IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 09.02.2010 CORAM THE HONOURABLE MR. JUSTICE M. VENUGOPAL W.P.No. 2210 of 2003 Savamalai Estates Limited, 3, Simon Lay-out, Annamalai Chettiar Road, Coimbatore – 641 011. ... Petitioner vs. 1. The Special Commissioner and Commissioner of Agricultural Income-Tax, Chepauk, Chennai – 600 005. 2. The Agricultural Income-Tax Officer, Pollachi. ... Respondents. PRAYER: Petition filed under Article 226 of the Constitution of India for the issuance of writ of certiorari, to call for the records in Proceedings No.C1/2579/2009 dated 08.08.2002 of the first respondent and quash the same. For Petitioner : Mr.R.Venkatraman for Mrs.Lakshmi Sriram For Respondent Nos.1&2 : Mr.K.Radhakrishnan, Govt. Advocate.(T) O R D E R The petitioner has filed this writ of certiorari, in calling for the records in Proceedings No.C1/2579/2009 dated 08.08.2002 of the first respondent and to quash the same. 2. The petitioner was an assessee on the file of the second respondent/the Agricultural Income Tax Officer, Pollachi under the https://hcservices.ecourts.gov.in/hcservices/ erstwhile provisions of the Tamil Nadu Agricultural Income Tax Act, 1955. 3. The petitioner filed a statement of Advance Tax payable as per Section 16 of the Act on 25.03.1999 in regard to the assessment year 1999-2000 by estimating the tax payable at Rs.9,99,700/- 80% of which worked out to Rs.7,99,760/- or Rs.8,00,000/-. The petitioner paid the aforesaid sum of Rs.8,00,000/- by way of Advance Tax before the end of the financial year 31.03.1999. 4. It is the case of the petitioner that a sum of Rs.3,00,000/- was paid by it on 23.02.1999 and prayed for adjustment of balance of Advance Tax payable of Rs.5,00,000/- out of refund due to the petitioner for the assessment years 1996-97 and 1997-98 as per its letter dated 23.02.1999 and as found by the second respondent in his revised assessment order dated 04.12.1998 (for the assessment year 1996-97 recording the refund due to the petitioner to the tune of Rs.2,58,114/- to be adjusted towards future dues of the petitioner/assessee on representation of application by them) and in the revised assessment order dated 04.12.1998 in regard to the assessment year 1997-98 recording the refund due to the petitioner to the tune of Rs.4,73,580/- to be adjusted towards future dues. The revised orders aforesaid were passed by the second respondent on 04.12.1998 giving effect to the appellate orders in the appeals projected by the petitioner. 5. Further, according to the petitioner, because of the fact that no intimation in regard to the adjustments of refund due to the petitioner as against the balance of advance tax payable by the petitioner was received from the second respondent, the petitioner was proposed to pay a sum of Rs.3,00,000/- on 02.03.1999 and another sum of Rs.2,00,000/- on 10.03.1999 as compliance of payment of the entire Advance Tax due on the estimate of agricultural income as admitted by the petitioner in the statement of Advance Tax payable filed already, to be on the safer side. 6. The second respondent passed an assessment order in respect of the assessment year 1998-99 on 24.12.1998 determined the tax payable at Rs.1,58,828/- by adjusting the same, out of the refund due to the petitioner and in the said order, the second respondent re-determined the total refund of tax due to the petitioner at a sum of Rs.5,72,866/- 7. On 30.03.1999, the second respondent passed an order giving effect to the Appellate Order dated 26.02.1999 made in A.P.No.4199/D1, determining the refund due to the petitioner at Rs.5,80,456/-. Later on 21.09.1999, the second respondent passed an order in regard to the assessment year 1997-98 by giving effect https://hcservices.ecourts.gov.in/hcservices/ to the Appellate Order of the Tribunal made in A.T.A.No.40/98 dated 13.04.1999 and determining the refund due to the applicant at Rs.5,69,430/-. 8. It is represented on the side of the petitioner that the second respondent to its surprise passed an order on 01.12.1999 in G.I.R.2S/98-99/Dec No.136/99-2000 adjusted the refund due to the petitioner towards the demand raised for the assessment year 1994- 95 to 1997-98, consequent to the levy of interest and penalty, thereby exhausted the entire refund due to the petitioner. As a matter of fact, the petitioner approached the first respondent for waiver of the above said levies and the same was rejected on 03.03.2000 in C1/79/2000. 9. All of a sudden, the petitioner was forced to be in a situation, in which he was liable to pay the tax due for the assessment year 1999-2000 as per the return on 22.12.1999, inspite of the financial problem, it paid a sum of Rs.2,00,000/-. It filed a return on 23.12.1999, since, the time for filing return for the assessment year 1999-2000 was approaching on 31.12.1999. After adjusting Advance Tax already paid to an extent of Rs.8,00,000/- and a further sum of Rs.2,00,000/- paid on 22.12.1999 and an amount of Rs.4,11,605/- was the balance to be paid. Due to bad financial position, the petitioner was unable to pay a sum balance of Rs.4,11,605/- due as per the return and the amount was paid on 21.02.2000 within a period of two months from the filing of the return. 