HIGH COURT OF KERALA
Chief Commissioner of Income-tax, Cochin
W.P. (C) NO. 5799 OF 2008(M)
DECEMBER 3, 2012
1. This writ petition is filed challenging Ext.P16 order passed by the Chief Commissioner of Income Tax, Kochi in an application filed by the petitioner seeking waiver of interest imposed on the petitioner/assessee under Section 234A of the Income Tax Act.
2. Imposition of interest was in respect of delay in filing the returns for the assessment year 2001-02 and 2002-03. As per the provisions of the Act, the returns were to be filed on 31/08/2001 and 31/08/2002 during the respective assessment years. The returns were filed only on 03/10/2006.
3. According to the petitioner, the delay in filing the return could not be attributable to the petitioner since after conducting a survey in the office premises of the petitioner, the documents were impounded by the Asst. Director of Income Tax (Investigation), Calicut on 14/02/2002. According to the petitioner, he requested for release of the books by Ext.P1 dated 28/01/2004 addressed to the ADIT (Investigation), specifically stating that those were required for preparation of the returns. When there was no response, a further letter dated 23/03/2004 was issued to the Income Tax Officer of the respective area for obtaining copies of the books. There was no response for some time; but by Ext.P3 dated 29/11/2005, the assessing officer issued notice under Section 148 of the Income Tax Act calling upon him to file the return within twenty days failing which assessment for the year 2001-02 shall be treated as escaped assessment. A similar notice was issued as Ext.P4 in respect of assessment year 2002-03 also on the said date. On receiving the said notice, petitioner again requested the Income Tax officer by letter dated 17/12/2005 stating that since the returns are to be filed, an opportunity should be granted to take copies of the seized documents to file the return of income. Without acceding to the said request, it is stated that by Ext.P6 dated 03/01/2006 the Income Tax Officer had again requested him to file returns, which was replied by Ext.P7 again requesting for taking copies of the books seized from the petitioner.
4. The Income Tax Officer, by Ext.P8 dated 23/01/2006 intimated the petitioner that the books and documents are not in custody of that office and the petitioner was requested to approach the Deputy Commissioner of Income Tax, Central Circle. Petitioner submitted another request Ext.P9 dated 06/02/2006 to the Assistant Commissioner of Income Tax, Central circle, Calicut. He was again faced with another demand by Income Tax Officer for filing returns by notice dated 12/07/2006 for which he had sent a reply wherein he again made a request to the Assistant Commissioner of Income Tax for providing copies of the documents.
5. It is stated that thereafter the documents were received and returns were filed on 03/10/2006 declaring a total loss for the assessment years. The Income Tax Department, after having verified the returns as per Exts.P12 and P13 orders assessed the petitioner and returned a total income of Rs. 2,27,950/- in respect of assessment year 2001-02 and Rs. 4,80,110/- in respect of assessment year 2002-03 and thereby assessing the tax payable and imposing interest under Section 234A as Rs. 60,724/- in respect of assessment year 2001-02 and Rs. 86,507/- in respect of 2002-03. The imposition of interest under Section 234A was challenged by the petitioner by submitting Ext. P14 and P15 to the Chief Commissioner of Income Tax stating that the delay in filing was on account of not getting the copies of books of accounts in time though the Petitioner had requested for the same. This resulted in a common order being passed by the Chief Commissioner of Income Tax as per Ext.P16.
6. It is the contention of the petitioner that the Chief Commissioner had come to the conclusion that the reason for the delay was not due to obtaining the documents in time; but the Commissioner had proceeded on the basis that some margin has to be left for the time required for filing the returns after taking copies of the books and documents and considering the attempt of the assessee was not with full heart, 50% of interest was waived for the period from January 2006 to September 2006.
