An appellate authority cannot overturn or ignore a prior, final order of a superior tribunal that specifically denies interest on a tax refund, especially when the subject matter is interconnected with a voluntary tax settlement scheme that has already reached finality.

ORDER :

Arun Monga, J.

1. The assessee has challenged an order dated 13.10.2009 passed by the learned Income Tax Appellate Tribunal (ITAT) for Assessment Year (A.Y.) 1993–94. By the impugned order, the ITAT set aside the appellate order dated 18.12.2008 passed by the Commissioner of Income Tax (Appeals) [CIT(A)] and restored the order dated 02.09.2008 passed by the Assessing Officer.

1.1. Under the Assessing Officer’s order, the assessee’s determined income for A.Y. 1993–94 of Rs. 42,57,61,140/- was reduced by Rs. 5,53,13,531/- towards brought forward losses of A.Y. 1992–93, and tax was accordingly assessed on the net income of Rs. 37,04,47,609/- instead of Rs. 42,57,61,140/-.

However, the assessee’s claim for interest on the amount of tax refund was disallowed.

2. Brief Backdrop:

2.1. Pursuant to the KAR VIVAD SAMADHAN SCHEME , 1998 (hereinafter referred as ‘KVSS’), the assessee submitted a declaration dated 29.12.1998 under Section 88 of the Finance (No.2) Act, 1988 qua the Assessment Years 1993-94. In this connection, the CIT, Udaipur issued a certificate dated 02.02.1999 under Section 90(2) read with Section 91 of the Act, ibid.

2.2. In the certificate dated 02.02.1999 issued by the CIT, Udaipur it has been stated inter alia as under:

“And whereas the Designated Authority by order dated 6.1.99/28.1.99 determined the amount of Rs. 10,15,02,255/- payable by the declarant in accordance with the provisions of the Scheme and granted certificate setting forth therein the particulars of tax arrears and the sum payable after such determination towards full and final settlement of tax arrears as per details given below:

And whereas the declarant has paid Rs. 10,15,02,255/- on 1.2.99 being the sum determined by the designated authority.

x-x-x-x

Now, therefore, in exercise of the powers conferred by sub Section (2) of Section 90 read with Section 91 of the Finance (No.2) Act, 1988, the designated authority hereby issues this certificate to the said declarant (a) Certifying the receipt of payment from the declarant towards full and final settlement of tax arrears determined in the order dated 4.1.99/ 28.1.99 on the declaration made by the aforesaid declarant, (b) Granting immunity, subject to the provisions contained in the scheme, from instituting any proceeding for prosecution for any offence under Aaykar or from imposition of penalty under the enactment in respect of matters covered in the aforesaid declaration made by the declarant”

2.3. The learned ITAT passed order dated 23.01.2008 (Annexure- 4) disposing of assessee’s two appeals, including ITA No. 259/JDPR/2004 (A.Y. 1993-94). It held/directed as under:

“As the assessee had not opted for KVSS with reference to payment of tax on the assessed income, the matters connecting therewith are open to the regular proceedings available under the Act. Admittedly, the appeal of the assessee for the preceding A.Y. was decided after filing of KVSS declaration and the AO, on giving effect to the order passed by the Tribunal determined the loss of Rs. 5.53 crores available for set off against the income of the instant year. We are, therefore, of the considered opinion that the right of the assessee for claiming set off cannot be snatched simply for the reason that it had availed the benefit of KVSS for the interest payable under the Act. We, therefore, hold that the amount of tax on the brought forw