2016 (12) TMI 415 - HC - Income Tax

Exemption under Section 10(10C) entitled to retirees of the ICICI Bank under Early Retirement Option Scheme, 2003 - Held that - Default in complying with the requirement was due to circumstances beyond the control of the assessee, the Board is entitled to exercise its power and relax the requirement contained in Chapter IV or Chapter VI-A. If such a power is conferred upon the Board, this Court, while exercising jurisdiction under Article 226 of The Constitution of India, would also be entitled to consider as to whether the petitioner s case would fall within one of the conditions stipulated under Section 119(2)(c). The petitioner, being a senior citizen, cannot be denied of the benefit of exemption under Section 10(10C) of the Act and the financial benefit that had accrued to the petitioner, which would be more than a lakh of rupees. Therefore, this Court is of the view that the third respondent should grant the benefit of exemption to the petitioner. Accordingly, the writ petition is partly allowed, the impugned order is set aside and the third respondent is directed to grant the benefit of exemption under Section 10(10C) of the Act and refund the appropriate amount to the petitioner, within a period of three months from the date of receipt of a copy of this order. Considering the facts and circumstances of the case, the prayer for interest is rejected.

Issues:
1. Interpretation of Section 139(5) of the Income Tax Act, 1961 regarding the acceptance of revised returns beyond the statutory time limit.
2. Application of the judgment of the Hon'ble Supreme Court in S.Palaniappan Vs. I.T.O. regarding exemption under Section 10(10C) of the Act for retirees under the Early Retirement Option Scheme.
3. Authority of the Central Board of Direct Taxes to issue circulars under Section 119 of the Act for granting relief to specific classes of cases or individuals.
4. Consideration of genuine hardship cases and relaxation of requirements under Chapter IV or Chapter VI-A of the Act by the Board.

Analysis:

1. The main issue in this case revolves around the interpretation of Section 139(5) of the Income Tax Act, 1961, which sets the time limit for filing revised returns. The petitioner, a retired employee of ICICI Bank, filed a revised return after learning about a Supreme Court judgment granting exemption under Section 10(10C) of the Act to retirees under the Early Retirement Option Scheme. The third respondent rejected the revised return citing Section 139(5) as it was filed beyond the stipulated time limit.

2. The petitioner argued that the Supreme Court judgment and the circular issued by the Central Board of Direct Taxes should bind the Assessing Officers, and relief should be granted based on these. The Court acknowledged that technicalities should not hinder the implementation of the Supreme Court's order and the circular aimed at providing relief to retirees under the Early Retirement Option Scheme.

3. The Court delved into the authority of the Central Board of Direct Taxes to issue circulars under Section 119 of the Act. It noted that the Board can issue orders, instructions, and directions for the proper administration of the Act, and these must be followed by all Income Tax Authorities. The Board's circular in this case was issued in exercise of this power to provide relief to retirees of ICICI Bank under the Early Retirement Option Scheme.

4. Additionally, the Court considered the provision under Section 119(2)(c) of the Act, which allows the Board to relax requirements in cases of genuine hardship. It highlighted that if the default in compliance was due to circumstances beyond the assessee's control, the Board could relax the requirements. The Court emphasized that in cases of genuine hardship, the Board has the power to provide relief, and the Court can consider such cases under Article 226 of the Constitution of India.

5. Ultimately, the Court found that the petitioner, being a senior citizen, should not be denied the benefit of exemption under Section 10(10C) of the Act. It directed the third respondent to grant the exemption and refund the appropriate amount to the petitioner within three months. The Court emphasized the importance of considering genuine hardship cases and providing relief in line with the Supreme Court's judgment and the circular issued by the Central Board of Direct Taxes.

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