1 WP No.9494/2017 HIGH COURT OF MADHYA PRADESH AT JABALPUR WRIT PETITION NO.9494/2017 PETITIONER : GURMEET SINGH VILKHU Vs. RESPONDENTS : PRINCIPAL COMMISSIONER OF INCOME TAX AND ANOTHER. Present : Hon'ble Shri Justice R.S. Jha, Hon'ble Shri Justice Sanjay Dwivedi, JJ. Petitioner : Shri Gurmeet Singh Vilkhu in person. For respondents : Shri Sanjay Lal, Advocate. Whether approved for reporting: Law Laid down : Significant para nos. : ORDER (14/02/2019) Per R. S. Jha, J. This petition has been filed by petitioner against notice dated 9.5.2017 issued to him by respondents under section 154/155 of Income Tax Act, 1961 (hereinafter referred to as Act ), seeking rectification of mistake in order dated 5.12.2014 passed by Income Tax Officer, Ward-1(1), Jabalpur. 2. It is submitted by petitioner that petitioner was employee of Punjab and Sind Bank and while in service departmental enquiry was initiated against 2 WP No.9494/2017 him on 29.2.1996 and he was placed under suspension. petitioner was ultimately terminated by Bank in departmental enquiry against which petitioner had taken up proceedings before this Court. It is submitted that ultimately, after disposal of petitioner s writ appeal whereby order passed by learned Single Judge, setting aside termination and remanding matter, was set aside, this Court in M.C.C No.960/2007 dated 4.7.2008 held that petitioner should be treated as employee under suspension from 1.3.1996 to 16.4.2007 and be paid subsistence allowance for said period. As amount of subsistence allowance was not paid to petitioner, he filed Contempt Petition which was registered as C.P No.1003/2008 and was ultimately disposed of on 18.2.2010 on statement being made by Bank that subsistence allowance had been paid to petitioner, at same time granting liberty to petitioner to assail deduction made by Bank towards income tax by filing writ petition or by approaching income tax authorities for refund. subsistence allowance was Rs.20,90,354.96 for aforesaid period which had been paid to petitioner by 3 WP No.9494/2017 Bank on 23.3.2009 after deducting sum of Rs.5,25,000/- towards income tax. 3. Pursuant to order passed by this Court, petitioner approached Income Tax authorities for refund of Tax deducted from subsistence allowance. petitioner filed application on 4.6.2010 before authority concerned for refund of tax deducted by authorities on ground that amount paid to petitioner was debt accruing on account of judgment of Court and was not taxable, but application was rejected by authorities as it was stated that petitioner had not filed any return and, accordingly, petitioner was advised to do so by income tax authorities. 4. On advise of income tax authorities, petitioner filed return on 27.10.2010. prayer for refunding amount deducted by treating it as non- taxable on ground that it was judgment debt, was not accepted by authorities and order of assessment against petitioner under section 143(1) of Act, was passed on 31.3.2011. petitioner thereafter filed application under section 154 of Act, for rectification of mistake before authorities 4 WP No.9494/2017 on 29.4.2011 which was dismissed by Income Tax Officer, Ward 1(1), Jabalpur on 30.8.2011, however while dismissing application following observations were made by Income Tax Officer in para-21:- 21. Further Section 192 of Income Tax Act also attracts which state that Any person responsible for paying any income chargeable under head Salary shall at time of payment deduct income-tax on amount payable at average rate of income- tax computed on basis of rates in force for financial year in which payment is made. However since pay and allowance paid to assessee pertains to period 1.03.1996 to 16.4.2007 relief u/s 89(1) is allowable. assessee can file revised application u/s 154 along with revised computation treating subsistence allowance as income and claiming relief u/s 89(1). (underlined by us) 5. petitioner, being aggrieved, filed appeal against order of Income Tax Officer, Jabalpur, which was also dismissed on 1.10.2012 affirming order passed by Income Tax Officer. petitioner thereafter, in view of fact that Income Tax Officer had held that petitioner was entitled to relief under section 89(1) of Act, which was allowable for which he can file revised application under section 154 5 WP No.9494/2017 of Act, filed revised application before Income Tax Officer, Jabalpur on 24.2.2014. said application was allowed by Income Tax Officer, Jabalpur by order dated 5.12.2014 taking into consideration observations and opinion expressed by Income Tax Officer in his order dated 30.8.2011 to effect that petitioner was entitled to relief under section 89(1) of Act, which was allowable and which observation was affirmed by Commissioner of Income Tax (Appeals). 