2025 (11) TMI 657 - HC - Income Tax

Patent appeal and writ petition dismissed as records destroyed; Form 26A unenforceable since proviso effective 01.07.2012

Kohinoor Educational Services Pvt. Ltd. Versus Union Of India & Ors.

HC dismissed the patent appeal and affirmed the Single Judge's dismissal of the writ petition. The court held records were destroyed and key Income Tax ... Patent Appeal challenging the order passed by Ld' Single Judge - dismissal of the underlying writ petition on the ground that since the relevant records have been destroyed, and the statutory provisions of the Income Tax Act, 1961 relied upon by the petitioner, being inapplicable for a significant portion of the claim, any direction to issue the accountant certificate in Form 26A under the Act would be practically unenforceable - default in not deducting the tax HELD THAT:- Ld' Single Judge has taken into account the provisions of Section 201 of the Act, as also its proviso, to opine that the grievance of the appellant covering the financial years 2009-10 to 2012-13, are not covered by the benefit in the proviso since it came into effect only on 01.07.2012. Thus, even on merits, the learned Single Judge did not find the relief sustainable. We too, having regard to the legal position, are unable to disagree with the reasoning of the learned Single Judge. Though, none of the counsel invited our attention, however, we find from the records of the case that the ITAT, by the order [2018 (7) TMI 2378 - ITAT INDORE] on the same subject matter regarding disallowance made under Section 40(a)(ia) of the Act had disposed of the appeal pertaining to the Assessment Year 2013-14 restoring the issue in respect of the payment claimed to have been made by the appellant and as to whether such receipts have been disclosed by payee (respondent No. 3/AAI) in its return of income, by remanding the case back to the Assessing Officer for verification. The appellant has not brought to our notice any order or any proceeding as to what transpired consequent to the aforesaid order dated 26.07.2018, passed by the ITAT, Indore Bench. Single Judge has taken into consideration the fact that the appellant has invoked the writ jurisdiction of this Court after a substantial period of ten years had passed from the date when the alleged reason or alleged cause of action may have arisen in favour of the appellant. On that count too, we are unable to disagree with the opinion rendered by the learned Single Judge. ISSUES PRESENTED AND CONSIDERED 1. Whether a writ of mandamus can be issued directing the concerned officer to issue an accountant's certificate in Form 26A under the Income Tax Act where relevant physical records for the periods in dispute have been destroyed and electronic retrieval is unavailable. 2. Whether the proviso to Section 201 of the Income Tax Act (inserted w.e.f. 01.07.2012) affords relief for claims relating principally to financial years prior to its applicability (notably 2009-10 to 2012-13), and if absence of that proviso for earlier years precludes the grant of the certificate. 3. Whether the petitioner's long delay in seeking the relief (approximately ten years) amounts to delay and laches sufficient to bar judicial relief. 4. Whether a document obtained after the impugned order (an RTI reply) and not placed before the Single Judge can be entertained on appeal without an application for leave to place it on record, and whether such a document changes the entitlement to relief. 5. Whether the appropriate forum for raising the tax/deduction issues is writ jurisdiction or the statutory appellate/assessment process (i.e., whether writ is maintainable in the circumstances). ISSUE-WISE DETAILED ANALYSIS - Issue 1: Availability of mandamus to issue Form 26A where records destroyed Legal framework: Form 26A is a certificate issued by a practicing CA verifying that the payee has included the receipts in computing its income; issuance requires verification from the payer's ledger/books to confirm inclusion of income in payee's return. The Court's coercive relief (mandamus) requires that the direction be practically enforceable. Interpretation and reasoning: The Court considered the respondents' tax-cell communication that physical records prior to 01.04.2013 were destroyed (floods, 2015) and that legacy accounting package (AIMS) did not retain retrievable server data. Without ledgers or verifiable entries in the payer's books for the disputed years, the official/practitioner cannot verify inclusion of income and therefore cannot, in good faith, issue the certificate. Ratio vs. Obiter: Ratio - a mandamus compelling issuance of Form 26A cannot be granted where there are no records permitting verification; such direction would be practically unenforceable. Obiter - general observations on difficulties of reconstruction of accounts when records are lost. Conclusion: The absence and destruction of relevant records for the material period preclude a meaningful order directing issuance of Form 26A; judicial compulsion would be impractical and inappropriate. ISSUE-WISE DETAILED ANALYSIS - Issue 2: Effect of proviso to Section 201 and temporal applicability Legal framework: Section 201 makes a person who fails to deduct tax as required an assessee-in-default; a proviso inserted into Section 201 with effect from 01.07.2012 provides a particular regime/relief relevant to certificates (as relied upon by the petitioner). Interpretation and