9911796707
TMI Blog2002 (9) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... for various years and on completion of the said assessments, certain tax liabilities arose. The petitioner was unable to discharge the said tax liabilities which also resulted in liability for interest and for penalty for non-payment of dues. The relevant years are the assessment years 1984-85 to 1991-92. For some of these years, the petitioner had preferred first appeals before the Commissioner of Income-tax (Appeals), but as the self-assessment tax under section 140A was not paid, the appeals were not entertained by the said appellate authority in the years 1992 and 1993. For the other years, the petitioner had not preferred appeals. The Government of India promulgated the Kar Vivad Samadhan Scheme (hereinafter referred to as "the Scheme" or "the KVSS") through the Finance (No. 2) Act, 1998, as contained in sections 86 to 98 of the said Act. The scheme came into force from September 1, 1998, and remained in force till December 31, 1998, and extended till January 31, 1999. The petitioner filed revision applications under section 264 of the Act before the Commissioner of Income-tax, Rajkot--respondent herein. All the said revision applications were filed in November/December, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner's applications for condonation of delay and on that basis dismissed the petitioner's revision applications on March 31, 2000. The major contention of the petitioner in present petition is that when the tax arrears in the petitioner's case were determined before March 31, 1998, and the petitioner's revision applications were pending on December 28/29, 1998, when the declarations under the KVSS were filed, the petitioner satisfied all the requisite conditions for availing of the benefits under the KVSS and, therefore, the respondent acted illegally in rejecting the petitioner's declarations. The second major ground urged in the petition is that the petitioner had also preferred appeals for the assessment years 1980-81, 1981-82, 1993-94 and some of the earlier years under the Income-tax Act as well as under the Wealth-tax Act. Those appeals were also filed belatedly beyond the period of limitation. The respondent, however, accepted the petitioner's declarations in pending appeals which were time barred, but the respondent illegally rejected the petitioner's declarations in the pending revision applications. In response to the notice issued by this court, affidavit in reply da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 993-94, except for income-tax assessment for the assessment year 1981-82 and wealth-tax assessment for the assessment year 1993-94, had become final, long before the commencement of the KVSS, and the matters relating to recovery by auction has reached up to the Supreme Court." It is, therefore, submitted that the declarations under the KVSS filed immediately after belatedly filing revision applications after a number of years merely for taking the benefit of the KVSS cannot be treated as pending revisions as provided in section 95(i)(c). Rejoinder affidavit has also been filed by the petitioner. At the hearing of the petition, Mr. K.H. Kaji, learned counsel for the petitioner-assessee, has raised the following contentions: The petitioner fulfilled both the conditions precedent for eligibility of the benefits under the KVSS. The petitioner had outstanding tax arrears as on March 31, 1998. The revision applications filed by the petitioner for the relevant years were pending on the date when the declarations were filed within the time limit prescribed by section 89. Hence, the petitioner was entitled to get benefit of the KVSS. Strong reliance has been placed on the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f disputes for the purpose of giving benefits to the assessees whose assessments had become final long before coming into force of the KVSS. It is also submitted that when there was gross delay in filing of the revision applications, before condonation of the said delay, the revision applications cannot be said to be pending. There is considerable difference between an appeal and a revision. The remedy of filing an appeal is available to an assessee as a matter of right whereas the remedy of filing a revision application under section 264 is a discretionary remedy and, therefore, acceptance of the petitioner's declarations under the KVSS in appeals cannot clinch the issue in favour of the petitioner in the matter of declarations under the revision applications also. The petitioner's appeals filed against the assessment orders for the relevant assessment years (statement annexure A) were already dismissed in the year 1992-93 for non-payment of self-assessment tax and, therefore, the so called revision applications filed in December, 1998, were not bona fide. In fact, the recoveries were started earlier and the tax dues of Rs. 2.88 crores were already recovered from the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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. 90. Time and manner of payment of tax arrear.