10. Added further, the second respondent, by means of an order dated 25.05.2000, by referring to the earlier assessment order dated 18.01.2000, the rectification order dated 03.03.2000 and the Appellate Order dated 03.04.2000, for the assessment year 1999-2000, determining the tax at Rs.14,92,326/- as against the tax admitted by the petitioner in the return to an extent of Rs.14,11,605/-. Moreover, it was required to pay a sum of Rs.80,721/- towards the tax in the said order and the same was paid on 12.06.2000. 11. The second respondent by his order dated 01.02.2002 fastened the liability of interest of Rs.74,249/- and penalty of Rs.1,18,800/- as per Section 16(A) (4) and (5) of the Tamil Nadu Agricultural Income Tax Act, 1955, for the assessment year 1999- 2000, the detailed explanations of the petitioner were overruled by the second respondent in his proceedings. 12. Thereupon, the petitioner was constrained to project the petition before the first respondent, praying for waiver of interest levied as per Section 16(A) (4) o f the Act and the https://hcservices.ecourts.gov.in/hcservices/ penalty levied as per Section 16(A) (5) of the Act and also filed detailed written submission. The first respondent in its impugned order dated 08.08.2002 in C1/2579/2002, confirmed the levy of penalty granting waiver of 25% and indeed failed to apply his mind to the claim of waiver of interest of amount of Rs.74,249/-. 13. The learned counsel for the petitioner urges before this Court that the first respondent had not appreciated the fact that the plea of the waiver of interest under Section 16(A) (4) of the Act, to the effect that the petitioner was only requesting for adjustment of refund due to the petitioner from time to time before the second respondent and that the said plea, if considered in time, would fortify the stand that there was no controversy/dispute for making Advance Tax as the Department had an excess amount of refund due to the petitioner and as the same was found recorded in the orders of assessment, the same would be adjusted for the future tax due from the petitioner and in fact the levy of interest and penalty could not be calculated based on the tax assessed in the order. 14. Added further, the petitioner had made out a good and sufficient case for the plea of waiver of interest and penalty and the first respondent failed to exercise his power and discretion judiciously in not appreciating the explanation of facts in regard to the excess payments and refund due to the petitioner, which remained unadjusted and added further, the second respondent's own admission and recording of excess sum and readiness to refund as against the future dues and the payment of advance tax (80% as per the statutory provisions) before the end of the financial year 31.03.1999 and really , there was no deliberate or intentional and wanton delay in payment of Advance Tax or the admitted tax on the part of the petitioner and that the statutory power for waiver must be invoked and exercised in favour of the petitioner as per the Act by the first respondent and the denial of adjustment of refund due as determined by the second respondent was no fault on the part of the petitioner and therefore the petitioner by no stretch of imagination could be penalised for purported non payment of Advance Tax or admitted and also the second respondent was not justified in disregarding the letter from the petitioner requesting for adjustment of refund due towards advance tax payable and the action of the second respondent in adjusting the refund due towards the subsequent demand raised on the petitioner was an arbitrary one and that the levy of penalty and interest on earlier demand being against the principles of law ought to have been waived by the first respondent. 15. That apart, the learned counsel for the petitioner contends that Section 16(A) refers to an estimated total https://hcservices.ecourts.gov.in/hcservices/ agricultural income and there is no provision under the Act for filing an estimate as per the said provision or any other provision of the Act and the above provisions requiring Advance Tax to be paid on an amount not less than 80% of the estimated total agricultural income, while the rate of tax prescribed under the Act itself was far less than 80% of the total income and therefore, the tax mentioned in 16-A(1) is in excess of the statutory charge and in short the levy of interest under Section 16-A(4) and penalty under Section 16-A(5) was only within jurisdiction and the entire interest and penalty levied in respect of the assessment years 1994-95 to 1997-98 are liable to be quashed in the interest of justice. 