Punjab-Haryana High Court
Rajinder Mohan Singh vs Commissioner Of Income Tax (Appeals) on 21 February, 2014
Author: Rajive Bhalla
Bench: Rajive Bhalla
CWP No.2956 of 1999 -: 1 :-
IN THE HIGH COURT FOR THE STATES OF PUNJAB AND
HARYANA AT CHANDIGARH
CWP No.2956 of 1999
Date of decision: February 21, 2014.
Rajinder Mohan Singh
... Petitioner
v.
Commissioner of Income Tax (Appeals), Amritsar and others
... Respondents
CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA
HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON
Present: Shri S.C. Nagpal, Advocate, for the Petitioner.
Shri Denesh Goyal, Advocate for the respondents.
Dr. Bharat Bhushan Parsoon, J.
The petitioner seeks issuance of a writ in the nature of certiorari for quashing order dated 27.1.1999 (Annexure P-2) whereby case of the petitioner-assessee under the Kar Vivad Samadhan Scheme, 1998 (hereinafter referred to as the Scheme), had been rejected by the respondents.
2. The matter pertains to the assessment year 1994-95. A search and seizure operation was carried out by the revenue on 25.8.1993 wherein the petitioner had disclosed a sum of Rs.6.00 lacs in the current year as income of unaccounted stock lying at his brick-kiln. Subsequent to the date of search, scrutiny assessment in case of the petitioner for assessment years 1992-93 and 1993-94 was completed. While framing assessment under Section 143(3) of the Income Tax Act, 1961 (in short, the Act) for the assessment year 1994-95, on 19.3.1997 an amount of Rs.6.00 lacs was added to the Kadyan Vinod Kumar 2014.02.28 13:56 I attest to the accuracy and integrity of this document Chandigarh CWP No.2956 of 1999 -: 2 :- income of the petitioner. In appeal preferred by the petitioner, Commissioner of Income Tax (Appeals) on 26.9.1997 set aside the assessment order and remitted the matter to the Assessing Officer for fresh adjudication. Dissatisfied with this order, the petitioner preferred an appeal before the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar which was pending till filing of this petition.
3. Short question posed for an answer is as to whether the petitioner is covered under the Scheme and if yes, whether the impugned order (Annexure P-2) is unsustainable?
4. It is a conceded fact that to be covered under the Scheme, compliance with following conditions was necessary:-
"1. Tax arrears should have been determined on or before 31.3.1998.
2. The tax arrears should be outstanding as payable on 31.3.1998 and also on the date of making declaration.
3. The tax arrears must have been disputed in writ, appeal or reference etc. before the appropriate appellate authority, at the time of making the declaration.
4. The writ, appeal or reference etc. should be in time, admitted and pending at the time of making the declaration."
5. Declaration (Annexure P-1) made by the petitioner on 24.12.1998 under the Scheme for the assessment year 1994-95 was rejected by the respondents vide impugned order (Annexure P-2) on the ground that case of the petitioner was not covered under the Scheme as no tax arrears were due from the petitioner either on 31.3.1998 or at the time of making of the declaration.
6. Plea of the assessee is that notwithstanding the fact of setting aside of assessment order in appeal on 26.9.1997, he was liable to pay tax, though quantum of the same had not been Kadyan Vinod Kumar 2014.02.28 13:56 I attest to the accuracy and integrity of this document Chandigarh CWP No.2956 of 1999 -: 3 :- determined. It is pleaded that even appeal against the order of 26.9.1997 was pending before the Tribunal.
7. Per contra, contention of the revenue is that when neither there was determination of tax due from the petitioner nor there were any arrears outstanding against him and additionally, its refund had been made pursuant to order in appeal of 26.9.1997 of Commissioner of Income Tax (Appeals), Amritsar, the petitioner was not covered under the Scheme and thus, there was no applicability of the Scheme to the case of the petitioner.
8. For applicability of the Scheme, the tax arrears were required not only to be determined on or before 31.3.1998, but such tax arrears should also have been outstanding as payable as on 31.3.1998 and should also have been outstanding on the date of making of the declaration. When declaration of the petitioner is examined in the interface of essential conditions for applicability of the Scheme, it clearly emerges that on the date of declaration neither there was determination of tax nor there were any such arrears outstanding against the petitioner.
