High Court Of Madras
Sri Balaji Finance Vs. ITO
Section : 90
S. Nagamuthu, J.
Writ Petition. Nos. 22150, 22151, 22326, 24111 To 24113 Of 2001
September 2, 2010
ORDER
1. Since common issues are involved in these writ petitions, they were taken together and disposed of by means of a common order.
2. The petitioners are income-tax assessees. Under the Finance Act, 1998 (hereinafter referred to as ‘the Act’) in Chapter IV, a scheme known as “Kar Vivad Samadhan Scheme, 1998” was introduced. The said scheme came into force from 1-9-1998. As per the said scheme, for settlement of tax payable, an assessee is required to submit a declaration under section 88 of the Act. Section 89 of the Act speaks of the particulars to be furnished in the said declaration. Section 90 of the Act which is relevant for the issues involved in these writ petitions speaks of time and manner of payment of tax arrears. Sub-sections (1) to (4) of the section 90 of the said Act read as follows :
“90. Time and manner of payment of tax arrear.—(1) Within sixty days from the date of receipt of the declaration under section 88, the designated authority shall, by order, determine the amount payable by the declarant in accordance with the provisions of this scheme and grant a certificate in such form as may be prescribed to the declarant setting therein the particulars of the tax arrear and the sum payable after the determination towards full and final settlement of tax arrears :
Provided that where any material particular furnished in the declaration is found to be false, by the designated authority at any stage, it shall be presumed as if the declaration was never made and all the consequences under the direct tax enactment or indirect tax enactment under which the proceedings against the declarant are or were pending all be deemed to have been revived :
Provided further that the designated authority may amend the certificate for reasons to be recorded in writing.
(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.
(3) Every order passed under sub-section (1), determining the sum payable under this scheme, shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceeding under the direct tax enactment or indirect tax enactment or under any other law for the time being in force.
(4) Where the declarant has filed an appeal or reference or a reply to the show-cause notice against any order or notice giving rise to the tax arrear before any authority or Tribunal or Court, then, notwithstanding anything contained in any other provisions of any law for the time being in force, such appeal or reference or reply shall be deemed to have been withdrawn on the day on which the order referred to in sub-section (2) is passed :
Provided that where the declarant has filed a writ petition or appeal or reference before any High Court or the Supreme Court against any order in respect of the tax arrear, the declarant shall file an application before such High Court or the Supreme Court for withdrawing such writ petition, appeal or reference and after withdrawal of such writ petition, appeal or reference with the leave of the Court, furnish proof of such withdrawal along with the intimation referred to in sub-section (2).”
3. To get the benefits of the said scheme, the petitioners submitted their individual declarations on 30-11-1998 and all the said declarations were received by the 2nd respondent on 9th Dec., 1998. Thereafter, as required under section 90(1) of the Act, appropriate certificates were issued by the 2nd respondent on 5-2-1999 in respect of the declaration in Writ Petition. No. 22151 of 2001, on 4-2-1999 in respect of Writ Petn. Nos. 22150 and 22326 of 2001. The determined and demanded amounts were paid by the petitioners on 1-3-1999 in respect of the certificates in Writ Petn. Nos. 22151 of 2001 and 22150 of 2001. The demanded amount was paid on 27-2-1999 in respect of the certificate relating to Writ Petn. No. 22326 of 2001. Thus, the petitioners complied with the payment within the time stipulated in the scheme.
4. While so, the 2nd respondent issued an amendment to the said -“Certificate on 8-6-1999 in respect of the certificate in Writ Petn. No. 22151 of 2001, on 14-5-1999 in respect of the certificate in Writ Petn. No. 22150 of 2001 and on 18-5-1999 in respect of Writ Petn. No. 22326 of 2001. As per the amendment made, various amounts in addition were demanded as against all the three petitioners. The Petitioners paid the said amounts on 19-7-1999.
5. After having paid the said amounts, the petitioners have come up with the writ Petn. Nos. 24111, 24112 and 24113 of 2001 challenging the above amendments issued to the original certificates.
