Madhya Pradesh H.C : what is the meaning of the words “is admitted and pending” used in s. 95(c) ibid ?

High Court Of Madhya Pradesh : Indore Bench

Shree Amarlal Kirana Stores vs. CIT & Ors.

Section 1998FA (No. 2) 95(i)(c)

Asst. Year 1992-93

A.M. Sapre, J.

Writ Petn. No. 226 of 2002

13th November, 2002

Counsel Appeared

G.M. Chafekar with R.K. Sarda, for the Petitioner : A.P. Patankar, for the Respondents

ORDER

A.M. SAPRE, J. :

By filing this writ under Arts. 226 and 227 of the Constitution of India, the petitioner seeks to challenge the order, dt. 26th Feb., 1999, (Annexure P-8) and reiterated by way of intimation by subsequent order, dt. 7th Dec., 2001, (Annexure P-26), passed by CIT (intimated on his behalf by Dy. CIT/Asstt. CIT) to the petitioner. In order to appreciate the controversy involved in the writ, which lies in a narrow compass, few relevant facts need mention.

2. Petitioner is an assessee, as defined under s. 2(7) of IT Act, 1961, so too, a ‘person’ as defined under s. 2(k) of Kar Vivad Samadhan Scheme, 1998 as introduced by the Finance (No. 2) Act, 1998. For the asst. yr. 1992-93, the petitioner filed its return on 28th March, 1995. The AO by order dt. 28th March, 1995, made an assessment and determined the tax liability as also imposed penalty payable by the petitioner for the year 1992-93. The petitioner was not satisfied with the additional tax liability as also the penalty imposed, and hence, filed an appeal under s. 249 of IT Act to CIT(A). This appeal came to be dismissed by order dt. 30th Nov., 1995, resulting in upholding of the assessment order in its entirety passed by the AO. The petitioner then not being satisfied with the order of CIT(A) filed further second appeal under s. 253 ibid to Tribunal on 26th Dec., 1998, i.e. almost after three years of passing of an order by CIT(A). By that time, naturally it had become barred by limitation.

3. On 1st Sept., 1998, a Scheme called Kar Vivad Samadhan Scheme, 1998 (hereinafter for brevity called “The Scheme”) was brought into force by Finance (No. 2) Act, 1998. In terms of the Scheme, the assessee was entitled to get the benefit in payment of tax and penalty provided they fulfil certain conditions stipulated in the Scheme. The petitioner claiming itself to be an eligible assessee and satisfying the conditions of eligibility for claiming benefits of the Scheme submitted a declaration in prescribed Form 1-A on 31st Dec., 1998, to the prescribed authority (CIT). This declaration was submitted for taking benefit of the tax/penalty liability in relation to asst. yr.1992-93 referred supra, which was imposed by AO and upheld in appeal by CIT(A). It is this declaration which was rejected by the CIT (respondent No. 1) by passing an impugned order dt. 26th Feb., 1999, (Annexure P-8) and again reiterated by order dt. 7th Dec., 2001 (Annexure P-26). It was rejected essentially on the ground that since no appeal/revision was pending in relation to disputed amount for which the benefit of Scheme was sought on the date when the declaration was submitted i.e. on 31st Dec., 1998 and hence, the petitioner was not entitled to claim any benefit under the Scheme. This is what was conveyed to the petitioner by the impugned order: “This is in reference to your declaration filed under KVSS-98 on 31st Dec., 1998. As there is no appeal/revision pending, you are not eligible for relief in terms of Kar Vivad Samadhan Scheme, 1998 and, therefore, the declaration is filed.”

4. To complete the facts, the second appeal filed by the petitioner to the Tribunal being barred by limitation the petitioner had applied for condonation of delay in filing the appeal. It is this application which was allowed by the Tribunal by order, dt. 11th Feb., 2000, (Annexure P-11). As a consequence, the delay in filing the appeal was condoned. As stated supra, the petitioner having felt aggrieved by an order, dt. 7th Dec., 2001, (Annexure P-26) by which its declaration was rejected has filed this writ. Notice of the petition was issued to respondents. They were served and filed their return justifying passing of the impugned order and the reasons contained in support thereof.

