Madhya Pradesh H.C :condonation of delay in paying tax under the Kar Vivad Samadhan Scheme

High Court Of Madhya Pradesh

Joshi And Joshi Construction Co. (P.) Ltd. Vs. CIT

Assessment Year : 1990-91 and 1991-92

Section : 90

S.R. Alam, CJ. And Alok Aradhe, J.

Writ Petition No. 6331 Of 2002

August  11, 2010

JUDGMENT

Alok Aradhe, J. – The petitioners in the instant writ petition have impugned the legality and validity of the order dated 3-1-2000 (annexure P-7) by which the Commissioner of Income-tax has declined to issue the certificate under section 90(2) of the Finance (No. 2) Act of 1998, (hereinafter referred to as “the Act”) as well as the order dated October 1, 2002 (annexure P-15) by which the application filed by the petitioners for condonation of delay in making payment of the amount of tax under the Kar Vivad Samadhan Scheme, 1998 (in short “the Scheme”) has been rejected.

2. Briefly stated, the facts giving rise to filing of the instant writ petition, are that the petitioners made declarations on December 29, 1998 contained in annexures P-1 and P-2 in respect of the assessment years 1990-91 and 1991-92 for settlement of arrears of tax under the Scheme. Respondent No. 1 issued certificates of intimation under the Scheme in Form II to the petitioners. The petitioners by the aforesaid certificates of intimation were required to deposit a sum of Rs. 17,763 for the assessment year 1990-91 and a sum of Rs. 31,952 for the assessment year 1991-92. It is the case of the petitioners that they received the intimation dated 3-2-1999 under section 90(1) of the Act on 17-3-1999, and thereafter the payment of the amount in terms of the Scheme was made on 23-3-1999, and intimations were sent on 24-3-1999 to respondent No. 1. However, respondent No. 1 vide order dated 31-1-2000, intimated the petitioners that the intimation under section 90(1) of the Act in respect of the Scheme was issued on 3-1-1999 and, therefore, the period of 30 days for payment expired on 5-3-1999. Since, within the stipulated time the petitioners did not make payment of amount therefore, the petitioners are not eligible to relief under the Scheme. Accordingly, the declaration filed by the petitioners under section 88 of the Act was rejected.

3. Thereafter the petitioners filed applications on 28-2-2000 (annexures P-8 and P-9) in which inter alia, it was stated that the amount due has already been deposited and there has been slight delay in depositing the amount of tax on account of non-availability of funds and, therefore, delay in depositing the amount of tax may be condoned. Pursuant to the applications submitted by the petitioners on 28-2-2000, the petitioners were asked to appear for hearing on 8-8-2000. On 8-8-2000 an adjournment was sought on behalf of the petitioners and thereafter proceedings were fixed for 6-9-2000. On 6-9-2000, the petitioners submitted an application stating that the declaration filed by the petitioners should be accepted in accordance with the amendment, introduced in the Scheme by the Finance Act, 2000. On 25-9-2002, the petitioners filed applications for condonation of delay on the ground that petitioners received the certificate only on 17-3-1999, and, therefore, the payment of amount of tax was made on 23-3-1999, which is within the stipulated time. It was further contended that the certificate was wrongly served on one Vinod Kumar Sharma who was residing on the ground floor of the building whereas the registered office of the petitioner/company is situate on the first floor of the same building. The said Vinod Kumar Sharma handed over the certificate only on 17-3-1999, and thereafter the payment was made within the stipulated time. Accordingly, a prayer was made that delay in making the payment may be condoned and certificate under the Scheme may be issued. Along with the application, the affidavits of Vinod Kumar Sharma and director of the petitioner No. 1/company were filed. Respondent No. 1 vide order dated 1-10-2002 (annexure P-15) rejected the application dated 25-9-2002, seeking condonation of delay filed by the petitioners on the ground that there is no power to condone the delay in making payment of the amount of tax under the Scheme. Accordingly, the petitioners were informed that their declarations under the Scheme for the assessment years 1990-91 and 1991-92 have been rejected by the designated authority.