6. Inspite of aforesaid order of 5.12.2014 holding that petitioner was entitled to benefit of Section 89(1) of Act, on salary income of Rs.20,90,355/- i.e., subsistence allowance paid to petitioner, as amount was not paid to petitioner, he approached authorities by filing representations and gave legal notice to them on 19.4.2017. petitioner was thereafter served with impugned notice under section 154/155 of Act, dated 9.5.2017. 7. particular mistakes proposed to be rectified, as mentioned in impugned notice, is as under:- Particulars of mistake proposed to be rectified:- On verification of record, it is found that you have not shown any income in your 6 WP No.9494/2017 return of income filed for A.Y. 2009010 and also not claimed any relief u/s 89(1) in your return of income, so it can not be allowed u/s 154, as there is no mistake apparent from record. Thus, order u/s 154 passed on 5.12.2014 needs to be rectified by withdrawing relief of Rs.2,81,797/- allowed u/s 89(1) and to revise total income from Rs.20,87,090/- to Rs.NIL as shown by you in original return of income. 8. petitioner, being aggrieved by notice has filed present petition and this Court by order dated 22.8.2017 directed parties to maintain status quo. 9. It is pertinent to note that counsel for Revenue accepted notice on that date and sought time to seek instructions. petition was thereafter listed on 11.9.2017 but no return was filed or submissions made by respondents before this Court. Therefore, on 10.10.2017, matter was again adjourned for two weeks for filing return as prayed for by learned counsel for respondents, with observation that in case return is not filed, Income Tax Officer, Ward-1 (1), Jabalpur, shall remain personally present before this Court on 6.11.2017. 7 WP No.9494/2017 10. return was filed by respondents on 1.11.2017, in which it is stated that pursuant to proceedings under Section 154 of Act, initiated against petitioner, respondent authorities had already passed order under Section 154 of Act, on 1.8.2017 rectifying mistake in order dated 5.12.2014. In paragraph 26 of return respondents have mentioned that order under 154 proceedings was passed during pendency of this petition on 1.8.2017 after issuing show cause notice to petitioner on 9.5.2017. 11. petitioner submits that he was paid sum of Rs.20,90,355/- pursuant to order passed by this Court in MCC No.960/2007 holding that petitioner was entitled to payment of subsistence allowance. It is submitted that though no tax on this amount was required to be deducted as same was paid to petitioner pursuant to order passed by this Court, however, authorities deliberately misconstrued order and by treating amount disbursed to petitioner as payment of salary, refused to refund income tax deducted from payment of subsistence 8 WP No.9494/2017 allowance made to petitioner and asked him to file return. 12. It is submitted that petitioner, who is layman and is not conversant with provisions of Income Tax Act, filed return on instructions of Income Tax authorities themselves but his claim for refund was again rejected. It is submitted that subsequently, when petitioner again filed application for rectification, same was dismissed on 30.8.2011 but while doing so, it was held that petitioner's claim under Section 89(1) of Act. is allowable and after holding so, petitioner was advised to file revised application under Section 154 of Act. 13. Though petitioner assailed aforesaid order before CIT Appeals, order dated 30.8.2011 was affirmed by CIT Appeals by order dated 1.10.2012 affirming findings recorded by Income Tax Officer to effect that relief under Section 89(1) of Act, was allowable for which petitioner can file revised application under Section 154 alongwith revised computation. It is further submitted that when petitioner filed such application, he was asked to submit Form 10(E) giving details of his income and 9 WP No.9494/2017 report in that regard was also called from Bank authorities and thereafter petitioner's claim under Section 89(1) of Act, was allowed by order dated 5.12.2014. 