Karnataka H.C : Where revenue against order of Commissioner (Appeals) filed appeal before Tribunal and assessee during course of hearing of appeal filed before Tribunal a certificate issued by Commissioner under Kar Vivad Samadhan Scheme, 1988 showing that tax due had been fully paid by assessee, impugned appeal was not maintainable

High Court Of Karnataka

CIT vs. SPR Group Holdings (P.) Ltd.

Assessment Years : 1993-94 And 1994-95

Section : 253

N. Kumar And B. Manohar, JJ.

IT Appeal Nos. 685 & 689 Of 2007

March 5, 2013

JUDGMENT

1. These two appeals relate to the same assessee, but for two assessment years i.e., 1993 94 and 1994-95.

2. The assessee, during the course of hearing the appeal before the Tribunal filed a Certificate issued by the Commissioner of Income-Tax, Karnataka (Central), Bangalore dated 16.04.1999 for the two assessment years. The Certificate was issued under the Kar Vivad Samadhan Scheme (KVSS for short), 1988 showing that the tax due for the said two assessment years has been fully paid under the said scheme. It was further submitted that in view of the aforesaid settlement under the scheme, the said appeal is not maintainable for the said period. Acting on the said submission, the appeal was dismissed by the Tribunal as it has become infructuous. Aggrieved by the said order the Revenue is in appeal.

3. The question whether Revenue could prosecute an appeal in respect of an assessment year, covered under the aforesaid scheme was the subject matter of the decision before this Court in the case of Bhawaralal (HUF) v. Asstt. CIT [2009] 177 Taxman 541 (Kar.). It has been held as under at paras 16 and 17:

“16. The Central Government having accepted this decision has issued instructions to implement the Scheme subject to the above decision in its Clarification bearing No. 149/152/1998 TPL dt. 17th Dec, 1998, with reference to the declarations filed by the assessees under the Scheme and the manner in which they shall be regulated, as under:

“(i) The assessee has the option of filing declaration either in respect of arrears disputed in his appeal or of taxes involved in Departmental appeal or for both independently of each other.”

(ii) For declarations relating to Departmental appeals also the existing Form No. IA can be used. In such cases, there are no outstanding taxes and hence the process of working out ‘disputed income’ on which the the sum payable can be determined. In respect of Departmental appeals, the declaration has to be for the entire income disputed in such appeals.

(iii) Where the declarations in respect of Departmental appeals are accepted by the designated authority, the CIT(A) may proceed to withdraw such appeals on passing of the order under s.90(2). ..

(iv) In the event of cross appeals on same issue. If the assessee does not opt to declare in respect of taxes involved in Departmental appeals, the provisions of s.92 would not apply as these place bar only in respect of issue covered in the declaration in respect of which order under s.90 has been passed. This will also be the position, if the assessee does not opt for declaration in respect of other Departmental appeals. The appeals in all such cases should not be withdrawn.”

The above clarifications are not with reference to the provisions of the Act providing for the Scheme, but an interpretation sought to be placed on the legal position and the manner in which the same is ought to implemented. The present case on hand having been decided by the Tribunal after the decision of the Delhi High Court in All India Federation of Tax Practitioners (supra) the appeals by the Department could not be placed on a separate pedestal as was required to be done under the proviso to s.92. A declaration made in terms of the Scheme was therefore required to be considered with respect to the tax arrears pertaining to that assessment year irrespective of whether the dispute was in question in an appeal preferred by the assessee or in an appeal preferred by the Revenue.

17. In the instant case, when the assessees filed their declaration, the appeals of the Revenue were also pending. The determination by the designated authority of the tax arrears would necessarily have to take into consideration such arrears including what was raised in dispute by the Revenue by way of an appeal This was a duty cast on the designated authority notwithstanding that the declaration may not have included the tax arrears including what was sought to be raised by way of an appeal by the Revenue. It was open to the designated authority to have called upon the assessees to avail the benefit of settlement only if all tax arrears, including those which are disputed by the Revenue and which are pending in appeal as on the date of such determination, are paid. In the instant case, the designated authority having determmed the tax arrears as defined under the Act, would be deemed to include the amount of tax determined on or before 31 March, 1998 in respect of that assessment year as modified by any appellate order, but remaining unpaid on the date of declaration and further, as held by the Delhi High Court, it would include such arrears, which after determination have been set aside, but such setting aside has not been accepted by the Department and continues to remain under challenge before a Court or Tribunal. Sec. 90 required the designated authority to determine the amount payable by the declarant in accordance with the provisions of the Scheme and grant a certificate setting forth the particulars of the tax arrears and the sum payable after such determination towards full and final settlement of tax arrears. And upon payment of such amount, determined and on an order having been passed under sub-s. (1) of s. 90, it is conclusive and shall not be reopened. In the instant case, the designated authority having issued such a certificate, the same attains finality.”

4. In fact this Court relied on the judgment of the Apex Court in the case of Killick Nixon Ltd. v. Dy. CIT [2002] 125 Taxman 1055 in coming to the said conclusion. It is not in dispute that the said law covers this case also. In that view of the matter, there is no merit in these two appeals. Accordingly they are rejected.

[Citation : 355 ITR 169]

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