5. Heard Shri G.M. Chafekar, learned senior counsel with Shri Sarda for the petitioner and Shri A.P. Patankar, learned counsel for respondents.

6. Shri Chafekar, learned senior counsel while assailing the legality and propriety of the impugned orders, dt. 26th Feb., 1999 and 7th Dec., 2001, which resulted in rejection of declaration filed by the petitioner under the Scheme in the first place contended that the reasoning that led to rejection of petitioner’s declaration by the respondent No.1 itself was factually and/or legally faulty. In the second place, learned counsel contended that it cannot be disputed as a fact that on the date (31st Dec., 1998) when the petitioner filed a declaration under the Scheme, the appeal filed by the petitioner on 26th Dec., 1998, was pending before the Tribunal thereby entitling the petitioner to take benefit of scheme. In the third place, learned counsel contended that even assuming that the appeal was barred by time on the date of its filing, the delay having been actually condoned by the Tribunal by order dt. 25th Jan., 1999, (though subsequent to filing of declaration) the same shall relate back to the date of filing of the appeal treating the appeal to have been filed in time entitling the petitioner to claim benefit of the Scheme. In the fourth place, learned counsel contended that in order to see whether declaration is in accordance with the requirement of Scheme or not, what is required to be seen is, whether any appeal, reference or writ is pending before appellate authority or High Court or Supreme Court in respect of disputed amount for which the benefit is claimed in the declaration and once the assessee is able to show that appeal/reference/writ, as the case may be, is pending as a fact then in such event, the declaration submitted by the assessee has to be accepted by the competent authority.

Learned counsel placed reliance on Raja Kulkarni vs. State of Bombay AIR 1954 SC 73. It is these submissions which the learned counsel elaborated by citing the provisions of IT Act, Scheme and the Rules. In reply, learned counsel for the respondents supported the impugned order and the reasoning contained in it and prayed for its upholding.

7. Having heard the learned counsel for the parties and having perused the record of the case, I find no merit in the writ and hence, the petition deserves dismissal resulting in upholding of the impugned order.

8. The question that really falls for consideration in this petition is what is the true interpretation of s. 95(i)(c) of the Scheme ? In other words, the fate of the petition depends upon the true interpretation of s. 95(i)(c) of the Scheme.

