned by assessee for condonation of delay in the applications/petitions dated 30.03.2012 namely Annexure-N, N1 and N2 is in the vicinity of truth and for being accepted, since the Chartered Accountant is said to have assured the assessee that steps had been taken for rectification.

12. At this juncture, submission of Sri K.V.Aravind, learned counsel appearing for revenue who has vehemently contended that if the department were to take up the revised returns and necessary assessment orders are passed thereon, assessee should not take up the plea of limitation and his prayer for putting the assessee on terms or assessee being directed to file such an undertaking deserves to be accepted.

13. Sri. P. Dhananjaya, learned counsel on instructions from the assessee who is present before the Court would submit that such an undertaking would be filed within a period of one week from today. In that view of the matter, the explanation offered by the assessee for filing the revised return of income namely, on account of the assessee's Chartered Accountant having erroneously classified the income head, deserves to be accepted and delay is liable to be condoned. In that view of the matter and for the reasons aforestated following order is passed:

ORDER i. Writ petitions are hereby allowed.

ii. Order dated 16.01.2013, Annexure-P is hereby set aside.

iii. Applications / petitions dated 30.03.2012 filed by petitioner for condoning the delay in filing revised return of income for assessment years 2007-08 to 2008-10 are hereby allowed.

iv. Jurisdictional assessing officer would be at liberty to scrutinize the revised returns after notice to the assessee and pass orders on merits and in accordance with law after considering the submissions of assessee, if any.

v. The assessing officer would be at liberty to consider the claim of the assessee while adjudicating the revised return of income on merits without being influenced by the report submitted by the ITO to the Commissioner and also by any observations made by this Court during the course of this order. For compliance of undertaking list this matter on 10.06.2013.



Sd/-

JUDGE DR
 

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