14. It is submitted that in such circumstances, it is not in dispute that petitioner is entitled to refund of Rs.2,81,797/- from amount of Rs.5,25,000/- deducted by Bank towards Income Tax from total amount of subsistence allowance disbursed to petitioner of Rs.20,90,355/-. It is submitted that in such circumstances, impugned notice dated 9.5.2017 seeking to rectify some imaginary mistake in order dated 5.12.2014 on ground that he had not shown any income in his return for year 2009-2010 and had initially not claimed relief under Section 89(1) of Act, is itself misconceived as there is no mistake in order dated 5.12.2014. 15. It is submitted that petitioner was granted interim relief by this Court on 22.8.2017 directing parties to maintain status quo and inspite of fact that matter was listed twice, no information was given by respondent authorities to this Court to effect that orders on impugned notice had already been passed 10 WP No.9494/2017 by authorities. It is submitted that return and additional return filed by respondents make it abundantly clear that though orders in 154 proceedings are said to have been passed on 1.8.2017 by Income Tax Officer, Jabalpur, no notice or intimation of same was ever given to petitioner. 16. petitioner has pointed out that respondents themselves have filed notice said to have been issued to petitioner under Section 156 of Income Tax Act, dated 2.8.2017 which is admittedly and undisputedly sent to address of Mishra Transport Service, Sihora, Jabalpur. petitioner has also filed certificate issued by Shri Ajay Mishra, Advocate who is counsel for Mishra Transport, indicating that notice of name of petitioner was received by Mishra Transport Service, as address in notice was clearly mentioned as Mishra Transport Service. 17. It is submitted that no notice whatsoever was ever issued to petitioner by authorities before passing of order under Section 154 of Act. It is submitted that pursuant to impugned notice issued by respondents to petitioner on 9.5.2017, petitioner had immediately filed his response on 17.5.2017 11 WP No.9494/2017 (Annexure P/16) but authorities, while passing alleged order on 1.8.2017 under Section 154 of Act, has not mentioned anything about impugned notice dated 9.5.2017 or response submitted by petitioner on 17.5.2017 and has passed order without considering same in violation of interim directions issued by this Court. 18. It is submitted that in said order authorities have also mentioned that another notice was issued to petitioner on 30.6.2017 for hearing on 7.7.2017 but petitioner did not appear and, therefore, order was passed but no such notice has been placed on record. petitioner submits that in view of aforesaid facts and circumstances, it is apparent that respondent authorities have deliberated passed back dated order of 1.8.2017 to overcome interim orders passed by this Court. In such circumstances, petitioner submits that even if order under Section 154 of Act, has been passed by authorities on 1.8.2017, same is not binding on petitioner as same is in contravention to interim orders passed by this Court and has been passed without giving any opportunity of hearing or notice to petitioner. 12 WP No.9494/2017 19. learned counsel for respondents per contra submits that petitioner had filed return without claiming any relief under Section 89(1) of Act., and only prayer made therein was refund of tax deducted. It is submitted that as no relief under section 89(1) of Act, was ever claimed by petitioner, therefore, same could not have been allowed by Income Tax Officer in proceedings under section 154 of Act, by impugned order dated 5.12.2014. It is submitted that when aforesaid aspect came to notice of JCIT, Range-I, Jabalpur, he issued letter on 9.1.2015 to Income Tax Officer, Jabalpur, pointing out several aspects of matter on basis of which impugned notice dated 9.5.2017 was issued to petitioner. 20. It is submitted that though petition was filed by petitioner on 5.7.2017, interim order of status quo was passed thereafter on 22.8.2017, by which date respondent authorities had already passed order and decided 154 proceedings initiated against petitioner pursuant to impugned show cause notice on 1.8.2017. It is submitted that this fact was brought to 13 WP No.9494/2017 notice of this Court by respondent authorities in return, specifically para-26. 