4. The respondents have filed the return inter alia, indicating that there is no provision in the Scheme which was introduced by the Finance (No. 2) Act of 1998, to condone the delay in making payment of the amount of tax determined by the authority. It is averred that even assuming that the amended provision permits the petitioners to make payment of the amount of tax within thirty days from the date of receipt of the certificate, the payment should have been made latest by 8-3-1999, whereas the payment of tax in the instant case has been made by the petitioners beyond the prescribed period, i.e., on 23-3-1999. It is further averred that even if the provisions of the Scheme as amended by the Finance Act, 2000 are applicable then also the payment has not been made within the stipulated period. The respondents have disputed the contention of the petitioners that the certificate under section 90(1) was received on 17-3-1999. It has further been stated that the affidavits along with the applications dated 25-9-2002 have been filed by way of afterthought. Initially, the petitioner-company admitted in its application dated 28-2-2000 that delay in making the payment of amount of tax has occasioned due to non-availability of funds and, therefore, the delay should be condoned.

5. Learned counsel for the petitioners has contended that the certificate was served on the petitioners on 17-3-1999. In support of the aforesaid averment, an affidavit of Vinod Kumar Sharma was filed and an affidavit of the director of the company was also filed. It was further contended that since the certificate was served only on 17-3-1999, therefore, the amount of tax has been deposited within the stipulated period, i.e., on 23-3-1999. Alternatively, it has been submitted that even assuming that there was delay in making deposit the same should have been condoned. Learned counsel for the petitioners has placed reliance on decisions in Smt. Laxmi Mittal v. CIT [1999] 238 ITR 97 / 106 Taxman 36 (Punj. & Har.) ; Newandram and Co. v. CIT [1999] 106 Taxman 288 (AP) and Dilip Kumar Agarwal v. CIT [2001] 247 ITR 765/ 117 Taxman 335 (All.).

6. On the other hand, learned counsel for the Revenue has contended that the applications dated 25-9-2002, along with affidavits were filed by way of afterthought as in the applications dated February 28, 2000 (annexures P-8 and P-9) the petitioners had admitted that there was delay in depositing the amount of tax due to non-availability of funds. Learned counsel for the Revenue has further contended that the designated authority in the absence of any provision for condonation of delay under the Scheme has no power to condone the delay. Learned counsel has placed reliance on the decisions in Vyshnavi Appliances (P.) Ltd. v. CBDT [2000] 243 ITR 101/ 110 Taxman 57 (AP), Ranganatha Associates v. Union of India [2003] 261 ITR 646/ 125 Taxman 228 (Kar.) and K. Dilip Kumar v. Asstt. CIT [2001] 247 ITR 16 / 113 Taxman 593 (Ker.) as well as a decision of the Supreme Court in Hemalatha Gargya v. CIT [2003] 259 ITR 1 / 128 Taxman 190 in support of his contentions.

7. In the aforesaid factual backdrop and the submissions made by learned counsel for the parties, the following issues arise for consideration : (1) whether the designated authority under the provisions of the Scheme has power to condone the delay ? and (2) whether in the instant case the amount of tax has been paid within the period of limitation ?

8. Kar Vivad Samadhan Scheme, 1998 was introduced in the year 1998 by the Finance (No. 2) Act of 1998, which came into force on 1-9-1998. The Scheme provides for settlement of tax payable and time and manner of payment of arrears of tax. Since, answer to questions would depend upon the provisions of the Scheme therefore, it is useful to produce the relevant provisions of the Scheme ([1998] 232 ITR (St.) 79) :

“87. Definitions.—In this Scheme, unless the context otherwise requires,-

(e) ‘disputed income’ in relation to an assessment year, means the whole or so much of the total income as is relatable to the disputed tax ; . . .

88. Settlement of tax payable.—Subject to the provisions of this Scheme, where any person makes, on or after the first day of September, 1998 but on or before the 31st day of December, 1998, a declaration to the designated authority in accordance with the provisions of section 89 in respect of tax arrear, then, notwithstanding anything contained in any direct tax enactment or indirect tax enactment or any other provisions of any law for the time being in force, the amount payable under this Scheme by the declarant shall be determined at the rates specified hereunder, namely:- . . .

(i) in the case of a declarant, being a company or a firm, at the rate of thirty-five per cent of the disputed income ; . . .

(iii) in the case where tax arrear includes Income-tax, interest payable or penalty levied, at the rate of thirty-five per cent of the disputed income for the persons referred to in clause (i) or thirty per cent of the disputed income for the persons referred to in clause (ii) ;

89. Particulars to be furnished in declaration.—A declaration under section 88 shall be made to the designated authority and shall be in such form and shall be verified in such manner as may be prescribed.

90. Time and manner of payment of tax arrear.—. . . (2) The declarant shall pay, the sum, determined by the designated authority within thirty days of the passing of an order by the designated authority and intimate the fact of such payment to the designated authority along with proof thereof and the designated authority shall thereupon issue the certificate to the declarant.”