--(1) Within sixty days from the date of receipt of the declaration under section 88, the designated authority shall, by order, determine the amount payable by the declarant in accordance with the provisions of this Scheme and grant a certificate in such form as may be prescribed to the declarant setting forth therein the particulars of the tax arrear and the sum payable after such determination towards full and final settlement of tax arrears;... (2) The declarant shall pay the sum determined by the designated authority within thirty days of the passing of an order by the designated authority and intimate the fact of such payment to the designated authority along with proof thereof and the designated authority shall thereupon issue the certificate to the declarant. (3) Every order passed under sub-section (1), determining the sum payable under this Scheme, shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceeding un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty for contravention of section 25 which may even lead to imprisonment for six months. The question before the Supreme Court was whether the appellants in that case rendered themselves liable to prosecution under section 27, because they instigated the strike while the appeal was pending before the Appellate Tribunal. The contention raised on behalf of the appellant-workmen and the finding given by the Supreme Court are set out hereunder in their Lordships words: "It is contended that section 24 contemplates the pendency of a valid or competent appeal, but as no valid or competent appeal under the law was pending, the appellants committed no offence under section 27. We are unable to accept this contention. Section 24 on a plain and natural construction requires for its application no more than that an appeal should be pending and there is nothing in the language to justify the introduction of the qualification that it should be valid or competent. Whether the appeal is valid or competent is a question entirely for the appellate court before whom the appeal is filed to determine, and this determination is possible only after the appeal is heard, but there is nothing to preven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 148 of the Income-tax Act, 1961. The assessee invoked section 297 of the 1961 Act which provided that notwithstanding the repeal of the 1922 Act where in respect of any assessment year any income chargeable to tax had escaped assessment within the meaning of that expression in section 147 and no proceedings under section 34 of the 1922 Act in respect of any such income are pending at the commencement of the 1961 Act (1st April, 1962), a notice under section 148 may be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly. The assessee, therefore, contended that the proceedings under section 34 of the 1922 Act were pending on April 1, 1962 and, therefore, the proceedings under section 148 read with section 297 of the 1961 Act could not have been commenced. The reply of the Revenue was that since the notice under section 34 of the 1922 Act was an invalid notice on the ground that it was barred by limitation, the proceedings initiated on the basis of that notice should be considered as not pending in the eye of law. Rejecting the contention of the Revenue, the apex court held as under: "The only question for decision in these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the decision of the Karnataka High Court in Gopal Films v. Deputy CIT [1999] 237 ITR 655. Reliance is also placed on the following observations in Gufic Pharma Ltd. v. J. G. Arora (1999) 238 ITR 835 (Guj): "It was also not the case that the revision had not come into existence within the period of limitation, so as to suggest that the assessee had waived his right to challenge that order." The submission cannot be accepted. Similar provisions are to be found in sections 249 and 253 of the Act which also prescribe the period of limitation for filing first appeal before the Appellate Commissioner and the second appeal before the Income-tax Appellate Tribunal. Those provisions, after prescribing the period of limitation, also confer the power on the appellate authority to condone the delay where sufficient cause is shown. The submission about waiver shall be considered a little later in (para. 17). Section 95(i)(c) of the KVSS uses the expression "admitted and pending" in so far as the appeals are concerned, but uses only the word "pending" as far as revisions are concerned. The attempt made by Mr. Naik, for the Revenue to distinguish the aforesaid authorities of the apex cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g into force of the Kar Vivad Samadhan Scheme, in the facts of the case, could not be held against the assessee. If he can legitimately act within the precincts of the statute for pursuing a bona fide dispute, he can also claim the benefit of the scheme promulgated by Parliament when necessary conditions for availing of such benefit have been shown to exist. As on the date of declaration, he had tax arrears which stood determined prior to March 31, 1998, and he had also a dispute pending before the Commissioner of Income-tax by way of revision under section 264 which could not have been ignored by him. The assessee having made the declaration, fulfilling both the conditions as on the date of the declaration, could not have been denied the benefits of the Scheme." "The mere fact that the revising authority also happens to be the designated authority, he cannot merge the two distinct jurisdictions and obligations into one and reflect one order into another. As a designated authority, he has jurisdiction to see only the existence of the conditions which makes the Kar Vivad Samadhan Scheme operative in the case...Whether the revision has merit or will be successful, is not his domain. