9911796707
TMI Blog2002 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... in Chapter IV of the Finance (No. 2) Act, 1998 (referred to hereafter as "the Act"). It was in force between September 1, 1998, and January 31, 1999. Briefly, the scheme permits the settlement of "tax arrears" as defined in section 87(m) of the Act. The relevant extract of the definition reads: "tax arrears" means,-- (i) in relation to direct tax enactment, the amount of tax, penalty or interest determined on or before the 31st day of March, 1998, under that enactment in respect of an assessment year as modified in consequence of giving effect to an appellate order but remaining unpaid on the date of declaration;" We have emphasised the dates which have a bearing on the case, namely, (a) March 31, 1998 and (b) the date of declaration. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declarant shall be determined at the rates specified hereunder." Section 89 provides that: "89. Particulars to be furnished in declaration.--A declaration under section 88 shall be made to the designated authority and shall be in such form and shall be verified in such manner as may be prescribed." Section 95 of the Scheme excludes certain tax arrears from the benefit of the Scheme. In this case we are concerned with the particular exclusion from the purview of the Scheme which is contained in section 95(i)(c) of the Act. It reads: "95. Scheme not to apply in certain cases.--The provisions of this Scheme shall not apply- (i) in respect of tax arrears under any direct tax enactment.... (c) to a case where no appeal or reference or wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT, Karnataka (Central)) to resolve the issues raised. The assessment year in this appeal is 1992-93. By an order dated March 31, 1995, the appellant was assessed to tax under section 143(3) of the Income-tax Act, 1961, by the Assistant Commissioner. The total tax with interest determined was Rs. 44,50,568. After adjustment of pre-paid taxes Rs. 40,74,820 remained payable. The appellant preferred an appeal before the Commissioner (Appeals) (referred to as the "CIT(A)") objecting to the following additions in the assessment order: (i) Share of profit from Raju Investment taken at Rs. 6,85,668 as against Rs. 1,85,250 shown in the return, (ii) Unexplained investment in acquisition of jewellery Rs. 23,07,809, (iii) Value of stones other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation of the levy of interest under sections 234A, 234B and 234C. Pursuant to the order of the Commissioner of Income-tax (Appeals), the Assessing Officer by order dated November 17, 1997, modified the assessment order for the assessment year 1992-93 in respect of item (i) and deducted the additions set aside by the Commissioner of Income-tax (Appeals). The income was re-computed as Rs. 12,16,303 and the tax thereon at Rs. 6,56,042. Interest was levied on the income under sections 234A, 234B and 234C. After crediting the appellant with the amounts already paid, a sum of Rs. 23,044 was calculated as the balance due. By a subsequent order dated January 2, 1998, the Assessing Officer deleted the levy of interest under sections 234A, 234B an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. There does not exist any arrears on March 31, 1998, as seen from the facts stated above. 2. The appeal said to be pending is on levy of interest, which has been waived. Hence, there is no dispute. 3. The arrear that is sought to be settled relates to the current demand raised on December 31, 1998, which is entirely different from the arrear demand." The appellant impugned the order of the Commissioner of Income-tax (Appeals) by way of a writ petition before the High Court. The High Court dismissed the writ application upholding the first and second reasons of the Commissioner of Income-tax (Appeals) as set out above. The High Court held that the appellants declaration was rightly rejected because there were no tax arrears as the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination is made. However, not all "tax arrears" under section 87(m) are entitled to the benefit of the Scheme. If no appeal, etc., is pending in respect of the tax arrears, the benefit of the Scheme is not available under section 95(i)(c). If an appeal, etc., is pending, it is not for the designated authority to question the possible out come of the appeals, nor for the High Court to hold that the appeal was "sham", "ineffective" or "infructuous" as it has. In any event, the High Court erred in holding that the entire demand raised on December 31, 1998, had been consented to by the appellant. In computing the demand on December 31, 1998, the Assessing Officer included not only those items which had been remitted by the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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