reasoning: The Court accepted that the proviso to Section 201 became effective only on 01.07.2012; the petitioner's principal grievance related to FY 2009-10 to 2012-13 (periods largely preceding the proviso). Consequently, the statutory basis relied upon by the petitioner did not apply to the bulk of the claim, undermining the claimed entitlement to the Form 26A certificate for those years. Precedent Treatment: The impugned reasoning applied the statutory commencement date rather than retroactive operation; no precedent was overruled or distinguished by the Court on this point. Ratio vs. Obiter: Ratio - where the statutory provision conferring the claimed benefit is not in force for the period in question, relief predicated on that provision cannot be granted. Obiter - none beyond factual application. Conclusion: On merits, the claimed entitlement under the proviso to Section 201 is unsustainable for the principal years in dispute because the proviso was not in force for those years. ISSUE-WISE DETAILED ANALYSIS - Issue 3: Delay and laches Legal framework: Equity and public law principles bar relief where there is unexplained or inordinate delay causing prejudice or rendering enforcement unworkable; courts exercise discretion to refuse relief tainted by delay and laches. Interpretation and reasoning: The Court noted that the petitioner invoked writ jurisdiction nearly ten years after termination of the license period and the asserted cause of action; this long delay, coupled with destruction of records and consequent impracticality of enforcement, supported refusal of extraordinary relief. Ratio vs. Obiter: Ratio - substantial and unexplained delay may bar equitable/judicial relief, particularly when records needed for adjudication have been lost and enforcement would be impractical. Obiter - observations on interplay between delay and loss of evidence. Conclusion: Delay and laches independently justify refusal to exercise writ jurisdiction in the circumstances; the petition was rightly dismissed on this ground. ISSUE-WISE DETAILED ANALYSIS - Issue 4: Reliance on post-order RTI reply and failure to place material before Single Judge Legal framework: New material obtained after an order may be entertained only on proper application to place it on record and show grounds for its late production; appellate courts exercise discretion to admit or reject such material based on procedural propriety and prejudice. Interpretation and reasoning: The RTI reply dated 07.04.2025 was obtained after the Single Judge's order and was never placed before that court. The appellant neither sought leave to file it before the Single Judge nor applied in the appeal for permission to take it on record. The Court therefore refused to base relief on that material in the absence of procedural compliance and explanation. Ratio vs. Obiter: Ratio - documents obtained post-judgment cannot be relied on in appellate proceedings without leave and proper explanation; absence of such an application weighs against admitting the material. Obiter - none beyond procedural norms. Conclusion: The newly obtained RTI reply could not be relied upon without leave and was insufficient to alter the outcome; procedural non-compliance justified excluding it from consideration. ISSUE-WISE DETAILED ANALYSIS - Issue 5: Appropriateness of writ jurisdiction vs. statutory remedies Legal framework: Tax and deduction disputes are ordinarily addressed through the statutory assessment, appeal and revision machinery; writ jurisdiction is exceptional and not a substitute for those remedies unless there is no efficacious alternative. Interpretation and reasoning: The Court noted submissions that the issue ought to have been pursued before the assessing authorities and by appeal; also observed an ITAT order (relating to a later year) remanding a related verification issue to the Assessing Officer, and that the petitioner had not shown what transpired thereafter. The Court treated the matter as one where statutory remedies were relevant and writ relief was not appropriate given the delay, missing records, and the technical tax nature of the dispute. Precedent Treatment: The Court applied established principle limiting writ intervention in tax matters where appellate/assessment remedies are available; no precedent was disturbed. Ratio vs. Obiter: Ratio - where statutory fora exist and the dispute concerns tax deductions/income inclusion, the writ is not ordinarily maintainable, particularly where procedural and evidentiary routes via assessment/appeal remain available and have been or could be invoked. Obiter - reference to ITAT remand as a factual pointer to ongoing statutory processes. Conclusion: Writ jurisdiction was not the appropriate forum given available statutory remedies and the factual matrix; this reinforced denial of the extraordinary relief sought. OVERALL CONCLUSION The Court dismissed the appeal: (i) directions to issue Form 26A would be practically unenforceable due to destruction/unavailability of records; (ii) the statutory proviso relied upon did not cover the principal years in dispute; (iii) the petition was barred by delay and laches; (iv) post-order RTI material was not properly placed on record and could not be relied upon without leave; and (v) the matters were in any event suited to statutory assessment/appeal processes rather than extraordinary writ relief. These conclusions constitute the operative ratio of the decision.