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the levy of interest is automatic and, therefore, no relief can be granted against levy of interest in a revision under section 264 of the Act. Hence, the revision petitions were not maintainable and, therefore, at the time when the declarations under the KVSS were filed, there were no appeals or revisions. After holding that the revision petitions were maintainable because the petitioners had challenged the calculation of interest which was not outside the purview of section 264, the Kerala High Court examined the controversy about the interpretation of the provisions of section 95(c), accepted the view taken by this court in Gufic Pharma Ltd.'s case [1999] 238 ITR 835 and held as under: "I am of the view that for the disposal of the declarations under the Kar Vivad Samadhan Scheme what is necessary is to find out whether there is a revision or appeal pending...In this case, the revision petitions were filed on October 28, 1998. The declarations were filed on November 2, 1998. Thus, it cannot be said that the revision petitions were not pending on the date of filing of the declarations. The further question whether the revision petitions filed were maintainable or any reliefs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 264 are concerned. But, where a revision is filed beyond time, unless the delay is condoned, it cannot be said that the revision is pending. In such a case only when it is admitted by condoning the delay, the revision proceedings can be said to be pending; and on condonation of delay by the Commissioner and admission, the pendency would relate back to the date of filing of the revision petition. The proviso to sub-section (3) of section 264 of the Act, in terms provides that where there is delay in filing a revision petition, the Commissioner should admit the revision by condoning the delay, on sufficient cause being shown. In this case, there is a long unexplained delay and there is no condonation of such delay. Therefore, it cannot be said that a revision was pending on January 6, 1999. Hence, mere filing of a belated application seeking revision, on January 5, 1999, will not entitle the petitioner to contend that a litigation was pending in regard to the assessment year 1995-96 and that, therefore, a declaration could be made under section 88." Similarly, the Calcutta High Court has laid down the same principle in Paresh Premji Rajda v. CIT [1999] 239 ITR 11, and held that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired or, in the case of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal, the assessee has not waived his right of appeal ; or (b) where the order is pending on an appeal before the Deputy Commissioner (Appeals); or (c) where the order has been made the subject of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal." Mr. Kaji submits that this issue is already judicially concluded in favour of the assessee. We find considerable substance in the submission of Mr. Kaji. In C.C. Jayaram v. CIT [1994] 207 ITR 662 (Ker), the expression "subject of appeal" in section 264(4) of the Act came up for interpretation. The Kerala High Court held that an order can be said to be the "subject of an appeal" within the meaning of section 264(4) of the Income-tax Act, 1961, only if the appeal was considered and disposed of on the merits; an appeal which was dismissed as withdrawn at the instance of the assessee or where an appeal was dismissed on the ground that the same was incompetent or where an appeal was dismissed as barred by limitation or where the appeal was dismissed for nonpayment of undisputed tax as a condition precedent for entertaining the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up in such disputes. Declogging the system will not only incentivise honest taxpayers, enable Government to realise its reasonable dues much earlier but coupled with administrative measures, would also make the system more user friendly. I, therefore, propose to introduce a new scheme called Samadhan." Mr. Naik strongly relied on the decisions of the Karnataka High Court in Gopal Films v. Deputy CIT [1999] 237 ITR 655 and of the Calcutta High Court in Paresh Premji Rajda v. CIT [1999] 239 ITR 11 and submitted that the object of the KVSS has been correctly appreciated by the Karnataka High Court in the following words: "The object of the KVS Scheme is to realise the revenue locked up in litigations pending at different levels, by giving incentive to honest taxpayers. Having regard to the provisions of the KVS Scheme, pendency of a proceeding either by way of appeal or revision or reference or writ petition should be a bona fide pendency. When a matter has attained finality and when no litigation is pending, creation of an artificial pendency, after the announcement of the scheme, merely to obtain the benefit of the scheme is impermissible. Any attempt to create such artificial pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner herein), which appeals were also filed after considerable delay and after the date of commencement of the scheme, it is not open to the Revenue to contend to the contrary in respect of the revisions filed under similar circumstances. Having heard learned counsel for the parties, we do find that the petition involves an interesting debate about the object of the Scheme. The view canvassed by Mr. Naik for the Revenue is certainly a plausible view, the one which commenced itself to the Karnataka and Calcutta High Courts in the aforesaid decisions in Gopal Films' case [1999] 237 ITR 655 and