2005 Supreme(SC) 1133

2005(6) Supreme 123
Supreme Court of India
(From Gujarat High Court)
B.P. Singh & S.H. Kapadia, JJ.
Commissioner of Income Tax, Rajkot —Appellant
versus
Shatrusailya Digvijaysingh Jadeja —Respondent
Civil Appeal No. 4411 of 2003
Decided on 1-9-2005
Counsel for the Parties :
For the Appellant : K.P. Pathak, Additional Solicitor General, Harish Chander, Sr. Advocate, Tufail A. Khan, B.V. Balaram Das, Advocates.
For the Respondent : M.L. Varma, Sr. Advocate, Bhargava V. Desai, Sanjeev Kr. Singh, Ms. Sheenam Parwanda and Satya Mitra, Advocates.

Headnote:Income Tax Act, 1961—Sections 143(3), 246 and 264—Wealth Tax Act, 1957—Kar Vivad Samadhan Scheme, 1998 which came into force w.e.f. 1.9.1978—Sections 86 to 96—Assessment year 1992-93—In respect of assessment years 1984-85 to 1991-92, assessee was liable to pay tax under assessment orders passed u/s 143(3) of the Act—Appeals filed before the Commissioner were dismissed as the assessee failed to pre-deposit the self assessed tax—Department rejected Kar Vivad Samadhan Scheme declarations filed by respondent assessee on ground that assessments had become final in year 1992-93—According to the department, revisions filed by assessee were time barred and as such they were not ‘pending’ in terms of Section 95(i)(c) of the said Scheme—Whether orders of designated authority rejecting declarations filed by assessee are sustainable—(No).

       Held : The basic point which we are required to consider in this case is the meaning of the word “pending” in section 95(i)(c) of the said Scheme. The object of the scheme was to make an offer by the Government to settle tax arrears locked in litigation at a substantial discount. It provided that any tax arrears could be settled by declaring them and paying the prescribed amount of tax arrears, and it offered benefits and immunities from penalty and prosecution. In several matters, Government found that large number of cases were pending at the recovery stage and, therefore, the Government came out with the said Scheme under which it was able to unlock the frozen assets and recover the tax arrears. In our view, the Scheme was in substance a recovery scheme though it was nomenclatured as a “litigation settlement scheme” and was not similar to the earlier Voluntary Disclosure Scheme. As stated above, the said Scheme was a complete Code by itself. Its object was to put an end to all pending matters in the form of appeals, reference revisions and writ petitions under the IT Act/WT Act. Keeping in mind the above object, we have to examine section 95(i)(c) of the Scheme, which was different from appeals under section 246, revisions under section 264, appeals under section 260A etc. of the IT Act and similar provisions under the W.T. Act. Under the I.T. Act, there is a difference between appeals, revisions and references. However, those differences were obliterated and appeals, revisions and references were put on par under section 95(i)(c) of the Scheme. The object behind section 95(i)(c) in putting on par appeals, references and revisions was to put an end to litigation in various forms and at various stages under the IT Act/Wealth Tax Act and, therefore, the rulings on the scope of appeals and revisions under the IT Act or on Voluntary Disclosure Scheme, will not apply to this case. (Paras 10 and 12)

       One more aspect needs to be looked into. The Finance (No.2) Act, 1998 introduced a Scheme called Kar Vivad Samadhan Scheme, 1998. It was a recovery scheme. Under the Scheme, the tax arrear had to be outstanding as on 31.3.1998. Under section 87(f), “disputed tax” was defined to mean total tax determined and payable under the IT Act/Wealth Tax Act in respect of an assessment year but which remained unpaid as on the date of making of the declaration from which TDS, self-assessed tax, advanced tax paid, if any, had to be deducted under section 90; the DA had to determine the amount payable and for that purpose, he had to determine the tax arrear as well as the disputed amount as defined under section 87(f). Thus, the DA had to make an assessment of tax arrears, disputed amount and amount payable for each year of assessment; that appeal was barred against the order under section 90 (see section 92); that such determination had to be done within 60 days from the receipt of the declaration and based thereon the DA had to issue a certificate. In other words, till the completion of the aforestated exercise, the appellant could not have paid the amount of tax and, therefore, the appellant was not liable to pay interest as his liability accrued only after the ascertainment of the amount payable under section 90. In the present matter, that exercise has been completed; that taxes have been recovered by sale of lands; that amounts have been paid pursuant to the determination by the DA, may be under the orders of the High Court and, therefore, we do not wish to reopen the matter. (Para 13)