MODERN CHEMICAL WORKS Vs. V B KULKARNI

JUDGEMENT

(1.) PETITIONER No. 1 is a partnership firm and petitioner No. 2 is one of its partners. The firm is engaged in the business of manufacture of chemicals and at the relevant time had a factory situate at Dadar in Bombay and also another at Ambarnath. The Dadar unit is in existence since 1951, while the new industrial undertaking at Ambarnath was started some time in the year 1969. The accounting year of the petitioners for the purpose of income tax is the calendar year, i.e., ending on 31st December of each year. Sec. 80J of the IT Act, 1961, provides that where the gross total income of an assessee includes any profits and gains derived from a new industrial undertaking, there shall, in accordance with and subject to the provisions of the said section, be allowed in computing the total income of the assessee a deduction from such profits and gains of an amount calculated at the rate of 6 per cent per annum on the capital employed in the industrial undertaking in respect of the previous year relevant to the assessment year.

(2.) THE petitioners claim that at the relevant time they were not aware of the provisions of S. 80J of the IT Act and, therefore, failed to claim a deduction in their IT returns for the asst. yrs. 1970 71 to 1974 75. The petitioners claim that their income tax matters are handled not by an income tax expert and the chartered accountant who was engaged by them advised them only to explain the matters relating to the accounts. The petitioners claim that the assessment orders were passed by the concerned ITO in respect of the relevant years and the petitioners did not secure the advantage of the provisions of S. 80J of the Act. The petitioners further claim that in November, 1978, the petitioners consulted a firm of chartered accountants regarding income tax matters and for the first time came to know that they were entitled to claim the relief provided under S. 80J of the Act.

(3.) SHRI Dastur, learned counsel appearing on behalf of the petitioners, submitted that the petitioners filed applications requesting the Central Board of Revenue to exercise the powers under Sub S. (2) (b) of S. 119 and issue directions to the ITO to reopen the assessment and grant requisite relief to the petitioners. Shri Dastur urged that the petitioners requested the Central Board of Revenue to give them a hearing before exercising the powers, but the Board without, any notice or without any hearing the petitioners passed the impugned order declining to interfere in the matter. The learned counsel urged that the communication sent to the petitioners did not reflect that the Board has thought that the request made by the petitioners is neither desirable nor expedient or is not for avoiding genuine hardship. Shri Dastur also submitted that the Central Board of Revenue had issued a circular dt. 11th April, 1955, wherein the officers of the Department were advised not to take advantage of the ignorance of the assessee as to his right. The learned counsel urged that the circular demands that the officers should take the initiative in guiding taxpayers and should draw their attention to any refund or relief to which they appear to be clearly entitled but which they have omitted to claim for some reason or the other. Shri Dastur submits that the relevant (last) date for claiming exemption was available before the concerned ITO and the ITO ought to have guided the petitioners to make such a claim. Shri Joshi for the Revenue, on the other hand, submits that the case of the peititoners does not fall within the ambit of the circular and the claim of the peititoners that the officers should have advised the assessee to claim deductions cannot be entertained. Shri Joshi submits that the Board while rejecting the claim must have come to the conclusion that it is not desirable or expendient to reopen the assessment and the claim of the petitioners that this is a case of genuine hardship shoul dnot be accepted. Shri Joshi also urged that it is not possible for the Board to exercise the powers under Sub S. (2)(b) of S. 119 and issue directions in every case.