The central legal point established in the judgment is the requirement for a bona fide pendency of litigation to avail of the benefits of the Kar Vivad Samadhan Scheme, 1998, and the discretion of the revisional authority in condoning delay for filing a revision petition.

R. V. Raveendran, J.

1. SRI M. V. Seshachala, learned counsel for the Income-tax Department, is directed to take notice for the respondents.

2. IN regard to the return of income submitted by the petitioner-firm for the assessment year 1995-96, the Assistant Commissioner of INcome-tax, Circle 5(1), Bangalore, determined the total income-tax and interest payable thereon under Section 143(1)(a) of the INcome-tax Act, 1961 ("the Act" for short), as Rs. 18,33,470, Rs. 7,36,698 and Rs. 2,15,796, respectively, as per order dated March 29, 1996 (annexure-A). The petitioner appears to have paid in all Rs. 9,52,494 between February 28, 1997, and October 12, 1998. The Recovery Officer, Range-5, Bangalore, informed the petitioner by letter dated October 15, 1998, that a sum of Rs. 3,60,000 is still due in regard to the assessment year 1995-96, made up of Rs. 3,34,771 towards interest under Section 220(2) and Rs. 18,500 towards penalty, Rs. 3,581 as interest thereon and Rs. 3,148 towards costs and charges.

The Kar Vivad Samadhan Scheme, 1998 ("the Scheme", for short), was introduced with effect from September 1, 1998, by the Finance (No. 2) Act, 1998, for settling tax arrears, locked in litigation, at a substantial discount. Section 88 enables any person to make a declaration to the designated authority in respect of any tax arrear as on March 31, 1998, to avail of the benefit of the discounts/concessions provided under the scheme. Such declaration is required to be made after September 1, 1998, and before December 31, 1998 (later extended to January 31, 1999). Section 95 of the Scheme provides that the Scheme will not apply in certain cases. Section 95(i)(c) makes it clear that the scheme shall not apply in respect of any tax arrear under any direct tax enactment 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 the declaration or no application for revision is pending before the Commissioner on the date of filing the declaration.

3. WHEN the Scheme came into force on September 1, 1998, no litigation was pending before any authority or court in regard to any tax arrear of the petitioner relating to the assessment year 1995-96. The petitioner, however, filed an application for revision on January 5, 1999 (annexure-C), under Section 264 of the Act before the third respondent challenging the order dated March 29, 1996, passed under Section 143(1)(a) of the Act. As the application was filed beyond the limitation period of one year, the petitioner sought condonation of delay on the following ground :

"The petitioner-firm prays before your honour to kindly condone the delay in filing of the revision petition inasmuch as the appellants counsel, Sri Shivagangappa, was sick for a prolonged period and subsequently expired on August 7, 1996, and thereby could not attend to the affairs of the petitioners which was plunged in pell mell and confusion and as no other person was aware of the state of affairs and true position."

4. IMMEDIATELY after filing the said revision petition on January 5, 1999, the petitioner also filed a declaration under Section 88 of the Finance (No. 2) Act, 1998, on January 6, 1999, claiming the benefit under the Scheme, by alleging that a revision petition filed on January 5, 1999, was pending on the date of declaration.

The third respondent dismissed the revision petition on January 12, 1999, by the following order (annexure-E) :

"The assessee has filed a revision petition under Section 264 on January 5, 1999, for the assessment year 1995-96 against the order under section 143(1)(a) dated March 29, 1996. The petition made under Section 264 is beyond the due date prescribed under the Income-tax Act, 1961. Since, the revision petition made is out of time, the petition is dismissed as not maintainable."

5. THEREAFTER the third respondent sent a communication dated January 29, 1999 (annexure-F), reject