9. Section 95 of the Scheme provides that the Scheme shall not apply to certain categories of cases specified in its sub-sections. So far as this case is concerned, it falls in sub-section “c” of s. 95(i). It reads as under : “95(i).— Scheme not to apply in certain cases.—The provisions of this Scheme shall not apply— (i) in respect of tax arrear under any direct tax enactment,— (c) to a case where no appeal or reference or writ petition is admitted and pending before any appellate authority or the High Court or the Supreme Court on the date of filing of declaration or no application for revision is pending before the CIT on the date of filing declaration;” Perusal of aforequoted sub-section would show that the scheme in question is not made applicable to a case where no appeal or reference, or writ petition is “admitted” and “pending” before appellate authority or the High Court or the Supreme Court on the date of filing of declaration or no application for revision is “pending” before the CIT on the date of filing declaration. In other words, in order to take benefit of the Scheme, it is necessary for the assessee to show as a fact that on the date of filing declaration under the Scheme an appeal, or reference, or writ was “admitted” for final hearing and was “pending” before any appellate authority, or High Court, or Supreme Court as the case may be. It is only then the assessee becomes entitled to invoke the provisions of Scheme and apply by submitting the declaration for taking its benefit. The question, therefore, that arises for consideration is, what is the meaning of the words “is admitted and pending” used in s. 95(c) ibid ? and secondly, whether in the facts of this case any appeal was pending before the Tribunal so as to enable the petitioner to take benefit of the Scheme ? Submission of learned counsel for the petitioner was that petitioner had in fact having filed an appeal before Tribunal on 26th Dec., 1998 and thereafter submitted a declaration pursuant to scheme on 31st Dec., 1998, had become entitled to take benefit of the scheme. Learned counsel urged that this being an admitted position, it ought to have been held that appeal, was in fact pending on the date when declaration was filed. I do not agree to this contention for the reasons assigned infra. If one look to the appeal which the petitioner claims to have filed on 26th Dec., 1998 before the Tribunal, then it would appear that it was at best a case of appeal being “pending” but it was certainly not a case of an appeal being “admitted” and “pending”. The use of the words “is admitted and pending” in s. 95(i)(c) are important and significant. Mere filing of an appeal can be of no use for the purposes of taking advantage under the Scheme. It must further be shown that it is “admitted” for hearing by the appellate authority prior to filing of declaration and that it is “pending” on the date of filing of declaration form. In other words, in order to claim benefit of Scheme, the assessee is required to comply two things apart from others. One is that appeal filed by the assessee should have been “admitted” for final hearing by the appellate authority prior to filing of the declaration by the assessee, if it is a case of appeal and, secondly, it must be “pending” for final disposal. If the appeal is found to be not “admitted” for final hearing but is found to be simply pending without there being any order of admission, then no benefit of Scheme can possibly be denied (sic-allowed) to the assessee. In my opinion, the legislature has in its wisdom confined the benefit of the Scheme to only those assessees whose appeals are “admitted” and “pending” before the appellate authority for their final disposal and not to those appeals which are not “admitted” for final hearing or in other words, simply pending. The deliberate use of the word “admitted” prior to word “and pending” can never be regarded as redundant or otiose. It being a settled rule of interpretation that every word in the statute has its definite meaning has full application to this case.

The submission of learned counsel for the petitioner would have had some force if the word “admitted” had not been used by the legislature in s. 95(i)(c) of the Scheme and instead only the word “is pending” had been used. In that situation, what was required to be seen was, whether any appeal was filed prior to submission of declaration and whether it was pending on the date of submission of declaration. Such is not the case here. Yet another submission of learned counsel for the petitioner that the Tribunal condoned the delay in filing appeal though subsequent to filing a declaration on 11th Feb., 2000 hence, it relates back to the date of filing of appeal i.e. on 26th Dec., 1998, so as to hold the appeal to be valid and pending on 31st Dec., 1998 i.e. the date of filing declaration, has no merit for several reasons. Firstly, it is not in dispute that the appeal when filed on 26th Dec., 1998, was barred by limitation. Secondly, delay had not been condoned by the Tribunal either on 26th Dec., 1998 or before 31st Dec., 1998 i.e. prior to filing of declaration. Thirdly, even assuming that the appeal had been filed within limitation on 26th Dec., 1998, even then it was of no consequence for the reason that it was only a case of filing of an appeal but it was not “admitted” for hearing. I have already held supra that mere filing of an appeal whether within time or barred by time, is of no significance. In order to take benefit of Scheme, assessee is required to prove that his appeal was actually “admitted” by the appellate authority prior to submission of declaration and secondly what was pending before the appellate authority should be an “admitted” appeal. In other words, one is required to make a distinction between “pending appeal” and “admitted” pending appeal, because, the Scheme will apply only to “admitted pending appeal” and not to “pending appeal”. The same reasoning will apply to writs and references also.

Learned counsel for the petitioner then submitted that there being no provision under the ITAT Rules, 1963 for admission of appeal once filed before Tribunal, and therefore, the word “admitted” used in s. 95(i)(c) of the Scheme will not apply to appeals filed in Tribunal. Learned counsel maintained that the word “admitted” is used only with reference to writ and reference which are filed only in High Court and Supreme Court, where the Courts are required to examine, whether writ and/or reference is fit for admission, but this procedure according to learned counsel has no application so far as appeal filed before CIT(A) and/or Tribunal is concerned. I do not agree to this submission also.

