Telangana & Andhra Pradesh H.C : Benefit under Kar Vivad Samadhan Scheme (KVSS) is independent of merits or otherwise of claims in appeals, revision or other proceedings

High Court Of Telangana & Andhra Pradesh

East India Petroleum Ltd. Vs.CIT

Section : 264

Assessment Year : 1997-98

L. Narasimha Reddy And Challa Kodanda Ram, JJ.

Writ Petition No. 5358 Of 1999

July 9, 2014

JUDGMENT

L. Narasimha Reddy, J. – The petitioner is a limited company and is assessed to income-tax. In the assessment year 1997-98, the assessing authority passed an order dated March 18, 1998, taking the view that the sum covered by prima facie adjustment of Rs. 79,86,590 under section 143(1)(a) of the Income-tax Act, 1961 (for short “the Act”) was not proper and, accordingly, made a demand of Rs. 47,10,108 as tax. Additional tax of Rs. 6,86,847 under section 143(1)(a) of the Act and interest of Rs. 7,78,680 under section 234B of the Act was also demanded.

2. The petitioner filed a revision under section 264(3) of the Act before the Commissioner of Income-tax, the first respondent herein. When the revision was pending, Parliament introduced the Kar Vivad Samadhan Scheme, 1998 (for short “the Scheme”), by amending the Act. It provided for the termination of the proceedings at the stage of appeal, revision or writ petition, before any forum, in case the assessee offers to pay the amount stipulated under the relevant provisions of the Scheme.

3. With a view to avail of the benefit under the Scheme, the petitioner submitted an application in the prescribed form on December 16, 1998. Incidentally, the first respondent is the designated authority to process the application and he is the one before whom the revision filed by the petitioner was pending. The first respondent passed an order dated February 1, 1999, in the revision rejecting the claim of the petitioner. Few days thereafter, i.e., on February 26, 1999, he rejected the application filed under the Scheme. This writ petition is filed challenging the order dated February 26, 1999.

4. Heard Sri K. Raji Reddy, learned counsel for the petitioner, and Sri J. V. Prasad, learned standing counsel for the respondents.

5. The petitioner felt aggrieved by the order passed by the income-tax authority, imposing tax, penalty and interest on a sum covered by prima facie adjustment. The remedy of revision under section 264(3) of the Act was availed of before the first respondent. During the pendency of that revision, the Scheme came into force. Accordingly, an application was filed in the prescribed form.

6. One of the conditions for extending the benefit under the Scheme is that a revision, appeal or proceedings must be pending before the authorities or the Tribunal created under the Act or the High Court or the Supreme Court. That condition stood fulfilled on account of the pendency of the revision before the first respondent. A perusal of the Scheme discloses that the extension of benefit thereunder is independent of the merits or otherwise of the claims in the appeals, revision or other proceedings. Further, once it emerges that an appeal, revision or other proceedings were pending by the time the application was filed, it hardly makes any difference, if such proceedings are terminated by the concerned authority, unmindful of the pendency of the application.

7. In the instant case, the first respondent was the authority to deal with the application filed under the Scheme as well as to hear the revision. Knowing fully well that the application filed by the petitioner is pending before him, he has chosen to take up the revision and dismissed the same through order dated February 1, 1999. He cited the dismissal thereof as a ground for refusing to extend the benefit under the Scheme. The approach of the first respondent is totally untenable, apart from being opposed to the letter and spirit of the Scheme. In a way, he has read certain aspects into the Scheme, which Parliament did not intend to. The mere fact that a revision, which was pending before him was dismissed cannot constitute the basis to deny the relief under the Scheme. We have taken similar view in W. P. No. 16170 of 2000 and batch.

8. We, therefore, allow the writ petition and set aside the impugned order. There shall be no order as to costs.

9. The miscellaneous petition filed in this writ petition shall also stand disposed of.

[Citation : 367 ITR 293]

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