TMI Blog2000 (12) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... revised return. The assessment order was passed under section 143(3) on March 27, 1995. Briefly, it may be mentioned that the petitioner had claimed deductions in respect of payment of premium, in respect of bad debts, depreciation and interest. They had also claimed that receipt of rent/compensation be treated as income from business and not income from house property. Their contentions were rejected by the Assessing Officer. Being aggrieved, the petitioner preferred an appeal to the Commissioner of Income-tax (Appeals). By order dated September 25, 1998, the appellate authority found on the question of taxing the income of Rs. 27,93,977 under the head "Income from house property", that the issue was pending on the file of the Assessing Officer for the earlier assessment year and since proper opportunity was not given to the assessee, the first appellate authority directed the Assessing Officer to decide the above issue afresh, after giving opportunity to the assessee. As regards the claim of bad debt to the extent of Rs. 68,02,046, the issue was also remanded back for fresh determination by the Assessing Officer after giving reasonable opportunity to the assessee. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems which were remanded to him by the Commissioner of Income-tax. In other words, on the date of filing of the declaration by the assessee, the declaration was only confined to the three heads which were the subject-matter of appeal before the Tribunal and which covered an amount of Rs. 33,65,298. The remaining four heads remitted to the Assessing Officer which covered Rs. 99 lakhs (approximately) were not the subject-matter of the petition. Be that as it may, the designated authority disposed of the declaration on January 19, 1999, under section 90(1) under the Finance (No. 2) Act, 1998. By the said order, the designated authority determined the assessed income of the petitioner at Rs. 33,65,298. The designated authority, accordingly, computed the tax arrears at Rs. 13,83,778. Similarly, in view of the fact that the assessee had paid TDS of Rs. 3.57 lakhs, the designated authority arrived at the disputed income of Rs. 6,91,331. Accordingly, the designated authority arrived at the disputed income of Rs. 26,73,967 and, thereafter, applying the rate of 35 per cent. under the Kar Vivad Samadhan Scheme, he arrived at the amount payable by the petitioner at Rs. 9,35,888. The above figu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ;" Section 94 : "94. For the removal of doubts, it is hereby declared that, save as otherwise expressly provided in sub-section (3) of section 90, nothing contained in this scheme shall be construed as conferring any benefit, concession or immunity on the declarant in any assessment or proceedings other than those in relation to which the declaration has been made." Relying upon the abovequoted sections, Mr. Dastur, learned senior counsel appearing on behalf of the petitioner, contended that under section 88, two conditions are required to be satisfied in regard to the maintainability of the declaration, viz., that there should be some outstanding tax payable and, secondly, that there should be a pending appeal/reference. In this connection, he also relied upon the definition of the words "tax arrears" in section 87(m) which refers to tax arrears in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 87(f) which defines the expression "disputed tax" to mean total tax determined and payable, in respect of an assessment year, but which remained outstanding on the date of the declaration under section 88. In this connection, Mr. Dastur invited our attention to the working made by the assessee which is broadly accepted by the designated authority. This is only by way of illustration. The said working is at page 88 of the paper book. The working shows that the assessed income is Rs. 33,65,298. The tax payable on the assessed income at 51.75 per cent. which is the rate which was applicable at the relevant time, comes to Rs. 17,41,542. This constitutes disputed tax. We have not gone into deductions on account of TDS. It is from this disputed tax that the disputed income is arrived at by applying the following formula : Disputed tax x 100 -------------------------------------- Tax rate The same formula is applied by the designated authority. Applying that formula, the designated authority has arrived at the disputed income of Rs. 26,73,967 and 35 per cent. of the said disputed income, viz., Rs. 9,35,888 which constituted the amount payable by the petitioner. This amount h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here would be two different total incomes for the same assessment year which would lead to absurdity. Mr. Chatterjee, learned counsel appearing on behalf of the Department, on the other hand, contended by referring to the various provisions of the Kar Vivad Samadhan Scheme and by reference to the orders passed by the Assessing Officer that under section 88, the amount payable by the declarant shall be determined by the designated authority at the rate of 35 per cent. of the disputed income. Mr. Chatterjee pointed out the provisions of section 87(e) and (f). He submitted that reading of the above definition section shows that disputed income means the whole or so much of the total income as is relatable to the disputed tax. The word "disputed tax" is also defined under section 87(f) to mean the total tax determined and payable but which remains unpaid as on the date of making of the declaration under section. 88. Mr. Chatterjee emphasised the words "determined and payable" in section 87(f). Mr. Chatterjee pointed out that, in the present case, the effect order passed by the Commissioner of Income-tax (Appeals) was not fully worked out by the Assessing Officer. He contended that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above four items/heads. Mr. Chatterjee further points out that under the Kar Vivad Samadhan Scheme, there should be a determination followed by a dispute. He contended that, in the present case, the notice of demand issued for Rs. 33,65,298 only related to items in dispute in appeal before the Tribunal. That, these were the items which were determined. That, these were the items on which the appeal was pending. He contended that if the argument of the petitioner is accepted, it would lead to an escapement of tax as the assessee would not be required to pay any tax in relation to the heads of income regarding which there is no determination nor dispute pending. He accordingly submits that the petition deserves to be rejected. We find merit in the contentions advanced on behalf of the Department. At the outset, it may be mentioned that the Kar Vivad Samadhan Scheme is essentially introduced to recover the taxes at the earliest point of time. It is essentially a recovery based Scheme. The predominant object is to recover the taxes as early as possible. This scheme is primarily enacted because of the increasing burden of fiscal deficit in the budget and to unlock large amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords indicate determination of the assessed income. Ultimately, it is important to note that the Scheme contemplates determination of disputed income from disputed tax which, in turn, is based on the income assessed under the Income-tax Act. The words "tax arrears" in section 87(m) are important in the first stage of section 88 whereas the words "disputed income" and "disputed tax" are important in the second stage of section 88. Now, in the present case, there is no dispute regarding the formula to be applied to compute the disputed income, viz. Disputed tax x 100 ------------------------------------ Tax rate However, the assessee contends that in the present case, the effect order, passed by the Assessing Officer, has calculated the assessed income at Rs. 33,65,298 (which is calculated without taking into account the above four heads of income representing more than Rs. 99 lakhs). On the other hand, the Department contends that the amount payable under the Kar Vivad Samadhan Scheme, as computed by the designated authority has a limited scope in view of the fact that the -above four heads have not been taken into account for the purposes of calculating the assessed income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment had given notice to the assessee for payment on tax of Rs. 33,65,298 which covered disallowance of interest expenditure, disallowance of depreciation and disallowance on premium paid. The assessee's appeal was also restricted to the aforestated three items. These three items were determined by the Department. The dispute was in respect of the three items. There could not have been a dispute in respect of the assessee's claim in respect of bad debts, income from house property, disallowance under rule 6D and capital gains amounting to Rs. 99,00,000 (approx.) as the Assessing Officer is yet to determine on remand the dispute regarding the said four heads. In the circumstances, the total tax determined and payable under section 87(f) for the purposes of the Kar Vivad Samadhan Scheme was based on the total income of Rs. 33,65,298. That, there was no determination regarding the remaining four heads. That the disputed tax on the date of the declaration was based on the total income of Rs. 33,65,298 on which the petitioner has paid tax of Rs. 9,35,888. In the present matter, acceptance of the contention of the petitioner would mean that the petitioner would pay the tax only on in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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