16. By drawing the attention of this Court to Section 16-A(1) of the Act which enjoins for self assessment and payment of Advance Tax in by which every individual shall pay agricultural income tax, for each previous year on or before the end of the February of the said previous year on the agricultural income derived by him during the previous year and that the agricultural income tax so payable shall not be less than 80% of the admitted total agricultural income derived by him, during the said previous year, the learned counsel submits that the requirement of sub Section (1) of the Agricultural Income Tax Act which is not less than 80% of the estimated Agricultural Income to be paid thereunder is a levy of an extortion and the same is an arbitrary one. 17. The sum and substance of the contention projected on the side of the petitioner is that sub Section 16(A) (1) of the Act, imposes an unconscionable burden on an assessee and that Section 16-A(1) has no reasonable nexus to the object of the enactment and imposes a burden far beyond what is reasonably required to enforce under the provisions and therefore the same is liable to be struck down as ultravires and in the present case on hand, the first respondent has arbitrarily rejected the petition against the levy of interest and penalty and suffice to point out that he has mechanically rejected the petition and his order dated 08.08.2002 is a non-speaking order and the same is bad in the eye of law and liable to be quashed. 18. At this stage, it is useful to refer to the impugned order of the first respondent dated 08.08.2002 in C1/2579/2009 inter alia which reads as follows: "..... It is seen from the assessment file at page No.3, that the Company has actually requested the Agricultural Income Tax Officer, Pollachi on 23.02.1999 to adjust the amount refundable to them for the https://hcservices.ecourts.gov.in/hcservices/ assessment year 1998-99 towards advance tax for the year 1999-2000. It is also seen that the company has paid the entire interest amount of Rs.74,249/-. The Learned Chartered Accountant has requested waiver of the penalty amount of Rs.1,18,800/- on the ground that there would have been actually no tax payable as such, had adjustment of refund amount towards tax dues been made by the Agricultural Income Tax Officer, Pollachi in time. The Authorised representative has informed that if correct adjustment of the advance tax of Rs.8,00,000/- and another sum of Rs.2,00,000/- paid on 22.12.99, had been made, only a sum of Rs.4,11,605/- would have remained payable. However, the company had not actually paid the amount while filing the return but had paid this amount belatedly only on 21.02.2000. Taking into consideration the amount already paid, and the efforts made by the Company to pay the dues, I am inclined to waive 25% of the penalty levied and accordingly order waiver of a sum of Rs.29,700/- (Rupees Twenty Nine thousand and seven hundred only)." 19. It is not out of place to make a significant mention that the petitioner on 08.04.2002 had addressed a letter in regard to the levy of interest to the first respondent taking a categorical stand that they have paid 80% of tax due as per the estimated income before 31.03.1999 and as such the levy of interest on an assessment shortfall was not proper and delay of 10 days being less than a month interest should have been ignored, etc. 20. Again, on 08.04.2002 itself, the petitioner addressed another detailed letter to the first respondent,praying for the waiver of penalty of Rs.1,18,800/- levied by the second respondent, because the Government was adequately compensated by the interest charged on the delayed demands. The aforesaid communication dated 08.04.2002 were admittedly sent by Registered Post that apart the petitioner also submitted his written arguments through the Chartered Accountant being its authorised representative. 21. The main contention submitted by the petitioner counsel is that the first respondent while passing the impugned order dated 08.08.2002 had not adverted to the two communications dated 08.04.2002 sent by the petitioner through Registered Post and also the written arguments submitted through the petitioner's representatives namely the Chartered Accountant and therefore the Court is not able to decipher as to how the first respondent was inclined to waive 25% of the penalty levied and accordingly ordered waiver a sum of Rs.29,700/- and there is no indication in the https://hcservices.ecourts.gov.in/hcservices/ impugned order as to how the 75% of the penalty levied has been rejected and in short the contention of the learned counsel for the petitioner is that the impugned order of the first respondent suffers from non application of mind and it does not have the appearance of justice. 