A.ramamurthy v. The Income Tax Officer, Ward No.i(3), Virudhunagar

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 11.2.2008 C O R A M : THE HONOURABLE MR.JUSTICE ELIPE DHARMA RAO andTHE HONOURABLE MR.JUSTICE S.R.SINGHARAVELU W.A.No.1568 of 2006 A.Ramamurthy ... Appellant/Petitioner -vs- The Income Tax Officer,Ward No.I(3), Virudhunagar. ... Respondent/Respondent PRAYER: Appeal filed under Clause 15 of the Letters Patent against theorder, dated 24.8.2006 made in W.P.No.14024 of 2004 and WPMP.No.16534 of2004 on the file of this court under Article 226 of the Constitution ofIndia, to issue a Writ of Certiorarified Mandamus, to call for therecords of the petitioner on the file of the respondent in GIR.No.R-4356/1(3) VNR/85-86 and quash the impugned order dated 03.02.2004 andconsequently direct the respondent to drop the proceedings under Section155 of the Act. For appellant :: Mr.P.J.Rishikesh J U D G M E N T (JUDGMENT OF THE COURT WAS DELIVERED BY ELIPE DHARMA RAO, J.) This appeal is directed against the order of the learned SingleJudge passed in W.P.No.14024 of 2004, dated 24.8.2006. 2. The writ petition was filed stating that thepetitioner/appellant, who is an income tax assessee, availed the schemecalled "Kar Vivad Samadhan Scheme" for the Assessment Year 1985-86.Pursuant to the same, he paid the amount determined as tax arrears andobtained a certificate to that effect. Later the authorities havereopened the assessment for the Assessment Year 1985-86 and directed thepetitioner to pay a sum of Rs.4,98,187/- as per the order of therespondent, dated 03.2.2004. The said writ petition was filed seeking toquash the said order, dated 03.2.2004 and to consequently direct therespondent to drop the proceedings under section 155 of the Income TaxAct. 3. The learned Single Judge, taking into consideration the factthat against the abovesaid order, dated 03.2.2004, the petitionerpreferred an appeal which is pending before the Commissioner of IncomeTax (Appeals), disposed of the writ petition giving liberty to theparties to agitate the grounds available as per the ratio laid down bythe Supreme Court in Killick Nixon Ltd. -vs- Deputy C.I.T (258 ITR 627)and further directing the department not to take any coercive steps forrecovery of income tax till the disposal of the appeal pending beforethe Commissioner of Income Tax Appeals. Aggrieved against the same, thepresent writ appeal is filed by the petitioner/appellant. 4. The learned counsel appearing for the appellant contended thatby virtue of Clause 90 (3) and Clause 92 of the Finance (No.2) Act,1998, under which the Kar vivad Samadhan Scheme was introduced, anyissue in respect of which a declarant has opted for scheme shall not bereopened in any other proceedings under the Direct Tax enactment. Hefurther contended that the Assessing Officer has no power orjurisdiction under Section 155 of the Income Tax Act, 1961 to reopen theassessment. 5. In support of his contention, he relied on the judgment of theSupreme Court reported in 2006 (7) SCC 642 (Duncans Agro Industries Ltd.-vs- Commissioner of Central Excise, New Delhi), wherein the SupremeCourt held that the amount finally determined as due for the entireperiod of 10 years from the assessee having been settled under the KarVivad Samadhan Scheme, there is no scope for any further review ordetermination of that issue by any authority under the Act. Further,referring to the judgment of the Supreme Court in Hira Lal Hari LalBhagwat -vs- CBI (2003) 5 SCC 257); CBI -vs- Duncans Agro Industries Ltd(1996) 5 SCC 591) and Sushila Rani -vs- CIT (2002) 2 SCC 697), theSupreme Court held that after the grant of certificate under the KarVivad Samadhan Scheme, 1998 as having settled the dispute and payment ofthe amount determined, no further proceedings could be initiated withfor the period in question. 6. On the other hand, the learned counsel for the respondentcontended that the Department has got power under the abovesaidprovision to re-open the assessment under Section 155 of the Income TaxAct, 1961. 7. The learned counsel for the respondent has also relied on thejudgment of the Supreme Court reported in Vol.258 (2002) ITR 627(Killick Nixon Ltd. -vs- Deputy Commissioner of Income Tax and others),wherein the Supreme Court held as follows:- ''As far as the provisions of the Kar Vivad Samadhan Schemeare concerned, we agree with the contention of the learnedsenior counsel for the assessee that the order to be made bythe designated authority under Section 90 is a considered order which is intended to be conducive in respect of taxarrears and sums payable after such determination towards fulland final settlement of tax arrears. Once the declarant makespayment of the amount so determined under section 90, theimmunity under section 91 springs into effect. We are also ofthe view that upon such declaration being made, tax arrearsbeing determined, paid and certificate issued under the KarVivad Samadhan Scheme, there is no justification for theAssessing Officer to reopen the assessment by a notice undersection 143 of the Act except where the case falls under theproviso (2) of sub-section (1) of section 90 as it is foundthat any material particular furnished in the declaration isfound to be false. In the present case, it is not the case ofthe Revenue that any material particular furnished by theappellant-assessee in the declaration was found to be false.Consequently, the Assessing Officer could not have reopenedthe assessment by a notice under section 143 of the Act." 8. After going through the authorities relied on, we are not ableto understand as to how this judgment is helpful to the respondent, buton the other hand, it is helpful to the appellant. In the facts andcircumstances of the case, the order of the learned Single Judge is setaside. Writ petition is allowed. In the circumstances, there will be noorder as to costs. The Income Tax Officer,Ward No.I (3), Virudhunagar. AVM(CO)RVL 10.03.2008