TMI Blog2002 (7) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - - Dated:- 2-7-2002 - Judge(s) : M. S. SHAH., K. A. PUJ. JUDGMENT The judgment of the court was delivered by K.A. Puj J.-The petitioners in these petitions under article 226 of the Constitution of India, have challenged the orders dated February 25, 1999 and February 23, 1999, respectively, passed by the designated authority rejecting the petitioners' declaration filed under section 89 of the Finance (No. 2) Act, 1998. The said declaration was filed by the petitioners under the Kar Vivad Samadhan Scheme, 1998 (hereinafter referred to as "the KVS Scheme"). The brief facts giving rise to the filing of Special Civil Application No. 3247 of 1999 are, that during the assessment years 1982-83 to 1988-89, the petitioner was a partner in the firms of Premier Paper Industries, Pioneer Builders and Swadeshi Industries. The petitioner had filed his return of income for the respective years declaring his share income from the firms on the basis of the returns of income filed by the firms, and as per the allocation of his share of profits according to the said returns of income of the firm. The said partnership firms had approached the Settlement Commission for the settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue is involved in both the petitions, both the petitions were heard together and are disposed of by this common judgment. Heard Mr. S.N. Soparkar, learned senior advocate appearing for the petitioners and Mr. B.B. Naik, learned standing counsel appearing for the respondents. Before we deal with the respective arguments canvassed by both the parties, it is important to point out here in relation to Special Civil Application No. 3247 of 1999 that the declaration filed by the petitioner was rejected by the designated authority on the following three grounds: (i) The income in your case has been determined pursuant to an order under section 245D(4) of the Income-tax Act. (ii) Sub-clause (b) of clause (i) of section 95 of the Finance (No. 2) Act, 1998, holds that the provisions of the Kar Vivad Samadhan Scheme do not apply in such cases. (iii) Your appeal before the Commissioner of Income-tax (Appeals) is not a valid appeal under section 246A. Similarly, in another petition, the declaration was rejected on the ground that in view of the provisions of section 95(i)(b) of the Finance (No. 2) Act, 1998, the petitioner's case cannot be covered under the KVSS 1998. The main arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x arrear and that the proceedings were challenged in appeal before the appellate authority were satisfied and hence the petitioner was entitled to avail of the benefit granted under the KVS Scheme. Mr. Soparkar, learned senior counsel, has further submitted that once the order is challenged in appeal it is not open for the designated authority to go into the merits of the matter and reject the declaration on the ground that there was no tax dispute raised by the assessee and the dispute raised was only frivolous or baseless. In support of his contention, he relied on the decision of this court in the case of Gufic Pharma Ltd. v. J. G. Arora [l999] 238 ITR 835, wherein it is held as under: "That it is not the condition for operation of the Kar Vivad Samadhan Scheme that the appeal, revision or reference should have come before March 31, 1998, or before the coming into force of the Scheme. It was not intended to curtail the right of any aggrieved party to prosecute his remedies under law. The facts clearly showed the existence of an issue as to the jurisdiction of the Assessing Officer to make an order under section 154 in respect of a claim to deduction that had been the subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit under the KVS Scheme. Mr. B.B. Naik, learned standing counsel, appearing for the respondent has vehemently argued before us that section 95(i)(b) of the Act is very clear and the order passed by the Settlement Commission under section 245D(4) in the case of the firm equally applies to the case of the petitioner as what is to be done in the partner's case is only to pass a consequential order giving effect to the order of the Settlement Commission and hence within the KVS Scheme itself and looking to the entire scheme of the Act which is in force at the relevant time covering assessment years in question. Section 155(1), so far as it relates to the allocation and computation of the share income from the partnership firm is required to be read with section 95(i)(b) of the Act and any order passed by the Settlement Commission under section 245D(4) of the Act in the case of the firm would equally apply with full force to the case of the partners. If the scheme is not applied to the firm in whose case the order is passed under section 245D(4) of the Act, and similarly when effect is given in the case of the partner pursuant to that order, the assessee cannot avail of the ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability the declaration can be filed and for that purpose, Mr. Naik has relied on the decision of the Bombay High Court in the case of Killick Nixson Ltd. v. Dy. CIT [2001] 248 ITR 17. In this case, there were additions on seven heads, out of this, three additions were confirmed and remaining four were set aside with a direction to the Assessing Officer to frame the reassessment de novo. The assessee preferred second appeal before the Tribunal challenging the additions which were confirmed in the first appeal and thereafter a declaration was filed by the assessee for the entire additions. The designated authority accepted the declaration only with regard to the three additions in respect of which the appeal was pending before the Income-tax Appellate Tribunal. Thereafter, the Assessing Officer has taken on hand the reframing of the assessment in respect of four additions and the said action was challenged before the Bombay High Court, wherein the court has taken the view that if, in a given case, the income is determined by taking into account all the heads then the determination of the assessed income would cover all the heads, but if the Assessing Officer has not adjudicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In rejoinder, Mr. Soparkar, learned senior counsel, has submitted that the authorities cited by Mr. Naik are not relevant and they are not applicable to the issue involved in the present petition. He has therefore submitted that the designated authority was not justified in rejecting the declaration of the petitioners. We have at length dealt with the arguments canvassed by both the parties. However, we are not inclined to go into the merits and demerits of all these contentions which were raised before us. We confine ourselves only to ground No. 2 raised by the designated authority while rejecting the declaration filed by the petitioner. In our view, section 95(i)(b) of the Act squarely applies to the facts of the petitioners' case as the said section refers to the case where an order has been passed by the Settlement Commission under sub-section (4) of section 245D of the Act. Here, in the present case, the order was passed by the Settlement Commission in the case of the partnership firms and consequential effect was given to the petitioners' case and the petitioners were partners in the said firm. The said proceedings, therefore, flow from the proceedings of the firm. In ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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