7. According to the petitioner, he was entitled for waiver of interest for the entire period and should not have been confined to a short period i.e. January 2006 to September 2006 and that too 50% of the said amount. On the other hand, Sri. Jose Joseph, learned Standing Counsel for the Department contends that though the documents were impounded after survey conducted in respect of assessment year 2001-02, the returns ought to have been filed on 31/08/2001 and the documents were impounded only on 14/02/2002. Therefore there is no justification in demanding any waiver of interest for the assessment year 2001-02. In regard to the assessment year 2002-03, though the documents were impounded on 14/03/2002 and returns ought to have been filed on 31/8/2002, the request for release of documents Ext.P1 was issued only on 28/01/2004. Therefore, according to the learned Standing Counsel, if there was any genuine interest in filing returns, the petitioner could have filed the same within the stipulated time as far as 2001-02 assessment year is concerned and in respect of the second return for the assessment year 2002-03, there was no genuinenity in requesting for the documents after the period stipulated.
8. It is further submitted that the application dated 23/03/2004 was for taking books of accounts for the purpose of sales tax assessment for the year 2000-01. It is again submitted that even after taking copies of the impounded documents the assessee had tried to avoid the payment of tax aggregating to Rs. 2,60,753/- for the assessment years 2001-02 and 2002-03 by not declaring the correct total income in the returns filed on 03/10/2006. It is further submitted that there is no statutory right available for the petitioner to demand waiver of interest under Section 234A and waiver of interest is granted only on the basis of Board’s order in F.No.400/129/2002-IT(B) dated 29/06/2006. The applicable provision has been extracted in Ext.P16 order which reads as under:
“It has also specified the class or classes of income in which the reduction or waiver of interest u/s 234A or 234B, or 234C can be considered, as follows:
(a) Where, during in the course of search and seizure operations, books of account etc. were seized and the CCIT/DGIT concerned is satisfied on the facts and circumstances of the case, that the delay in furnishing return was for reasons beyond the control of the assessee, and is not attributable to him,
(d) Where return of income could not be filed voluntarily by the assessee due to unavoidable circumstances and such return is filed by the assessee or his legal heirs without detection by the Assessing Officer.”
The above provision is made applicable only for giving waiver of interest under Section 234A.
9. According to the learned Standing Counsel, petitioner is not entitled for waiver of interest. Once the discretion has been exercised by the competent authority, judicial review is not possible. The learned Standing Counsel also relied upon judgments in Dy. CIT v. P.M. Antony 257 ITR 616 and Kerala State Cashew Development Corpn. Ltd. v. ITO  186 ITR 521 to contend for the position that the circular has been issued only to enlarge the discretion of the Commissioner to reduce or waive interest though there is no statutory provision under Section 234A. Therefore the condition prescribed for invoking the provision of waiver should be strictly applied. In the present case, the argument is that since the discretion has been properly applied in terms of the provisions of the circular, no interference is called for. Learned Standing Counsel also relied upon the judgment in Universal Trades Corpn.v. Chief CIT  249 ITR 291 in order to contend that a strict approach is required in the matter.
10. Having heard the counsel on either side, the only point that requires to be considered is whether the petitioner is entitled for waiver of interest for the entire period from 24/01/2004 onwards which is the date on which he requested the concerned officers to return the files.
11. The Chief Commissioner had considered the matter elaborately and found as under:
“4. It is noted that the documents were impounded after a survey in the premises of the assessee. The survey had connection with action u/s.132, in the case of Thayampattil group of assessees, with which the assessee was connected. The jurisdiction over Thayampattil group was assigned to the Assessing Officer in Central Circle, Calicut, and the documents appear to have been in his custody because of this, and as the same was needed as an appeal was pending in that case.
5. The order impounding the documents had been passed on 14/02/2002, by the DIT (Investigation) Calicut. The assessee could have easily noted that such documents are not kept by the DIT for long and would be sent to the Assessing Officer concerned, and also that books and documents impounded are not released till the purpose is served. If the intention was to use the books and documents impounded, to prepare accounts including the transactions not recorded in the regular books of accounts, it could have enquired with the ADIT (Inv), as to which officer, the documents have been sent and after ascertaining the same, ask the custodian to permit the assessee to take copies of the documents. This is not what has been done in this case. The assessee requests the ADIT (Inv.) to release books of accounts and documents, when the filing of returns can be done with out the originals.