6. Subsequently, the 1st respondent passed individual orders in respect of the three declarations on 18-6-2001 rejecting the above declarations on the ground of delay. To put it otherwise, according to the 1st respondent, there had occurred 5 days delay in payment of the amount demanded as per the amended order in Writ Petn. No. 22151 of 2001, 21 days delay in Writ Petn. Nos. 22150 and 22326 of 2001. According to the 1st respondent, as per section 90(2) of the Act, the payment should have been made within 30 days from the date of the order passed under section 90(1) of the Act. In this case, according to the respondents, since the payments were made beyond 30 days from the date of the amendment orders, the declarations were liable to be rejected and accordingly, the impugned orders came to be passed. These orders dated 18th June, 2001 are challenged in Writ Petn. Nos. 22150, 22151 and 22326 of 2001.
7. For the sake of convenience, let me take up the Writ Petn. Nos. 24111, 24112 and 24113 of 2001 first.
Writ Petn. Nos. 24111, 24112 and 24113 of 2001 :
The main contention of the petitioners in all these writ petitions is that the impugned orders in these writ petitions are in the form of reopening the assessment made earlier on the basis of the declaration under section 90(1) of the Act. The learned counsel would submit that as per sub-section (3) of section 90 of the Act, no such reopening is permissible under law. The learned counsel would further point out that since the declarations made under sections 88 and 89 of the Act were accepted by the 2nd respondent and since appropriate certificates were issued under section 90(1) of the Act based on which the amounts assessed were paid within 30 days from the said date of the order, the present impugned orders are without jurisdiction since there is no power vested with the 2nd respondent to reopen the same.
8. No counter has been filed by the respondent. But the learned counsel for the respondent would submit that the orders impugned in these writ petitions cannot be termed as orders passed on reopening the assessments. According to him, these orders are only amendments made to the original certificates issued under section 90(1) of the Act. The learned counsel would point out that as per the second proviso to sub-section (1) of section 90, the designated authority has got ample power to amend the certificate for the reasons to be recorded in writing. He would point out that in these cases when the original certificates were issued, the payments made under section 140A were not adjusted properly by the Assessing Officer it was noticed later. As a matter of fact, the Chief CIT has clarified that such adjustment of the payments made under section 140A should be made. On realising the said mistake and after recording the reasons, the amendments were brought in. Therefore, according to the learned – counsel, the orders under challenge in these writ petitions are not at all orders for fresh payments made on any reopening. But they are only amendments made on the original certificate issued under section 90(1) of the Act.
9. I have considered these submissions and also perused the records carefully.
10. A perusal of the second proviso to section 90 of the Act would make it abundantly clear that the designated authority, namely, the 2nd respondent has got ample power to amend the certificate after recording the reasons in writing for doing so. In these cases, as rightly pointed out by the learned counsel for the respondents, the amounts paid under section 140A were not earlier adjusted when the original certificates under section 90(1) were issued. When the Chief CIT clarified that such adjustment should be made, the mistake was noticed and thereafter, the amendments have been issued. This cannot be termed as reopening of the assessment at all. In view of the same, I fully agree with the arguments advanced by the learned counsel for the respondents.
11. But the learned counsel for the petitioners would submit that the impugned orders are not in the form prescribed in Form 2A. The impugned orders would reflect as though they are only fresh orders made since they are not in Form 2A. This argument cannot be countenanced because if the order is issued in Form 2A, it can be taken as though it is a fresh order made under section 90(1). But to the contrary what was done was an order amending an earlier order issued in Form 2A. Therefore, the contention of the learned counsel cannot be accepted. At this juncture I have to state that if the declaration has been found to be false or misleading for any reason or any reasons, as per the first proviso to section 90 of the Act, it shall be presumed that there is no declaration at all made. In such an event, the benefit of the scheme shall not be available to the declarant. It is only in a case where a mistake has occurred either at the end of the declarant or at the end of the Assessing Officer, then the question of amendment arises. In the case on hand, it is not the case of the respondents that the petitioners made any false declaration. Therefore, the first proviso to section 90 is not applicable. It is the admitted case of the respondents that the mistake was committed only by the Assessing Officer and that is the reason why the amendment came to be made. This argument deserves acceptance.