16. Rule of interpretation does not permit this type of construction of s. 95(i)(c). The word “admitted and pending” used in sub-s. (c) has its application to all the three type of cases namely, appeal, reference and writ petition. Indeed, the legislature was quite aware of the procedure which has its application for prosecuting appeal, reference and writ provided under the Act and the Rules applicable to these three statutory remedies prescribed under the Act and Constitution. It is for this reason that it specifically used the word “admitted” and “pending” after these three types of cases in s. 95(i)(c) ibid. However, in the same section while dealing with the case of revision, the legislature has only used the word “is pending”. In other words, not using the same phraseology i.e. “admitted” and “pending” for revision and only using the word “pending” for revision is of great significance. This deliberate departure of word “admitted” while dealing with the case of revision in same section lends support to the interpretation that while it is not necessary for the assessee to show that his revision is “admitted” and “pending” on the date of submission of declaration but by simply showing that revision is pending, the declaration can be entertained, it is not so insofar as it relates to appeal writ and reference else, legislature would not have carved out revision separately but would have kept it in the same category of appeal, writ and reference or vice versa i.e. placing the appeal along with revision, rather than with writ/reference. In other words, nothing prevented the legislature to include appeal along with revision instead of keeping it along with writ and reference while drafting s. 95(i)(c). In such eventuality the submission of learned counsel for the petitioner would have had some force. In that situation, the words, “admitted and pending” would have had its application to writ and references whereas, the word “pending” , would have had its application to appeal and revision. Such is not the case here. Equally untenable was the submission of learned counsel for the petitioner when he urged that ITAT Rules do not provide for any procedure for admission of appeal. Mere perusal of elaborate Rules, r/w s. 253(5) of the IT Act would go to show that before the appeal is placed for hearing the registrar of Tribunal is empowered to even return the defective appeal to the appellant [r. 4A(iv)] if the defects are not rectified by the appellant. Similarly, the Tribunal is empowered to dismiss the appeal if it finds that appeal has some defects and they are not rectified by the appellant. This elaborate procedure prescribed in Rules read with powers of Tribunal conferred by s. 253(5) ibid does indicate that it is necessary for the Tribunal to first admit the appeal for final hearing and then decide it on merits. So far as appeal pending before CIT(A) is concerned, ss. 249(3) and (4) ibid recognize the powers of CIT(A) to “admit” the appeal for final hearing. Indeed, sub-ss. (3) and (4) expressly uses the word “admit”.