Paresh Premji Rajda's case [1999] 239 ITR 11 respectively. But we find that the interpretation being canvassed by the Revenue involves addition of words to the statute by inserting the words "as on the date of commencement of the scheme as also" before the words "on the date of filing declaration" at two places in section 95(i)(c) and, therefore, the said provision would be required to be redrafted as under: "95. The provisions of this scheme shall not apply- (i) in respect of tax arrear under any direct tax enactment, (c) to a case where no appeal or reference or writ petition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject and intention of a statute are clear, it must not be reduced to a nullity by the draftsman's unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used." We are unable to accept the submissions made on behalf of the Revenue for supplying the aforesaid words to the provisions of section 95(i)(c) for the reasons that follow. The real question about the legislative intent is whether the Legislature had intended that the benefit of the scheme is not to be made available to an assessee who files time barred litigation after the date of commencement of the scheme, i.e., after September 1, 1998, for challenging the determination of tax made prior to March 31, 1998. The answer would have been in the affirmative if the scheme was framed only with a view to settling the "existing" disputes. The submission of Mr. Naik, for the Revenue, is that the nomenclature "Kar Vivad Samadhan Scheme" itself indicates the only object of the scheme and, therefore, the Legislature could not have intended to extend an invitation to assessees to file belated appeals/revisions only in order to avail of the benefit of the scheme. Even though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the possible interpretation that the Legislature was very keen to realise the tax arrears determined on or before March 31, 1998, we do not find any compelling necessity to hold that not inserting the words "on the date of commencement of the scheme" in section 95(i)(c) would reduce the scheme to a nullity or would lead to a discriminatory or incongruous result or absurdity or inconvenience. Hence, in the case at hand, we do not see why the rule of literal interpretation should be given a go-by. Very recently, in Padmasundara Rao v. State of Tamil Nadu [2002] 255 ITR 147; [2002] 3 SCC 533, the apex court has again cautioned that a casus omissus should not be readily inferred and that it cannot be supplied by the court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself. Thirdly, in Gufic Pharma Ltd.'s case [1999] 238 ITR 835, another Division Bench of this court has already held that the conditions precedent for availing of the benefit under the KVSS are only two, namely, (1) tax arrears determined on or before March 31, 1998, and (2) pending appeal/revision/writ petition on the date of the declaration. It has been hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividual) and also as executor of the late Digvijaysinhji for the assessment years 1988-89 to 199091 and also the appeals filed on January 13, 1999, for challenging the assessment orders dated March 29, 1993, under the Wealth-tax Act for the assessment year 1990-91. A perusal of the statement (annexure B to this judgment) giving the particulars about the appeals and the amounts of tax, interest and penalty involved therein indicates that as against the tax liability of Rs. 116 lakhs and interest and penalty liability of Rs. 429 lakhs aggregating to a total liability of Rs. 545 lakhs, by way of declarations under the KVSS filed by this very assessee (the petitioner herein) in the belated appeals under the Income-tax Act as well as Wealth-tax Act, the Revenue had admittedly accepted the said declarations giving up the right to recover more than Rs. 460 lakhs on receiving only Rs. 85 lakhs. As against the aforesaid figures in the case of the appeals, as far as the declarations filed in revision applications are concerned, the total tax liability of the assessee under the Wealth-tax Act and the Income-tax Act for the relevant assessment years between 1984-85 and 1991-92 was about Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the petitioner on the question of the object and interpretation of the statutory provisions of the KVS Scheme, when this court has found that the object and interpretation of the scheme canvassed by the assessee is more plausible than the one canvassed by the Revenue, the acceptance of the declarations filed by this very assessee under the same scheme in the belated appeals filed after the date of commencement of the scheme can certainly tilt the matter in favour of the assessee in the sense that the Revenue had itself accepted the interpretation canvassed by the petitioner in case of declarations in the belated appeals and, therefore, the same interpretation would govern acceptance of the declarations under the same scheme in the belated revision applications as well. Even while holding in favour of the petitioner-assessee that the designated authority was required to accept the petitioner's declarations under the KVSS in the pending revision applications, even though belatedly filed, we find that since the assessee retained the amounts otherwise payable under the KVSS, the assessee must be held liable to pay interest on the amounts payable by the assessee under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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