12. is the contention of the learned counsel for the petitioner that such amendment cannot be made after the payment has been made as per the original demand. This argument will only run counter to the very purpose of the scheme. Had that been the real intention of the Parliament, surely, the Parliament would have said that such amendment could be made only before the payment is made as per the original demand. Absence of any such restriction in the provision would only indicate that such amendment can be made at any stage. Rightly, in this case, though the petitioners had paid the amounts demanded under section 90(1) of the Act, the designated authority found the mistake later on after getting some clarification from the Chief CIT, then has made the amendments. Thus, I do not find any merit in the respondents’ challenge made to the amendment orders which are impugned in these three writ petitions. Thus, these writ petitions deserve to be dismissed.
Writ Petn. Nos. 22150, 22151 and 22326 of 2001 :
13. Now let me take up the other three writ petitions, namely, Writ Petn. Nos. 22150, 22151 and 22326 of 2001. In these writ petitions, the orders passed by the 1st respondent declaring that the petitioners are not entitled for the benefit of the claim on the ground that the payments as demanded under section 90(1) of the Act were not made within the period of limitation are under challenge.
14. The learned counsel for the petitioners would contend that since within 30 days of the original determination order made under section 90(1) of the Act, the payments were made, the petitioners have complied with the sub-section (2) of section 90 of the Act. Therefore, they are entitled for the benefit of the scheme. The learned counsel would further point out that in the amendment orders, there was no time prescribed by the 2nd respondent making it imperative for the petitioners to pay the amounts within the said prescribed time. The learned counsel would further submit that there is no period of limitation prescribed in the Act to make payment on the basis of any amendment made to the original order. But the learned counsel would also point out that there is no provision in the Act to reopen the issue. The learned counsel would submit that as soon as the payments were made under section 90(1) of the Act as per the original orders made, the certificates should have been issued to the petitioners under section 90(2) of the Act. The learned counsel would further submit that it is not the question of extending the period of limitation at all. Therefore, the impugned orders in these writ petitions, according to the learned counsel, are not at all sustainable and to the contrary, the respondents are bound to issue certificates as required under section 90(2) of the Act. To decline to issue a certificate under the said provision, the power is vested with the competent designated authority which in these cases is only the 2nd respondent and not the 1st respondent. Therefore, the orders passed by the 1st respondent are wholly without jurisdiction.
15. The learned counsel for the respondents would stoutly oppose these three writ petitions. According to him, the payment as per the amendment made should have been made within 30 days from the date of the receipt of the amendment order. Here in this case, since the petitioners did not pay the amount demanded as per the amended orders within 30 days from the date of receipt of the orders, the 1st respondent as per section 90(2) declined to issue the necessary certificates to the declarants. The learned counsel would further point out that when the scheme extends certain benefits to the declarants, they would be entitled for the benefit of the scheme, if only they have strictly adhered to the conditions stipulated therein. When the scheme states that the payment should be made within 30 days from the receipt of the demand, the same should be scrupulously adhered to. If not, the declarants shall not be entitled for the scheme, he contended. In this regard, the learned counsel would submit that the Madras High Court earlier took a decision in a similar case that the delay could be condoned either by the authorities or by the Courts. When the matter was taken up to the Hon’ble Supreme Court, the Supreme Court in Hemalatha Gargya v. CIT [2003] 259 ITR 1/ 128 Taxman 190 has held that the Courts have no power to act beyond the terms of the statutory scheme under which the benefits have been granted to the assessee and to extend the time on consideration of equity. Relying on the said judgment, the learned counsel would submit that it is far beyond the jurisdiction of this Court to condone the delay so as to hold that the petitioners are entitled for the benefits of this scheme.
16. I have considered the above submissions made on either side. Admittedly, the petitioners have not paid the amounts demanded as per the amendment orders within 30 days of service of said orders to the petitioners. Hence, the only crucial question is whether on this ground, the 1st respondent was right in declining to issue a certificate under section 90(2) of the Act thereby declaring that the petitioners were not entitled for the benefits of the scheme. There is no dispute in this case that the petitioners paid the amounts originally determined under section 90(1) of the Act and demanded. The contention of the learned counsel for the petitioners that the payment of the original amount demanded within the time stipulated would amount to strict adherence to the time prescribed in the Act. I find force in the said argument.