9. A plain reading of the Scheme and in particular section 90(2) would reveal that tax payable under the Scheme shall be paid within thirty days. Initially, the period of thirty days under the 1998 Act commenced within thirty days from the date of passing of an order. The aforesaid requirement was amended by the Finance Act, 2000 and it was provided that time-limit for making the deposit shall commence within thirty days from the date of service of certificate under section 90(1) of the Act. The Scheme has conferred a benefit on those who had not disclosed their income earlier by affording them protection against the possible legal consequences of such non-disclosure under the Income-tax Act. A person seeking to claim the benefit under the statutory Scheme is bound to comply strictly with the conditions under which the benefit is granted to him. There is no scope for the application of any equitable consideration when the statutory provisions of the Scheme are stated in plain language. From a perusal of the relevant provisions of the Scheme referred to (supra ) it is apparent that the designated authority cannot act beyond the provisions of the Scheme. The power to accept the payment under the Scheme has been prescribed by the Revenue authorities. There is no express provision enabling the designated authority to condone the delay in making payment of amount deposited under the Scheme. Therefore, if the power to condone the delay is conceded to the designated authority, we are afraid, it would amount to modification of explicit terms of the Scheme which is impermissible in law. In this connection we may refer to the decision of the Supreme Court in Hemalatha Gargya’s case (supra) wherein their Lordships while considering the provisions of the Voluntary Disclosure of Income Scheme, 1997 introduced by the Finance Act, 1997 held that in the absence of any express provision empowering the authority to condone the delay, the authority would have no power to condone the delay. It was further held by the Apex Court that the authority is bound by the provisions of the Scheme and cannot act beyond the provisions of the Scheme. For the aforesaid reasons, we hold the designated authority under the Scheme has no power to condone the delay in making the payment of amount of tax as required under section 90(2) of the Act.

10. Now, we shall advert to the second issue which arises for consideration, namely, whether the amount of tax was paid by the petitioners within the prescribed time-limit under the Scheme. As per the version of the petitioners, they were served with the certificate on 17-3-1999, and the amount of tax was paid on 23-3-1999, which is within the limitation. On the other hand the Revenue has taken a stand in categorical terms that the certificate dated 3-2-1999 was served on the petitioners on 6-2-1999 and the payment was made beyond the prescribed time-limit, i.e., on March 23, 1999. From perusal of the applications preferred by petitioners in the first instance, i.e., on 28-2-2000 contained in annexures P-8 and P-9, it is apparent that the petitioners themselves had admitted that there has been delay in depositing the amount of tax on account of non-availability of funds and, therefore, the delay in depositing the amount of tax should be condoned. After a period of two years, the petitioners submitted the applications dated 25-9-2002 in which they took a stand for the first time that the certificate was served on one Vinod Kumar Sharma who was residing on the ground floor whereas the office of the company is situate in the first floor. In the application it was alleged that the aforesaid Vinod Kumar Sharma handed over the certificate in the office of the company on 17-3-1999 and thereafter the payment was made on 23-3-1999 which is within the limitation. In the aforesaid application, the petitioners prayed that delay in making the payment under the Scheme is bona fide and, therefore, it should be condoned. We have perused the affidavits annexed with the application dated 25-9-2002. From a perusal of the affidavit of Vinod Kumar Sharma, it is graphically clear that there is no specific averment in the affidavit that the certificate dated 3-2-1999 was served on him and he handed over the same to the petitioners on 17-3-1999. Affidavit sworn in by Vinod Kumar Sharma is vague. Affidavit of the director of the company is silent with regard to the fact as to when the said Vinod Kumar Sharma received the certificate and to whom he handed over the certificate on 17-3-1999. Thus, in the first instance on 28-2-2000, the petitioners admitted that there is delay in making the payment of tax on account of non-availability of funds. After a period of two and half years, petitioners for the first time took a stand that the certificate was served on them on 17-3-1999. The affidavits which have been produced by the petitioners to substantiate the aforesaid plea are vague and, therefore, cannot be relied upon. In our view, the aforesaid plea of service of notice on 17-3-1999, has been taken as an afterthought. For the aforementioned reasons, we hold that the payment of the amount of tax due under the Scheme was not made by the petitioners within the stipulated time.

11. In view of the preceding analysis, the writ petition, being devoid of merit, deserves to and is hereby dismissed.

[Citation : 332 ITR 521]

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