K. J. Paul Vs DCIT (Kerala High Court)
Corporate Deadlock Froze Tax Filings: Kerala HC Orders Decision on Five-Year Belated-Return Request Within One Month
Summary:
In K.J. Paul & Seaqueen Builders Pvt. Ltd. v. DCIT, W.P.(C) No. 27267 of 2026, decided on 14 August 2026, the Kerala High Court considered a company’s request for an opportunity to file income-tax returns that could not be submitted for several years because of a serious management dispute. The Court did not itself permit filing of the delayed returns or decide their admissibility. It directed the DCIT to consider the company’s pending representation, provide an opportunity of hearing & pass an appropriate order in accordance with law within one month.
Relevant Facts
The first petitioner, K.J. Paul, was a subscriber, shareholder & director of the second petitioner, Seaqueen Builders Pvt. Ltd. A serious dispute arose concerning management & control of the company between the petitioners & another person, P. Johnny.
The dispute generated prolonged litigation before multiple forums, including the National Company Law Appellate Tribunal. The conflict affected the company’s administration & prevented those claiming management rights from effectively dealing with its statutory affairs.
The corporate dispute eventually reached the Supreme Court through Civil Appeal No. 6732 of 2026. By order dated 11 May 2026, the Supreme Court brought the controversy to a conclusion. As a consequence of the settlement or directions, P. Johnny was permitted to transfer his shares to K.J. Paul & exit from the company.
The petitioners relied upon the Supreme Court order, a share-transfer notice dated 15 May 2026, Form SH-4 & the resignation letter of the exiting person to demonstrate that control over the company had finally been regularised.
According to the petitioners, the prolonged management deadlock had made it impossible to file the company’s income-tax returns for several years, covering the period from 2017-18 up to 31 March 2022. Once the corporate dispute was settled, the petitioners sought to regularise these past defaults.
For this purpose, they submitted Ext.P5 representation dated 14 July 2026 before the jurisdictional DCIT. A further request dated 22 July 2026 was also placed on record as Ext.P6. As the principal representation remained pending without a decision, the petitioners approached the High Court.
Issue Involved
The limited issue before the High Court was whether the DCIT should be directed to consider & dispose of the petitioners’ pending request for permission or an opportunity to file the company’s delayed income-tax returns.
The case did not require the Court to determine conclusively whether the management dispute legally entitled the company to file returns after expiry of the normal statutory periods. Nor was the Court called upon to decide the tax liability for any particular assessment year.
The question was essentially one of administrative inaction & procedural fairness: where a detailed representation seeking statutory relief remained pending, should the tax authority be compelled to examine it through a reasoned decision after hearing the affected parties?
Petitioners’ Submissions
The petitioners contended that non-filing was not a deliberate attempt to conceal income or evade compliance. The company was paralysed by a genuine dispute concerning its management, shareholding & authority to act on its behalf.
Because the controversy was pending before different judicial forums, including the NCLAT & ultimately the Supreme Court, the persons claiming control could not complete the company’s income-tax filings for several years.
After the Supreme Court resolved the dispute & enabled P. Johnny to transfer his shares to K.J. Paul, the management position became clear. The company was then in a position to reconstruct its accounts, determine its income & seek regularisation of the delayed returns.
The petitioners emphasised that they were not asking the High Court to directly accept or validate the returns. Their limited prayer was for a direction requiring the DCIT to take up Ext.P5, examine the exceptional circumstances & pass an appropriate order in accordance with law.
Revenue’s Position
The judgment does not record any detailed objection from the Income Tax Department on the merits of the request. The Department was represented by its Standing Counsel.
Since the petitioners sought only consideration of a pending representation, the controversy before the Court remained narrow. The Revenue’s substantive rights regarding limitation, admissibility of the returns, applicable statutory provisions, tax, interest, penalty or verification of the explanation were left entirely open.
High Court’s Findings & Legal Reasoning
After hearing the Senior Counsel for the petitioners & Standing Counsel for the Department, the High Court found that a direction for consideration of Ext.P5 could appropriately be issued.
The Court did not adjudicate the merits of the management-dispute explanation. It did not declare that the corporate litigation automatically extended the statutory time for filing returns. It also did not issue a mandamus compelling the Department to accept the returns.
Instead, it applied a limited principle of administrative law: when a representation seeking relief is pending before the competent authority, particularly where it relies upon exceptional facts supported by judicial orders, the authority should consider it fairly & pass an order according to law.
The writ petition was therefore disposed of with a direction to the DCIT to take up Ext.P5, grant the petitioners an opportunity of hearing & pass an appropriate order within one month from receipt of the High Court judgment.
The direction to provide a hearing is significant because it enables the petitioners to place the entire chronology, corporate litigation records, Supreme Court order, evidence of change in management & reasons for year-wise non-filing before the Department.
Practical Implications
The judgment provides a procedural opening, not automatic acceptance of delayed returns. The company must now establish a clear connection between the management deadlock & its inability to comply for each relevant year.
The petitioners should prepare year-wise accounts, audit reports, tax computations, reasons for non-filing, evidence identifying who controlled statutory records & the complete litigation timeline. They must also identify the precise statutory route through which delayed filing is sought.
The DCIT must issue a reasoned decision after hearing them, but remains free to accept or reject the request in accordance with the Income-tax Act. If rejected without proper consideration of the Supreme Court settlement or supporting evidence, the resulting order may itself become open to further challenge. The decision therefore reinforces that extraordinary corporate disputes deserve reasoned administrative consideration, even where substantive tax relief is not granted directly by the Court.
Alternative SEO Titles
Kerala HC Orders Hearing on Delayed ITR Filing Request After Corporate Management Dispute
Kerala HC Directs DCIT to Decide Company’s Pending Request for Delayed Income Tax Returns
Management Dispute and Delayed ITRs: Kerala HC Directs DCIT to Consider Representation
Kerala High Court Orders DCIT to Hear Plea for Filing Returns Delayed by Management Deadlock
Delayed Income Tax Returns: Kerala HC Directs DCIT to Pass Order on Pending Representation
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The 1st petitioner is the subscriber, shareholder and the Director of the 2nd petitioner Company. According to the 1st petitioner, there was a serious dispute with regard to the management of the 2nd petitioner Company, which resulted in various litigations before various forums, including the National Company Law Appellate Tribunal. The same was ultimately settled by the Honourable Supreme Court as per Ex.P1 order passed in Civil Appeal No.6732/2026. The ultimate consequence of the aforesaid litigations was that, Sri.P.Johnny, the person with whom the petitioners were having dispute, were allowed to transfer the shares in favour of the 1st petitioner and thereby to exit from the company.
2. According to the petitioners, as a result of the said disputes, the returns of the 2nd petitioner Company under the Income Tax Act, could not be filed for several years, i.e., from 2017 – 2018 to 31.03.2022. The petitioners only seek an opportunity to submit the said returns, and highlighting this aspect, the petitioners submitted Ext.P5 request, which is now pending before the respondent herein. The limited relief sought by the petitioners is to direct the respondent to consider the same and pass appropriate orders.
3. After hearing the learned senior counsel appearing for the petitioners and the learned Standing Counsel for the respondent, I am of the view that, a direction can be issued in this regard.
Accordingly, this writ petition is disposed of, with a direction to the respondent to take up Ext.P5 and pass appropriate orders thereon, in accordance with law, after giving the petitioners an opportunity for being heard. This shall be done within a period of one month from the date of receipt of a copy of this judgment.