9. Declaration was made on 24.12.1998, whereas the assessment which was made vide order dated 19.3.1997, had been set aside on 26.9.1997 by Commissioner of Income Tax (Appeals), Amritsar. It had resulted in issuance of refund voucher of Rs.23,452/- to the petitioner.
10. Contention of the petitioner assessee is that pendency of appeal against the appellate order of 26.9.1997 before the Income Tax Appellate Tribunal is a circumstance to be reckoned with for applicability of the Scheme. This plea has no merit. Mere pendency of appeal ipso facto is not sufficient for application of the Scheme to Kadyan Vinod Kumar 2014.02.28 13:56 I attest to the accuracy and integrity of this document Chandigarh CWP No.2956 of 1999 -: 4 :- the case of the petitioner because there was neither determination of arrears of tax nor there were any tax arrears outstanding against the petitioner on the relevant date, i.e., 31.3.1998.
11. It remains a fact that there were no arrears of tax outstanding against the petitioner on 31.3.1998 as also on the date of making of the declaration. Rather, after remand of the case by Commissioner of Income Tax (Appeals), Amritsar, the matter had remained pending and in fact was lying dormant.
12. Counsel for the petitioner citing All India Federation of Tax Practitioners v. Union of Inda & Others, (1999) 151 CTR (Delhi) 1, has urged that no sub-classification could be made within the class of litigating assessees in arrears merely by reference to the fact that whether they were prosecuting the litigation or were defending the same. Counsel for the petitioner has made reference to para 26 thereof, which reads as follows:-
"In our opinion, no sub-classification can therefore, be made in the class litigating assessees in arrears merely by reference to the fact whether they are prosecuting the litigation or defending themselves. In our opinion, once liability to pay the tax was incurred and determined on or before 31st March, 1998, the assessee would be treated to be in arrears in spite of his having succeeded at one stage of litigation if the revenue has chosen to continue with litigation and there is no reason why the benefit of the scheme should be denied to him. To this extent, the scheme is discriminatory and violative of Article 14 of the Constitution. All the assessees litigating and in arrears belong to one class. Any attempt at carrying out further classes by reference to who is the prosecutor/appellant/applicant in the pending litigation is void as based on an intelligible differentia. It is arbitrary, irrational and evasive. It will have the no rational relation to the object sought to be achieved by the Act. The twin laws laid down in R.K. Garg's case (supra) would fail. On the other hand keeping them in one class would enable the twin objective of legislation being achieved: (i) the reduction of litigation, and (ii) the realization of revenue."
13. Counsel for the revenue citing Dr. Mrs. Renuka Datla v. Commissioner of Income Tax and another, (1999) 240 ITR 463 (AP), Kadyan Vinod Kumar 2014.02.28 13:56 I attest to the accuracy and integrity of this document Chandigarh CWP No.2956 of 1999 -: 5 :- has urged that while considering a provision in a Scheme, interalia, providing for an exception in the form of concession to the taxpayer, should be construed strictly in accordance with the plain language employed therein.
14. Support has also been sought by the petitioner from P.R. Thangavelu v. Commissioner of Income Tax, (2001) 250 ITR 492 (Madras) wherein, inter-alia, it was held that even after remand, if no determination of tax payable had been made, order of assessment made prior to 31.3.1998 (irrespective of subsequent developments with regard to appeal, remand and re-determination) would not affect the fact that the tax had been determined prior to 31.3.1998.
15. In the said authority, the term "tax arrears" and "disputed income" as also "disputed tax" were explained. It was held that in terms of Section 87(f), "disputed tax" would mean the total tax determined and payable in respect of an assessment order and which remains unpaid as on the date of making the declaration under Section 88 of the Act.
16. In almost similar circumstances where there was remand order and the process of re-determination of tax had started thereafter and on the crucial date, i.e., 31.3.1998, there were no tax arrears, it was held as under:-
"... The position on March 31, 1998, was that there was no determination of tax in so far as the aforementioned disputed items are concerned. The process of determination of tax vis-a-vis the "set aside" item was in a state of suspended animation on the crucial - March 31, 1998. As rightly observed by the Commissioner of Income Tax, the arrears that is sought to be settled under the scheme arises out of the determination made and demand raised on December 31, 1998, i.e., beyond the crucial date. ...
xxx xxx xxx xxx Kadyan Vinod Kumar 2014.02.28 13:56 I attest to the accuracy and integrity of this document Chandigarh CWP No.2956 of 1999 -: 6 :- ... While construing provisions in a scheme, inter alia, providing for an exception in the form of concession to the tax prayer, the provisions should be construed strictly in accordance with the plain language employed therein ...."