21. learned counsel for respondents further submits that notice of this order under section 154 of Act, was also issued to petitioner, however, fact that it was sent on address of Mishra Transport Service, Sihora, Jabalpur, has not been denied and has been admitted. It is submitted that in absence of any claim for benefit of Section 89(1) of Act, in return filed by petitioner, authority concerned could not have granted any relief to petitioner in proceedings under section 154 of Act, which is glaring and apparent mistake requiring rectification and, therefore, notice under section 154 of Act, was issued to petitioner on 9.5.2017 and order pursuant thereto has been passed withdrawing and correcting mistake committed by authorities in order dated 5.12.2014. 22. learned counsel for respondents has further submitted that claim made by petitioner under section 89(1) of Act, was beyond limitation and could not have been considered by authority concerned in view of provisions of Section 139(5) of Act, and in 14 WP No.9494/2017 such circumstances impugned order passed by authorities on 5.12.2014 suffered from apparent mistake of law which needed rectification and, therefore, impugned notice has rightly been issued to petitioner. learned counsel for respondents has relied upon decisions rendered in cases of Goetze (India) Ltd. vs. Commissioner of Income Tax, (2006) 284 ITR 0323; Hind Wire Industries Ltd. vs. Commissioner of Income Tax, (1995) 212 ITR 0639 and Orissa Rural Housing Development Corporation Ltd. Assistant Commissioner of Income Tax, (2012) 343 ITR 0316. 23. Having heard petitioner and learned counsel for respondents, it is observed that fact that petitioner is entitled to benefit under Section 89(1) of Act is undenied and undisputed fact. It is also clear from perusal of order dated 30.08.2011 passed by Income Tax Officer in previous application filed by petitioner under Section 154 of Act, that Income Tax Officer in no uncertain terms has held that relief under Section 89(1) of Act is allowable to petitioner for which he can file revised application while rejecting application filed by petitioner under Section 154 of Act. 15 WP No.9494/2017 24. It is also admitted and undisputed fact that this order of Income Tax Officer has been affirmed in appeal by CITA by order dated 01.10.2012. It is apparent from perusal of aforesaid orders that Income Tax Officer as well as CITA while rejecting applications filed by petitioner under Section 154 of Act on 30.08.2011 and 01.10.2012 respectively have categorically held that relief under Section 89(1) of Act is allowable to petitioner and that these orders have neither been set aside or withdrawn and exists as they are and have attained finality. It is also apparent that subsequent order dated 05.12.2014 has been passed on revised application filed by petitioner, by authorities under Section 154 of Act, on basis of and relying on aforesaid orders of Income Tax Officer dated 30.08.2011 and appellate order dated 01.10.2012 wherein it was held that claim of petitioner under section 89(1) was allowable and consequently allowed claim of petitioner under Section 89(1) of Act. 25. It is also undisputed fact that only ground that has been mentioned in impugned notice dated 09.05.2017 issued under Section 154 of Act is that 16 WP No.9494/2017 petitioner had not shown any income in his return for year 2009 10 and had not claimed any relief under Section 89(1) of Act in return and therefore, no orders under Section 154 of Act could have been passed by Income Tax Officer granting relief under Section 89(1) of Act. None of other grounds raised and argued before this Court have been mentioned in notice. 26. From aforesaid, it is apparent that authorities while issuing impugned notice have totally ignored orders passed by Income Tax Officer dated 30.08.2011 and CITA order dated 01.10.2012 wherein it has been held that relief under Section 89(1) of Act is allowable to petitioner for which he can file revised application under Section 154 of Act and that it was pursuant to aforesaid observations of Income Tax Officer and CITA that petitioner had filed revised application under Section 154 of Act. respondents have also overlooked fact that petitioner s claim was allowed by order dated 05.12.2014 mainly in view of previous orders dated 30.8.2011 and 1.10.2012. 