6. The stand taken by it shows that it was trying to wriggle out of the situation. In the initial stages, the managing partner admitted stock outside the books of account. Later he submitted that some transactions had not been entered in the books, but did not give the details.
7. If the intention was to disclose the unaccounted transactions, evidence regarding some of which was impounded, and income thereon, the assessee could have done so atleast at the time of filing the return of income. This appears to have been not the intention as the returns were filed claiming loss only purportedly as per books of account. If the intention was only to admit the results as per transactions recorded in the books of account, as was done in the returns of income, the assessee could have focused on ascertaining from the investigation wing where the said records are and approached the ACIT (Central) for allowing to take copies of the same and the photo copying work of the documents could have been over in a few hours. Sending the letter dated 28/01/2004 asking the ADIT to release the books of accounts impounded does not appear to be with any real intention to get the same released so that the return showing unaccounted transactions could be filed.
8. The documents impounded appear not to have been with the ITO, Tirur when the assessee asked his assessing Officer, to give opportunity to take copies of the documents, and the assessee could have easily known where the documents are, by enquiring about the whereabouts of the documents with the ADIT (Inv.) Calicut who impounded the documents and then following up successively with the officer(s) to whom these were transferred. The assessee had the help of a Senior Chartered Accountant who is a seasoned professional to help it. I am not convinced that not following up the matter in time, was due to ignorance or incapability. Asking the ADIT who did not have the documents, to release the same and writing to his own assessing officer at Tirur for copies of the documents impounded only after receipt of notice u/s 148, and then again not incorporating the unaccounted transactions reflected by the impounded documents to compute the income, while filing the return, appear to be calculated moves. The delay in filing of return for the assessment year 2000-01 which was due by 31/08/2001 cannot be attributed to the survey on 24/01/2002 and impounding of documents following the same, as it is clear that the assessee did not consider it necessary to file the return of income in time. The due date for filing the return of income for the assessment year 2002-03 was 31/08/2002. If the assessee was really bothered about filing the return by the due date, it would have taken steps without much delay so as to enable it to file return by 31/08/2002, the due date. The long wait upto 28/01/2004 to ask the ADIT to release the documents and upto the latter half of December 2004 and receipt of notice u/s 148 to ask the assessing officer to facilitate copying of documents impounded does not reflect any real intention or conscious effort to file the return of income, showing correct income.”
12. On a perusal of the reasons stated for consideration of the application, I do not think that it will be justified on the part of this Court to enter a different finding. It is a fact that the documents were given to the petitioner only after more than two years. But the reasons stated by the Chief Commissioner would unequivocally indicate that initially the request was made to release the books of account and documents; then the returns were prepared even without the originals. The assessee had requested for copies of the books and documents only by 23/03/2004 which was later supplied after the alleged delay. But it is indicated that from the returns it was found that unaccounted transactions have been included, the same could have been done without verification of the records. In other words, though the assessee was requesting for the records it did not make any difference as the returns were not in terms with the documents produced and there were unaccounted transactions. This finding of fact by Chief Commissioner has resulted in not exercising the jurisdiction to waive interest completely. However, a small concession has been granted on account of the fact that there had been some delay on the part of the department in providing the copies of the documents. Therefore, this is a case where the assessee was only trying to point out the non-availability of records as a reason for not filing the returns in time. Returns were considered and Exts. P12 and P13 assessment orders were passed intimating the unaccounted transactions also.
13. That being the situation, I do not think that there will be any justification for this Court to extend the scope of judicial review to Ext.P15 order. I do not find any illegality or arbitrariness in the said decision nor can it be stated to be unreasonable. This Court cannot sit in appeal against the said finding of fact by the Chief Commissioner.
In the light of the above discussion, the writ petition fails and the same is dismissed.