17. Further support by the Revenue has also been sought from Narula Traders v. Commissioner of Income Tax and another, (2003) 262 ITR 78 (P&H), wherein interpreting tax arrears in terms of the Scheme, it was held that the amount of tax, penalty or interest should have been determined on or before the 31st day of March, 1998 and should have remained unpaid on the date of declaration.
18. It is undisputed that there is no determination of tax liability on or before 31.3.1998. Admittedly, no adjudication had been made by the Assessing Officer after the case was remitted to him vide order of Commissioner of Income Tax (Appeals), Amritsar.
19. We are not inclined to give an extended meaning to the term 'determination' used in condition No.1 explained in Para No.4 (ibid)upon which scope and meaning of condition No.2 thereof also depends. Any determination of liability of payment of tax cannot be said to be surviving for implementation once such order of determination of tax has been set aside, rendering such determination to be no more in existence. We are in respectful disagreement with the extending meaning of term determination given in the authority and, therefore, hold that the word "determined" used in condition No.1 ibid of the Scheme would be construed to mean only concluded determination by quantification of tax payable by the assessee.
20. On this analogy, the term "tax arrears" in condition No.2 ibid of the applicability of the Scheme, would mean only such arrears which on determination of liability of payment of tax remain outstanding as payable on 31.3.1998 as also on the date of making of declaration under the Scheme. The term 'tax arrears' would not mean Kadyan Vinod Kumar 2014.02.28 13:56 I attest to the accuracy and integrity of this document Chandigarh CWP No.2956 of 1999 -: 7 :- any non-existent liability which may or may not arise in future. Even fluidity regarding quantum of tax payable is to be taken to be militating against the clear and specific term "determined", referring to tax arrears, which is used in conditions No.1 and 2 ibid of the Scheme.
21. So far as support from Hansmukhlal Thakordas Dalwala v. Commissioner of Income Tax, Surat and others, 1999 Tax. J.R. 635 (Gujarat) sought by the petitioner is concerned, facts in the case in hand are entirely different. In the said case, assessments had already been completed. Application of the assessee under Section 245(D) (1) of the Act, was held to be not barred to seek benefit of the Scheme. Concededly, concluded assessment were intact and had not been set aside. In the case in hand, there is no subsisting assessments and sequelly, there is no determination of liability of tax payable by the assessee. Admittedly, there is neither tax liability nor tax arrears outstanding against the assessee as on 31.3.1998.
22. Keeping in view the totality of facts and circumstances of the case, declaration Annexure P-1 made by the petitioner assessee on 24.12.1998 for the assessment year 1994-95 is not covered under the Scheme.
23. So far as plea of discrimination taken by the petitioner is concerned, it also has no merit because there is neither any discrimination nor bias nor arbitrariness. If we visualize the entire concept behind floating of the Scheme by the respondents, it is clear that the Scheme was sought to cover cases where there were arrears of tax, those were not being paid and had rather been subject matter of litigation. Claim of the petitioner rather is a result of misconstruction and wrong interpretation of the conditions of the Scheme.
Kadyan Vinod Kumar 2014.02.28 13:56 I attest to the accuracy and integrity of this document Chandigarh CWP No.2956 of 1999 -: 8 :-24. By way of passing reference, it may also be mentioned that following the judgment of Delhi High Court, the assessees who wanted to make declaration under the Scheme in respect of taxes determined against them but the same were subject matter of appeals filed by the Department, could do so. It may be noticed that prior to this judgment, as per provisions of the Scheme, the assessee could file declaration only in respect of appeal filed by him. This change thus was brought about only qua the appeals filed by the Department. In cases of appeals preferred by the assessees, the declarations were to be regulated by the existing provisions of the Scheme.
25. In the instant case, declaration filed by the assessee irrespective of pendency of the appeal before the Tribunal filed by him, is not covered under the provisions of the Scheme as there were no tax arrears either determined or outstanding at the time of making of declaration by him.
26. Consequently, the impugned order does not suffer from factual or legal errors. There being no merit in the appeal, the same is dismissed.
[Dr. Bharat Bhushan Parsoon] Judge [ Rajive Bhalla ] February 21, 2014. Judge kadyan Kadyan Vinod Kumar 2014.02.28 13:56 I attest to the accuracy and integrity of this document Chandigarh