Mr. A. Ramamurthy vs The Income Tax Officer

Elipe Dharma Rao, J.—This appeal is directed against the order of the learned Single Judge passed in W.P. No. 14024 of 2004, dated 24.8.2006.

The writ petition was filed stating that the petitioner/appellant, who is an income tax assessee, availed the scheme called "Kar Vivad Samadhan Scheme" for the Assessment Year 1985-86. Pursuant to the same, he paid the amount determined as tax arrears and obtained a certificate to that effect. Later the authorities have reopened the assessment for the Assessment Year 1985-86 and directed the petitioner to pay a sum of Rs. 4,98,187/- as per the order of the respondent, dated 03.2.2004. The said writ petition was filed seeking to quash the said order, dated 03.2.2004 and to consequently direct the respondent to drop the proceedings u/s 155 of the Income Tax Act.

The learned Single Judge, taking into consideration the fact that against the abovesaid order, dated 03.2.2004, the petitioner preferred an appeal which is pending before the Commissioner of Income Tax (Appeals), disposed of the writ petition giving liberty to the parties to agitate the grounds available as per the ratio laid down by the Supreme Court in Killick Nixon Ltd., Mumbai Vs. Deputy Commissioner of Income Tax, Mumbai and Others, and further directing the department not to take any coercive steps for recovery of income tax till the disposal of the appeal pending before the Commissioner of Income Tax Appeals. Aggrieved against the same, the present writ appeal is filed by the petitioner/appellant.

The learned Counsel appearing for the appellant contended that by virtue of Clause 90(3) and Clause 92 of the Finance (No. 2) Act, 1998, under which the Kar vivad Samadhan Scheme was introduced, any issue in respect of which a declarant has opted for scheme shall not be reopened in any other proceedings under the Direct Tax enactment. He further contended that the Assessing Officer has no power or jurisdiction u/s 155 of the Income Tax Act, 1961 to reopen the assessment.

In support of his contention, he relied on the judgment of the Supreme Court reported in Duncans Industries Ltd., Calcutta Vs. Commissioner of Central Excise, New Delhi, , wherein the Supreme Court held that the amount finally determined as due for the entire period of 10 years from the assessee having been settled under the Kar Vivad Samadhan Scheme, there is no scope for any further review or determination of that issue by any authority under the Act. Further, referring to the judgment of the Supreme Court in Hira Lal Hari Lal Bhagwati Vs. C.B.I., New Delhi, ; Central Bureau of Investigation, SPE, SIU (X), New Delhi Vs. Duncans Agro Industries Ltd., Calcutta, and Sushila Rani Vs. Commissioner of Income Tax and Another, , the Supreme Court held that after the grant of certificate under the Kar Vivad Samadhan Scheme, 1998 as having settled the dispute and payment of the amount determined, no further proceedings could be initiated with for the period in question.

On the other hand, the learned Counsel for the respondent contended that the Department has got power under the abovesaid provision to re-open the assessment u/s 155 of the Income Tax Act, 1961.

The learned Counsel for the respondent has also relied on the judgment of the Supreme Court reported in Vol.258 (2002) ITR 627 Killick Nixon Ltd. v. Deputy Commissioner of Income Tax and Ors., wherein the Supreme Court held as follows:

As far as the provisions of the Kar Vivad Samadhan Scheme are concerned, we agree with the contention of the learned senior Counsel for the assessee that the order to be made by the designated authority u/s 90 is a considered order which is intended to be conducive in respect of tax arrears and sums payable after such determination towards full and final settlement of tax arrears. Once the declarant makes payment of the amount so determined u/s 90, the immunity u/s 91 springs into effect. We are also of the view that upon such declaration being made, tax arrears being determined, paid and certificate issued under the Kar Vivad Samadhan Scheme, there is no justification for the Assessing Officer to reopen the assessment by a notice u/s 143 of the Act except where the case falls under the proviso (2) of Sub-section (1) of Section 90 as it is found that any material particular furnished in the declaration is found to be false. In the present case, it is not the case of the Revenue that any material particular furnished by the appellant-assessee in the declaration was found to be false. Consequently, the Assessing Officer could not have reopened the assessment by a notice u/s 143 of the Act.

After going through the authorities relied on, we are not able to understand as to how this judgment is helpful to the respondent, but on the other hand, it is helpful to the appellant. In the facts and circumstances of the case, the order of the learned Single Judge is set aside. Writ petition is allowed. In the circumstances, there will be no order as to costs.