Andhra Pradesh H.C : Appeal pending for 5 years being not informed to be invalid, declaration made by assessee under KVSS was to be considered for settlement

High Court Of Andhra Pradesh

Radha Vinyl (P.) Ltd. vs. CIT

Assessment Year : 1989-90

Section : 88, 89

G. Chandraiah And Challa Kodanda Ram, JJ.

Writ Petition No. 6249 Of 1999

February 13, 2014

JUDGMENT

Challa Kodanda Ram, J. – This writ petition is filed questioning the order dated February 26, 1999, passed by the first respondent-Commissioner of Income-tax, who is the designated authority under the Kar Vivad Samadhan Scheme, 1998 (hereafter referred to as “the K. V. S. S.”) intimating the petitioner-assessee that the declarations filed by the assessee were rejected.

2. The brief facts of the case are set out as below :

The petitioner is a private limited company. On March 31, 1993, it was assessed to gift-tax by the Assessing Officer for the assessment year 1989-90 and demanded to pay gift-tax of Rs. 42,072 and interest of Rs. 29,400. Being aggrieved by the assessment order, the petitioner preferred an appeal before the Commissioner of Gift-tax (Appeals-II), Hyderabad, through the authorised representative, M/s. M. Anandam and Co., Chartered Accountants. As per the averments made in the affidavit, though initially, the appeal was addressed to the Commissioner of Gift-tax (Appeals-II) but as the authorised representative was informed that the jurisdiction of the appellate authority had undergone a change, the address in the covering letter dated July 14, 1993, of the appeal appeared to have been changed to the Deputy Commissioner of Gift-tax (Appeals-II), Hyderabad, by adding the word “Deputy” before the words “Commissioner of Gift-tax (Appeals-II)”. The appeal papers were received by the authorities concerned on July 14, 1993, and for some reason or the other the appeals were pending as on March 31, 1998.

3. The Finance (No. 2) Act, 1998, introduced a Scheme called the Kar Vivad Samadhan Scheme, 1998. Broadly, the Scheme makes an offer by the Government for settling tax arrears locked in litigation subject to the provisions contained in Chapter IV of the Finance Act. The petitioner, being eligible under the KVSS, made a declaration on December 29, 1998, under section 88/89 of the Finance Act in Form 1A to the first respondent who is the designated authority under the K. V. S. S. The declaration made by the petitioner was to settle the tax dues in respect of the pending gift-tax appeal. As per the provisions of the K. V. S. S., the petitioner would have to make payment of the outstanding tax of Rs. 42,072. Thereafter, the petitioner received a letter dated February 26, 1999, from the first respondent indicating that since there was no valid appeal filed by the petitioner before the appropriate appellate authority, the petitioner was not entitled to make a declaration under the K. V. S. S. and the declaration under section 89 of the Finance (No. 2) Act, 1998, is never deemed to have been made. It is submitted that the letter of the first respondent rejecting the K. V. S. S. declaration filed by the petitioner is arbitrary, unjust and illegal. The letter of the first respondent does not disclose any reasons whatsoever why the appeal filed by the petitioner is not valid. The petitioner filed the appeal within the time limit of 30 days prescribed under the Gift-tax Act.

4. A counter-affidavit is filed on behalf of the first respondent wherein there is no denial of the fact of receipt of the appeal through the covering letter dated July 14, 1993. However, it is sought to be contended that inasmuch as there is no Deputy Commissioner of Gift-tax (Appeals-II) in relation to the companies, the appeal alleged to have been filed by the petitioner was not filed before the competent authority in the eye of law and the appeal addressed to the Deputy Commissioner can never be treated as an appeal. It was further contended, as there was no valid appeal pending as on the crucial date, i.e., March 31, 1993, for the purpose of considering the declaration filed under the K. V. S. S., the impugned order rejecting the declaration is proper and justified.

5. We have heard the learned counsel for both the parties and perused the material placed on record.

6. In the facts and circumstances of the case, it cannot be said that there was no appeal pending before the Department inasmuch as there is no categorical denial of the fact that the petitioner filed the appeal before the Department though the same has been addressed to the Deputy Commissioner of Income-tax (Appeals-II). We may not lose sight of the fact that the appeal was filed as far back as on July 14, 1993, and for one reason or the other the same was not disposed of. Assuming that the appeal filed by the petitioner was addressed to a wrong officer nothing prevented the Department from intimating the assessee to return the papers to enable them to file the same before the appropriate authority or in the alternative making over the appeal papers to the competent authority in the hierarchy. This exercise having not been done by the Department and the petitioner having never been informed of its appeal not being accepted on the technical ground that the same was addressed to the Deputy Commissioner of Income-tax (Appeals-II), it is not open for the Department to turn round and say that the appeal was not filed before the competent authority. Having regard to the facts of this case, we are satisfied that there was no lapse on the part of the petitioner in filing the declaration and, in our opinion, the authorities ought to have considered the declaration filed by the petitioner under the K. V. S. S. on the merits.

7. It is to be taken note of that at the time of admission of the writ petition, the petitioner sought leave of this court to deposit the tax arrears in terms of the Scheme. Now, it is submitted that the tax arrears have been deposited.

8. In the above view of the matter, this is a fit case to set aside the order dated February 26, 1999, passed by the first respondent-Commissioner of Income-tax.

9. Accordingly, the writ petition is allowed setting aside the order dated February 26, 1999, of the first respondent and directing him to process the declaration filed by the petitioner under the K. V. S. S. It is made clear that as submitted by the petitioner if tax arrears are deposited, the first respondent, while passing orders under the K. V. S. S., shall give credit to the amount deposited. No order as to costs.

[Citation : 364 ITR 199]