17 WP No.9494/2017 27. authorities have also not taken into consideration fact that in proceedings taken up by authorities on revised application under Section 154 of Act, authorities duly asked petitioner to submit form under Section 10-E of Act and also sought for and received information from Bank regarding salary paid towards subsistence allowance pursuant to orders passed by this Court and that it was on basis of aforesaid information and document filed by petitioner that benefit under Section 89(1) of Act was given to petitioner. 28. We are also constrained to observe that submissions made by learned counsel for respondents to effect that relief under Section 89(1) of Act was barred by limitation and, therefore, could not have been allowed by Income Tax Officer, Jabalpur vide order dated 15.12.2014, does not find any mention in particulars of mistake that were proposed to be rectified in notice dated 09.05.2017 and is apparently afterthought. 29. Quite apart from above, it is also undisputed fact that order of status quo was passed by this Court on 22.08.2017 and that respondents authorities in 18 WP No.9494/2017 return have filed order dated 01.08.2017 passed by authorities under Section 154 of Act pursuant to notice issued to petitioner on 09.05.2017, but said order was sent on address of Mishra Transport Service, Sihora, Jabalpur and was never communicated to petitioner and that petitioner came to know about same only when return was filed by respondents. It is also evident from perusal of order dated 01.08.2017 that said order does not make any mention of impugned notice dated 09.05.2017 and in fact only notice mentioned therein is notice dated 30.06.2017 said to have been issued by authorities concerned to petitioner for hearing 07.07.2017, but no copies of notice or documents in support of said avertments made in order dated 01.08.2017 have been placed before this Court. 30. perusal of observations made by Income Tax Officer in order dated 1.8.2017 makes it further clear that order has been passed not on basis of any law but on basis of detailed instructions issued by Joint Commissioner of Income Tax, Range-I, Jabalpur, in its letter dated 25.5.2016 and, therefore, there is no independent application of mind by 19 WP No.9494/2017 income tax authorities to issues raised therein or involved in case. 31. It is also apparent that Income Tax authorities while passing order dated 1.8.2017, Annexure R-6, has totally ignored and omitted to take note of findings recorded by Income Tax Officer in its order dated 30.8.2011 to effect that relief under section 89(1) of Act, is allowable to petitioner and for which purpose he could have filed revised application under section 154 of Act, which has been affirmed and confirmed by CITA by order dated 1.10.2017. authorities have simply taken note of fact that application under section 154 of Act, was dismissed without taking note of aforesaid finding and has revised order. 32. In such circumstances, we are of considered opinion that proceedings sought to be initiated by respondents against petitioner vide impugned order dated 9.5.2017 and decided against him by order dated 1.8.2017 are totally misplaced and misconceived and perverse, moreso as they have been passed totally ignoring final and binding orders passed by 20 WP No.9494/2017 Income Tax Officer dated 30.8.2011 and CITA dated 1.10.2012 which had become final. 33. We are also of opinion that very initiation of impugned Section 154 proceedings was misconceived and uncalled for as there was no mistake in previous orders requiring rectification in view of admitted and undisputed fact that petitioner is entitled to claim benefit under Section 89(1) of Act, and that his claim thereunder is allowable. 34. In circumstances petition filed by petitioner is allowed, impugned show cause notice dated 9.5.2017 and subsequent order dated 1.8.2017 are quashed and it is directed that petitioner is entitled to and shall be paid his dues mentioned in order dated 5.12.2014 by Income Tax Department within two months with allowable interest. 35. petition stands allowed. There shall be no order as to costs. (R. S. JHA) (SANJAY DWIVEDI) JUDGE JUDGE mms/- Digitally signed by MONSI M SIMON Date: 2019.02.27 12:09:12 +05'30' Gurmeet Singh Vilkhu v. Principal Commissioner of Income-tax and another