22. It is needless to make a mention that an unreasoned order may be just, but may not appear to be so to the individual affected. Per contra, a reasoned order will have the appearance of Justice. Also, it is pertinent for this Court to point out that in the impugned order, the first respondent had not made any mention about the interest portion and indeed there is no reflection of foreign seek ability/skill of the first respondent in a qualitative and quantitative fashion and in short there appears to be a violation of the principles of Natural Justice. The term 'Natural Justice' means "Justice according to Conscience". In modern parlance, the term 'Natural Justice' is "fairness or reasonableness". The concept of natural justice is an integral part of Article 14 of the Constitution of India. The term Natural Justice is the natural sense of what is right or wrong?. Added further, this Court recalls the Seneca's observation (a Philosopher of 4 B.C. - A.D.56 who was a tutor to the Emperor Nero, who said that 'both sides must be heard' and same runs as follows: "Whoever should adjudge anything, the other party not have been heard: even though, he should decide fairly, it would scarcely be fair" Even an authority including a Judicial or Administrative or Quasi judicial authority will have to act with reasonableness, fairness and in short should act according to conscience by adhering to the principles of hearing the other side after providing due opportunities to the concerned parties. No wonder, the term natural justice has not been defined anywhere and they are not an embodiment of set rules of a statute and the same cannot be put into a straight jack cast iron formula. 23. Be that as it may, the learned counsel for the petitioner brings to the notice of this Court to the earlier writ petition filed by the petitioner in W.P.No.7764 of 2000, on 10.07.2009, this Court has passed the order of allowing the writ petition partly, declaring that Section 16 A shall be read down to the effect that the Advance Tax to be payable shall be 80% of the "estimated total agricultural income tax" and not 80% of the "estimated total agricultural income" borne by him during the said previous year. Earlier the petitioner filed W.P.Nos.7760 to 7763 of 2000 before this Court and this Court on 10.07.2009 has set aside the impugned order thereto and remitted the matters to the second respondent for https://hcservices.ecourts.gov.in/hcservices/ fresh consideration in accordance with law in the light of the order passed by this Court in W.P.No.7764 of 2000 and pass appropriate orders within a period of three months from the date of receipt of a copy of the order. 24. As far as the present case is concerned on going through the impugned order passed by the first respondent, dated 08.08.2002, this Court is of the considered view that the said order does not possess the appearance of justice and the outline of process of reasoning is lacking and further the said order had not dealt with the two letters dated 08.04.2002 sent by the petitioner through Registered Post, one pertaining to the levy of interest and the penalty and all the more the said order had not countenanced the written submissions of the petitioner and needless for this Court to say that the said order is an unreasoned one and therefore, this Court opines that this is a classic of negation of principles of natural justice and accordingly, this Court exercises its discretionary, extraordinary jurisdiction under Article 226 of the Constitution of India and accordingly allows the writ petition to prevent an aberration of justice by setting aside the impugned order dated 08.08.2002, passed by the first respondent. 25. In the result, the writ petition is allowed, the impugned order dated 08.08.2002 passed by the first respondent is set aside and the same is quashed and remitted back to the first respondent for passing orders afresh by taking into account (1) the two letters of the petitioner dated 08.04.2002, one relating to the payment of interest, and another relating to the levy of penalty and (2) the written submissions furnished by the petitioner and moreover, the first respondent is directed to pass orders dispassionately on merits, after providing due opportunity to the petitioner uninfluenced with any of the observation made by this Court in this writ petition, in the manner known to law and in accordance with law, within a period of five months from the date of receipt of a copy of this order and leaving the parties to bear their own costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar ogy https://hcservices.ecourts.gov.in/hcservices/ To 1. The Special Commissioner and Commissioner of Agricultural Income-Tax, Chepauk, Chennai – 600 005. 2. The Agricultural Income-Tax Officer, Pollachi. +1cc to Mrs. Lakshmi Sriram, Advocate Sr 8000 +1cc to Spl. Govt. Pleader(T) Sr 8215 VSV(CO) km/22.2. W.P.No.2210 of 2003 https://hcservices.ecourts.gov.in/hcservices/