E.N. Murali vs Commissioner of Income Tax

S. Siri Jagan, J.—The issues involved in these two original petitions are identical and therefore these original petitions are being disposed of by this common judgment.

The matter relates to the claims of the petitioners under the Kar Vivad Samadhan Scheme, 1998 declared by the Finance Act No. 2/1998 passed by the Parliament. Under the said scheme assessees intending to avail of the benefits of the said scheme had to file a declaration between 1st Sept., 1998 and 31st Dec, 1998. (It was stated at the Bar that this period was extended for a period of one month, which is not relevant for the purposes of this case). For becoming entitled to the benefits of the scheme, inter alia, the amount in dispute must be in arrears and an appeal or reference or writ petition in respect of the same must have been admitted and pending before any appellate authority or the High Court or the Supreme Court on the date of filing of the declaration.

The petitioners in both original petitions had filed the revision petitions in respect of the amount in dispute for three assessment years on 31st Aug., 1998. They filed declaration under the scheme on 14th Oct., 1998. It is admitted by both sides that the amount in dispute was in arrears as on the date of declaration. Thus, as on the date of filing of declarations, they were prima facie entitled to get their claims under the Kar Vivad Samadhan Scheme, 1998 considered in accordance with the scheme. But before considering the declarations for the benefits under the scheme, the respondent took up the revision petitions for hearing and dismissed the same on 17th Nov., 1998 by Ext. P4 order (in both original petitions). Thereafter, the declarations of the petitioners were taken up by the respondent for consideration and by Ext. P5 order dt. 18th Nov., 1998 (in both original petitions) rejected the petitioners'' claim under the scheme on the ground that no appeal, reference, writ or any valid revision petition is pending in respect of the petitioners'' case and therefore the scheme has no application to the petitioners'' case. The petitioners are challenging Exts. P4 and P5 orders (in both cases) in these original petitions.

The petitioners rely on the decision of this Court in Lukkose John Thoppil Vs. Commissioner of Income Tax, and the decision of the Division Bench in appeal against that decision in Commissioner of Income Tax Vs. Leelamma John, as also the judgment of the Supreme Court in Dr. Mrs. Renuka Datla and Ors. v. CTT and Anr. (2003) 179 CTR (SC) 218 : (2003) 259 ITR 258. On the basis of the ratio of those decisions, the counsel for the petitioners would contend that what is relevant for the purpose of the Kar Vivad Samadhan Scheme, 1998 is pendency of a revision as on the date of filing declaration and not as on the date of consideration of the declaration for benefit under the Kar Vivad Samadhan Scheme by the authority competent to pass orders under the scheme.

In view of the abovesaid decisions, it is settled law that what is relevant for the purpose of the scheme is pendency of the revisions as on the date of declarations made by the petitioners under the scheme. Admittedly, the declarations were made on 14th Oct., 1998 and the revisions were pending at that time, the same having been filed on 27th Aug., 1998. That being so, the fact that the revisions were later dismissed on 17th Nov., 1998 and the respondent who himself was the authority to pass orders under the scheme and the revisional authority, took up the declaration for consideration for granting benefit under the Kar Vivad Samadhan Scheme only on 18th Nov., 1998, i.e., after dismissing the revisions of the petitioners, is no ground for rejecting the claim of the petitioners under the scheme.

Learned standing Counsel for the IT Department also could not dispute this factual position as also the legal proposition as laid down in the abovesaid decision. Further, Section 92 of the Finance Act No. 2 of 1998 reads as under:

Appellate authority not to proceed in certain cases.--No appellate authority shall proceed to decide any issue relating to the disputed chargeable expenditure, disputed chargeable interest, disputed income, disputed wealth, disputed value of gift or tax arrear specified in the declaration and in respect of which an order had been made u/s 90 by the designated authority or the payment of the sum determined under that section:

Provided that in case an appeal is filed by a Department of the Central Government in respect of such issue relating to the disputed chargeable expenditure, disputed chargeable interest, disputed income, disputed wealth, disputed value of gift or tax arrear (except where the tax arrear comprises only penalty, fine or interest), the appellate authority shall decide the appeal irrespective of such declaration.

In view of this section since the petitioners had filed declarations on 14th Oct., 1998, the respondent was not empowered to proceed with the revisions in respect of the disputed amounts and the respondent ought to have considered the declarations of the petitioners for benefits under the scheme, first. He having failed to do so, both Exts. P4 and P5 orders (in both original petitions) are bad in law and liable to be set aside. I do so. Consequently, the respondent is liable to reconsider the declarations of the petitioners in accordance with the Kar Vivad Samadhan Scheme, 1998.

Therefore, both the matters are remanded to the respondent for fresh consideration of the declarations filed by the petitioners on 14th Oct., 1998 in accordance with the Kar Vivad Samadhan Scheme, 1998 afresh. The respondent shall consider the same and pass appropriate orders as contemplated under the scheme as expeditiously as possible, at any rate within three months from the date of receipt of a copy of this judgment. If the decision of the respondent on the declarations is in favour of the petitioners the revision petitions shall be disposed of in terms of that decision. If the same is against the petitioners, the revision petitions shall be heard and disposed of afresh on merits.

Original petitions are allowed as above.