Learned counsel for the petitioner had placed heavy reliance on Raja Kulkarni’s case (supra) in support of his contention and contended that the question, whether there is a valid appeal or defective appeal is not for the CIT to decide at the time of scrutiny of declaration under the Scheme but it is for the appellate authority to see these issues when the appeal is heard by appellate authority. Learned counsel maintained that in view of ratio of Raja Kulkarani’s case (supra), mere filing of an appeal is enough to attract the provisions of Scheme entitling the petitioner to avail its benefit. I do not agree. The question that fell for consideration before their Lordships of Supreme Court in the case of Raja Kulkarni (supra) was in relation to interpretation of s. 24(b) of Industrial Disputes (Tribunal) Act, 1950. Though s. 24(b) is not reproduced verbatim in the report but the observations of Their Lordships while interpreting s. 24(b) do not indicate that its wordings are in pari materia with s. 95(i)(c) of Scheme in question. In other words, s. 24(b) of Industrial Tribunal Disputes Act did not have the words “is admitted and pending” like in s. 95(i)(c) but s. 24(b) contained the words “during pendency of appeal”. Secondly, the word “admitted” being conspicuously missing in s. 24(b) makes the case totally distinguishable with the present case and cannot be cited as a proposition in support of the submission. Thirdly, in the present case, it is necessary for the CIT while examining the declaration filed under the Scheme to ensure and record his finding as to whether it is in accordance with the requirements of Scheme or not ? Obviously, therefore, s. 95(i)(c) being a part of Scheme, it is equally obligatory on the part of the CIT to examine as to whether assessee has fulfilled the requirement of s. 95(i)(c) or not ? This includes twin requirement as to whether any appeal or writ or reference as the case may be, is “pending” before the appellate authority, High Court or Supreme Court and secondly, whether it is “admitted” by the appellate authority, if it is an appeal pending before CIT(A), or Tribunal, or High Court, if it is a reference under s. 256(1) or (2) of IT Act, or writ under Art. 226/227 of the Constitution of India, or SLP and/or Civil Appeal under Art. 136, or writ under Art. 32 of Constitution of India before the Supreme Court. So far as revision under the IT Act is concerned, the CIT is only required to see whether it is pending on the date of submission of declaration, or not ? Equally untenable is the reliance placed by learned counsel for the petitioner on a case in Shri Radhika Prakashan (P) Ltd. vs. Union of India & Anr. (2002) 174 CTR (MP) 498 : (2002) 256 ITR 265 (MP). Perusal of this decision shows that it is not in any way helpful to petitioner. There the question was, whether appeal subsequently dismissed in default can be treated as appeal pending. This question is not involved in this case.

The word “admission”, “admit” or “admitted” though not defined under any Act/Rule has acquired definite meaning in judicial system. No sooner the appeal/petition/reference as the case may be is filed, it is placed for hearing before the appellate authority/Court for deciding whether it involves any arguable case or not. If the appellate authority/Court is of the opinion after hearing the appellant/writ petitioner that the case involves an arguable point, then in such event, the appellate authority/Court admits the appeal/writ petition and direct issuance of notice to the respondent for its bi parte hearings. Such order of admission is a judicial order passed by the authority/Court after hearing the appellant/writ petitioner on the question involved and after perusing the entire record of the case. There may be cases where the appellate authority/Court finds no merit in the appeal/petition/reference after hearing the appellant/writ petitioner on the question involved and hence, may proceed to dismiss the case at its threshold and without calling the respondent to support the order impugned in the appeal/petition/reference. In such eventuality, the question of admission of case does not arise and the lis results in its final termination at its threshold. However, if the appellate authority/Court is satisfied that the appeal/writ/reference involves an arguable point then the case is “admitted” for final hearing and notice is issued to respondent. The reason being that no Court/authority can set aside the order impugned without hearing the party in whose favour the order is passed. This process involves judicial application of mind by an appellate authority/Court and hence, assumes significance so far as emerging of any judicial order is concerned. As taken note of supra it depends upon the facts of each case, whether it is a fit case for admission or not ? Keeping these well-settled principles and the procedure prescribed and evolved, this Court cannot ignore the use of expression “admitted” in s. 95(i)(c) and has to give due weightage to the said word while interpreting the said section.

21. Coming to the facts of the case, it is not in dispute that the appeal filed by the petitioner on 26th Dec., 1998 before the Tribunal was not an “admitted” appeal as on 31st Dec., 1998 i.e. the date on which the petitioner submitted the declaration but it was only an appeal pending, hence, it was hit by s. 95(i)(c) of the Scheme resulting in its rejection as not being in conformity with the requirement of Scheme. In other words, the declaration did not satisfy the requirement of s. 95(i) (c) ibid and Scheme had no application to the declaration submitted by the petitioner.

22. Accordingly and in view of aforesaid discussion, I am of the considered opinion that the view taken by the CIT, the respondent No. 1, that no appeal was pending on the date of submission of declaration in terms of s. 95(i)(c) ibid was legal and proper. It deserves to be upheld. It is accordingly, upheld. As a consequence, petition fails and is dismissed.

No costs.

[Citation : 259 ITR 572]

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