High Court Of Madras
TVS Motor Co. Ltd. vs. Assistant Commissioner Of Income Tax
Sections 1998FA(No. 2) 90, 147
Asst. Year 1995-96
P.D. Dinakaran & Mrs. Chitra Venkataraman, JJ.
With Petition No. 12607 of 2003
27th February, 2007
Counsel Appeared
R. Venkatnarayanan, for the Petitioner : Mrs. Pushya Sitaraman, for the Respondent
ORDER
P.D. DINAKARAN, J. :
The writ petition is filed for the issue of a writ of certiorarified mandamus to call for the records in PA No./GIR No. 32024 on the file of the respondent and quash the order dt. 27th March, 2003 and consequently, direct the respondent to drop the proceedings.
2. The case of the petitioner, in brief, is as under.
2.1. The petitioner is a public limited company. For the asst. yr. 1995-96, the AO had set off the unabsorbed depreciation and investment allowance carried forward while computing the relief under s. 80HH of the IT Act, 1961. With regard to that, an appeal was pending before the Tribunal.
2.2. In the meanwhile, the petitioner opted to avail the Kar Vivad Samadhan Scheme and ultimately, paid the amount determined by the Department. However, the AO issued notice under s. 148 of the IT Act to reopen the assessment and ultimately, withdrew the relief granted under s. 80HH of the Act by the impugned order dt. 27th March, 2003.
2.3. Under s. 90(3) of the Kar Vivad Samadhan Scheme [Finance (No. 2) Act, 1998], the sum determined under the Scheme is conclusive and no matter covered by such order shall be reopened. The petitioner therefore claims that the AO is not entitled to reopen the assessment.
2.4. The petitioner opted for the Kar Vivad Samadhan Scheme only on the basis of the assurance given by the Government that all issues covered by the Kar Vivad Samadhan Scheme would not be reopened. The petitioner also withdrew the appeal before the Tribunal. When s. 90(3) of the Finance (No. 2) Act, 1998 provides that the matter covered by the order cannot be reopened in any other proceedings, it is not open to the AO to reopen the assessment.
2.5. The reopening of assessment was made on the basis of an issue which has been considered and accepted under the Kar Vivad Samadhan Scheme. The petitioner cannot have the right of appeal against the order of reassessment, in view of Kar Vivad Samadhan scheme being availed by the petitioner. The rights of the petitioner being seriously prejudiced, the petitioner has come forward with this writ petition, as there is no alternative remedy except to approach this Court under Art. 226 of the Constitution of India.
3. Controverting the allegations of the petitioner, the respondent, in the counter-affidavit filed, has stated the following.
3.1. In the return of income for the asst. yr. 1995-96, the assessee, the petitioner herein, claimed deduction under s. 80HH of the Act to which the petitioner is not entitled, as the deduction under s. 80HH of the Act is allowable only for 10 years and the 10th year in the case of petitioner happened to be the asst. yr. 1994-95.
3.2. The immunity conferred by the Kar Vivad Samadhan Scheme is applicable to the issues which have directly resulted in the tax demanded. The petitioner availed the Kar Vivad Samadhan Scheme only with regard to tax arrears arising by setting off of brought forward loss first and later allowing deduction under s. 80HH of the Act. But, it has nothing to do with the very eligibility of claim of deduction under s. 80HH of the Act.
3.3. What is questioned in the reassessment proceedings is the very eligibility of deduction under s. 80HH of the Act, but not the issue of allowing deduction under s. 80HH of the Act. The stand of the AO in rejecting the claim of the petitioner is correct. The writ petition is liable to be dismissed.
4. Heard the learned counsel for the respective parties. The entire dispute revolves on the short point, whether the immunity under the Kar Vivad Samadhan Scheme gets affected by the reopening of assessment, and to appreciate the same in proper perspective, it is apt to refer the relevant portion of s. 90 of the Finance (No. 2) Act, 1998, which reads as under : “90. Time and manner of payment of tax arrear.—(1) Within sixty days from the date of receipt of the declaration under s. 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 forth therein the particulars of the tax arrear and the sum payable after such 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 shall 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-s. (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.”
5. The contention of the learned counsel for the petitioner that the order passed under s. 90(1) of the Finance (No.2) Act, 1998 is conclusive and no matter covered by such order shall be reopened in any other proceedings appears to be correct, but, a reading of the s. 90(1), more particularly, the provisos to the said section would give a wider meaning, viz., the designated authority can revive the proceedings if any material furnished in the declaration is found to be false and he may amend the certificate for reasons to be recorded in writing. Therefore, it cannot be stated that the matter covered by the order under s. 90(1) of the Finance (No. 2) Act, 1998 shall not be revived.
6. The apex Court in Killick Nixon Ltd. vs. Dy. CIT (2002) 178 CTR (SC) 387 : (2002) 258 ITR 627 (SC) held as under : “As far as the provisions of the Kar Vivad Samadhan Scheme are concerned, we agree with the contention of the learned senior counsel for the assessee that the order to be made by the designated authority under s. 90 is a considered order which is intended to be conclusive in respect of tax arrears and sums payable after such determination towards full and final settlement of tax arrears. Once the declarant makes payment of the amount so determined under s. 90, the immunity under s. 91 springs into effect. We are also of the view that upon such declaration being made, tax arrears being determined, paid and certificate issued under the Kar Vivad Samadhan Scheme, there is no jurisdiction for the AO to reopen the assessment by a notice under s. 143 of the Act except where the case falls under the proviso (2) to sub-s. (1) of s. 90 as it is found that any material particular furnished in the declaration is found to be false.” (Emphasis, italicised in print, supplied) In the present case, the reopening of assessment was made to decide the question of eligibility of the petitioner for deduction under s. 80HH of the Act, which material was not available before the designated authority while granting certificate under s. 90(1) of the Finance (No. 2) Act, 1998. While availing the benefit of the Kar Vivad Samadhan Scheme, the petitioner had not made any declaration as to its eligibility to claim deduction under s. 80HH of the Act. Therefore, the declaration of the petitioner has to be presumed as if it was never made and consequently, the petitioner cannot claim that the matter should not be reopened, as it is a case falling under the provisos to s. 90(1) of the Finance (No. 2) Act, 1998. In this view of the matter, we hold that the respondent is justified in reopening the assessment and deciding the tax liability of the petitioner by the order impugned in this writ petition. In fine, the writ petition stands dismissed. No costs. It is open to the petitioner to challenge the demand of tax, if it is so advised, in accordance with law.
[Citation : 293 ITR 394]
