Punjab-Haryana High Court
Biru Mal Gauri Shankar Jain & Co. vs Commissioner Of Income-Tax & Ors. (Jain ... on 30 November, 1999
Equivalent citations: [2000]243ITR234(P&H)
Author: N.K. Sud
Bench: N.K. Sud
JUDGMENT N.K. Sud, J.
1. This order will dispose of two Writ Petitions No. 16477 and 16507 of 1999 involving common questions of law based on identical facts. Since the detailed arguments have been advanced in CWP No. 16477 of 1999, the facts have been taken from that case.
2. The petitioner had filed a declaration under s. 89 of the Finance (No. 2) Act, 1998 (for short "the Act"), in respect of the Kar Vivad Samadhan Scheme, 1998 (for short "the KVSS"), before the designated authority on 6th January 1999. This declaration pertained to the tax arrears of Rs. 4,159 on account of interest under s. 220(2) of the IT Act, 1961, for the asst. yr. 1985-86. In the column requiring the details of pendency of appeal/revision/reference/writ on the date of declaration it had been stated that the appeal filed on 30th December, 1998, was pending before the CIT(A) (Central), Ludhiana. The designated authority vide order, dt. 27th January 1999, under s. 90(1) of the Act determined a sum of Rs. 2,080 as payable towards full and final settlement of the tax arrears. On the basis of the said order, the petitioner deposited the demand of Rs. 2,080 within the stipulated period of 30 days under s. 90(2) of the Act. However, the designated authority thereafter vide order dt. 30th March 1999, rejected the declaration on the ground that there were no income-tax arrears outstanding as on 31st March, 1998, for the asst. yr. 1985-86 and as such the declaration did not fall within the purview of the KVSS. It is against this order dt. 30th March, 1999, that the present writ petition has been filed.
3. We have heard counsel for the petitioner and are satisfied that the impugned order passed by the designated authority is in accordance with law. The term "tax arrear" has been defined under s. 87(m) of the Act and cl. (i) of the said provision which is relevant for the purpose of this petition reads as under :
"'tax arrear' means, -
(i) in relation to direct tax enactment, the amount of tax, penalty or interest determined on or before the 31st day of March, 1998, under that enactment in respect of an assessment year as modified in consequence of giving effect to an appellate order but remaining unpaid on the date of declaration;"
4. A plain reading of the aforesaid definition shows that only tax, penalty or interest determined on or before 31st March, 1998, was covered within the meaning of tax arrears. In the present case, the demand of Rs. 4,159 under s. 220(2) of the IT Act, 1961, has been determined on 24th December, 1998. Thus, the reasoning given by the designated authority for rejecting the declaration in the impugned order has to be upheld.
5. The declaration is also not valid on another ground as well. Sec. 95(i)(c) of the Act clearly provides that the scheme was not applicable to a case where no appeal, reference or writ petition is admitted and pending before the appellate authority or the High Court or the Supreme Court. In the present case, the petitioner claims to have filed an appeal before the CIT(A)(Central), Ludhiana, on 30th December, 1998 which according to it was pending. This is not a case of an appeal having been admitted. From a perusal of s. 246 of the IT Act, 1961, it is absolutely clear that no appeal against the order levying interest under s. 220(2) is provided for. Reference in this behalf may be made to the decision of the Madhya Pradesh High Court in Princess Usha Trust vs. CIT (1989) 176 ITR 227 (MP) : TC 6R.861. Thus, the appeal filed on 30th December, 1998, is itself not competent and as well cannot be termed an appeal admitted by the appellate authority.
6. Shri Mahajan learned counsel for the petitioner, also contended that once an order under s. 90(1) of the Act determining the sum payable towards the full and final settlement of the tax arrear is issued and the same is paid within the stipulated period, the designated authority has no option but to issue the certificate under s. 90(2) of the Act. This, according to learned counsel, was evident from the fact that no refund of the amount paid under the KVSS was permissible as per the provisions of s. 93 of the Act. We are unable to accept this contention. A person who does not fulfil the basic prerequisites of the KVSS cannot claim its benefit merely on the ground that the designated authority has passed an order determining the sum payable in full and final settlement under s. 90(1) of the Act. Further, once a declaration is held to be not covered by the KVSS any tax paid thereunder would automatically become refundable. In that event even the provisions of s. 93 of the Act would also not be applicable.
7. Before parting we would like to observe that from the facts emerging from this writ petition, it is clear that the petitioner in connivance with the officials of the Department has got the disputed demand created in order to fall within the purview of the KVSS, 1998. It is interesting to note that the demand for the asst. yr. 1985-86 had been raised on 28th October, 1991 and stood paid by 15th October, 1992. No demand for interest under s. 220(2) was raised thereafter. It is not understood as to how and under what circumstances the Department woke up after six years on 24th December, 1998, to determine the interest payable on payments made in the year, 1992. It is admittedly not the case of any party that the demand for interest under s. 220(2) of the IT Act, 1961, had been determined in any earlier order and was being merely recovered subsequently. The order dt. 24th December, 1998, clearly shows that the demand of Rs. 4,159 was being determined for the first time on 24th December, 1998. The only reason appears to be an attempt to help the assessee to file a declaration under the KVSS. Similarly, the appeal against the aforesaid order levying interest under s. 220(2) of the IT Act, 1961, also appears to have been filed to create litigation. As already observed earlier no appeal lies against an order levying interest under s. 220(2) of the IT Act, 1961. We may also refer to the decision of the Karnataka High Court in Gopal Films vs. Dy. CIT (1999) 237 ITR 655 (Kar), in this behalf especially to the following observations made at p. 662 of the report :
"The object of the Kar Vivad Samadhan Scheme is to realise the revenue locked up in litigations pending at different levels, by giving incentive to honest taxpayers. Having regard to the provisions of the Kar Vivad Samadhan Scheme, pendency of a proceeding either by way of appeal or revision or reference or writ petition should be a bona fide pendency. When a matter has attained finality and when no litigation is pending, creation of an artificial pendency after the announcement of the scheme, merely to obtain the benefit of the scheme is impermissible. Any attempt to create such artificial pendency merely for availing of the benefit of the Kar Vivad Samadhan Scheme, would defeat and dilute the scheme. However, rejection of the petitioner's declaration is proper as no revision or other litigation was 'pending' on 6th January 1999, when the declaration was filed."
8. Thus viewed from any angle we find no infirmity in the order of the designated authority rejecting the declaration filed by the petitioner under the KVSS. However, we may clarify that since the declaration has been held to be not falling within the purview of the KVSS the tax paid by the petitioner in accordance with the order under s. 90(1) of the Act shall be refunded to the petitioner.
9. The writ petitions are devoid of any merit and are hereby dismissed. No costs.