17. A close reading of sub-section (2) of section 90 would show that it speaks of limitation for making payment as determined by the designated authority. Here in these cases, the original amounts were determined, certificates under section 90(1) were issued and based on the same, the amounts were paid within 30 days. Thus, in my considered opinion, the petitioners have complied with section 90(2) of the Act. Strangely, there is no provision in the Act prescribing any period of limitation for making payment from the date of the passing of an amendment order. Had it been the intention of the legislature that the payment should be made within 30 days from the date of passing of the amendment order, surely, the Parliament would have made a provision for the same in the Act. But the Parliament has not done so. At this juncture, it should be noticed that there are time limits prescribed both for the designated authority to determine the amount, and for the assessee to make payment. For the former, it is 60 days and for the latter it is 30 days. If an amendment order is to be construed as a determination order in terms of section 90(1), then it goes without saying that such amendment order should also be passed within 60 days from the date of submission of the declaration. If this construction is accepted, the same will render the provision unworkable for, even if a patent mistake is noticed after 60 days, it cannot be corrected. This would not have been the intention of the Parliament. An amendment order cannot at any stretch of imagination be construed as yet another determination order. Therefore, the limitation of 60 days prescribed in section 90(1) of the Act is not applicable to an amendment order. As a corollary, the period of limitation prescribed for payment is also not applicable for payment as per the amendment made. At this juncture, one should not fail to notice the expressions used in section 90(1) as well as section 90(2) of the Act. In section 90(1), it is found “the competent authority shall, by order, determine”. Similarly, in section 90(2), it is found “the declarant shall pay the sum determined”. Both these provisions should be read conjointly and not in isolation. This would only reflect that there can be only one determination order and thus the amendment order cannot be construed as yet another determination order. If it is so correctly construed, then there can be no difficulty to conclude that both the limitation periods prescribed in section 90(1) and 90(2) respectively are not at all applicable to an amendment order. On the passing of an amendment order, no fresh period of limitation commences as contended by the learned counsel for the respondent. When the Parliament itself has not prescribed any such period of limitation both for the authority to pass an amendment order and for the declarant to make payment, such period of limitation cannot be assumed as it is sought to be done by the learned counsel for the respondent. At the same time, it cannot be said that the declarant at his free will, can make payment at any time. It can only be said that the payment should be made within a reasonable time or within a time to be stipulated in the order itself. In the cases on hand, as pointed out by the learned counsel for the petitioners, in the amendment orders, there was nothing said about the time within which the amounts should be paid. Therefore, in my considered opinion, the payment of the amounts by the petitioners beyond 30 days but within a reasonable time as per the amendment orders satisfies the requirements of the scheme. Therefore, they are entitled for the certificate under section 90(2) of the Act.
18. The learned counsel for the respondents would submit that as held by the Hon’ble Supreme Court in Hemalatha Gargya’s case (supra), it is far beyond the scope of power of this Court to condone the delay and to say that the. petitioners would be entitled for the benefit of the scheme though the payments were made belatedly. I am not for a moment to say that this Court has got such power to condone the delay or to extend the period of limitation. What I have concluded above is that there is no period of limitation at all prescribed for making payment of the amount as per the amendment order. To put it otherwise, the limitation prescribed in section 90(2) of the Act itself is only the time-limit for making payment from the original order of determination and it does not speak of any time-limit for payment from the date of amendment order. Therefore, I have to clarify that by this order, I am not either extending the period of limitation if any prescribed in the Act or condoning the delay for making payment.
19. Now coming to the last argument of the learned counsel for the petitioner that the 1st respondent is not a designated authority and therefore, the impugned orders are without jurisdiction, I am of the view that this question need not be gone into in these writ petitions in view of the conclusion which I have arrived at supra. This question is only left open.
20. In the result, the writ petitions in Writ Petn. Nos. 24111, 24112 and 24113 of 2001 are dismissed and Writ Petn. Nos. 22150, 22151 and 22326 of 2001 are allowed with a direction to the respondents to issue necessary certificates under section 90(2) of the Act, 1998 to the petitioners within a period of two months from the date of receipt of a copy of this order. No costs.
[Citation : 333 ITR 512]