M/S.tvs Motor Company Ltd., (Formerly Known As Tvs Suzuki Ltd) v. The Assistant Commissioner Of Income-Tax, Company Circle Iii(2), Chennai-34

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.02.2007 CORAM THE HON'BLE MR.JUSTICE P.D.DINAKARANANDTHE HON'BLE MRS.JUSTICE CHITRA VENKATARAMAN M/s.TVS Motor Company Ltd.,(formerly known as TVS Suzuki Ltd),No.8, Haddows Road,Chennai 600 006, rep. byits Managing Director, Shri Venu Srinivasan ...PetitionerVs. The Assistant Commissioner of Income-tax,company Circle III(2), Chennai-34. ...Respondent Writ petition filed under Article 226 of the Constitution of India forthe issue of writ of Certiorarified Mandamus as stated therein. For petitioner :Mr.R.VenkatnarayananFor respondents:Mrs.Pushya Sitaraman, Sr.SC for IT. ORDER The writ petition is filed for the issue of a writ of CertiorarifiedMandamus to call for the records in P.A.No./G.I.R.No.32024 on the file ofthe respondent and quash the order dated 27.3.2003 and consequently directthe respondent to drop the proceedings. 2. The case of the petitioner, in brief, is as under: 2.1. The petitioner is a public limited company. For the assessmentyear 1995-96, the assessing officer had set off the unabsorbeddepreciation and investment allowance carried forward while computing therelief under section 80HH of the Income-tax Act, 1961. With regard tothat, an appeal was pending before the Appellate Tribunal. 2.2. In the meanwhile, the petitioner opted to avail the Kar VivadSamadhan Scheme and ultimately, paid the amount determined by thedepartment. However, the assessing officer issued notice under section148 of the Income-tax Act to reopen the assessment and ultimately,withdrew the relief granted under section 80HH of the Act by the impugnedorder dated 27.3.2003. 2.3. Under section 90(3) of the Kar Vivad Samadhan Scheme (Finance(No.2) Act, 1998), the sum determined under the Scheme is conclusive andno matter covered by such order shall reopened. The petitioner thereforeclaims that the assessing officer is not entitled to reopen theassessment. 2.4. The petitioner opted for the Kar Vivad Samadhan Scheme only onthe basis of the assurance given by the Government that all issuescovered by the Kar Vivad Samadhan Scheme would not be reopened. Thepetitioner also withdrew the appeal before the Income-tax AppellateTribunal. When section 90(3) of the Finance (No.2) Act, 1998 provides thatthe matter covered by the order cannot be reopened in any otherproceedings, it is not open to the assessing officer to reopen theassessment. 2.5. The reopening of assessment was made on the basis of an issuewhich has been considered and accepted under the Kar Vivad SamadhanScheme. The petitioner cannot have the right of appeal against the orderof reassessment, in view of Kar Vivad Samadhan scheme being availed by thepetitioner. The rights of the petitioner being seriously prejudiced, thepetitioner has come forward with this writ petition, as there is noalternative remedy except to approach this Court under Article 226 of theConstitution of India. 3. Controverting the allegations of the petitioner, the respondent, inthe counter affidavit filed, has stated the following: 3.1. In the return of income for the assessment year 1995-96, theassessee, the petitioner herein, claimed deduction under section 80HH ofthe Act to which the petitioner is not entitled, as the deduction undersection 80HH of the Act is allowable only for 10 years and the 10[th] year inthe case of petitioner happened to be the assessment year 1994-95. 3.2. The immunity conferred by the Kar Vivad Samadhan Scheme isapplicable to the issues which have directly resulted in the tax demanded.The petitioner availed the Kar Vivad Samadhan Scheme only with regard totax arrears arising by setting off of brought forward loss first and laterallowing deduction under section 80HH of the Act. But, it has nothing todo with the very eligibility of claim of deduction under section 80HH ofthe Act. 3.1. In the return of income for the assessment year 1995-96, theassessee, the petitioner herein, claimed deduction under section 80HH ofthe Act to which the petitioner is not entitled, as the deduction undersection 80HH of the Act is allowable only for 10 years and the 10[th] year inthe case of petitioner happened to be the assessment year 1994-95. 3.2. The immunity conferred by the Kar Vivad Samadhan Scheme isapplicable to the issues which have directly resulted in the tax demanded.The petitioner availed the Kar Vivad Samadhan Scheme only with regard totax arrears arising by setting off of brought forward loss first and laterallowing deduction under section 80HH of the Act. But, it has nothing todo with the very eligibility of claim of deduction under section 80HH ofthe Act. 3.3. What is questioned in the reassessment proceedings is the veryeligibility of deduction under section 80HH of the Act, but not the issueof allowing deduction under section 80HH of the Act. The stand of theassessing officer in rejecting the claim of the petitioner is correct.The writ petition is liable to be dismissed. 4. Heard the learned counsel for the respective parties. The entiredispute revolves on the short point, whether the immunity under the KarVivad Samadhan Scheme gets affected by the reopening of assessment, and toappreciate the same in proper perspective, it is apt to refer the relevantportion of Section 90 of the Finance (No.2) Act,1998, which reads asunder: "90. Time and manner of payment of tax arrear- (1) Within sixtydays from the date of receipt of the declaration under section88, the designated authority shall, by order, determine theamount payable by the declarant in accordance with theprovisions of this Scheme and grant a certificate in such formas may be prescribed to the declarant setting forth therein theparticulars of the tax arrear and the sum payable after suchdetermination towards full and final settlement of tax arrears: Provided that where any material particular furnished in thedeclaration is found to be false, by the designated authority atany stage, it shall be presumed as if the declaration was nevermade and all the consequences under the direct tax enactment orindirect tax enactment under which the proceedings against thedeclarant are or were pending shall be deemed to have beenrevived: Provided further that the designated authority may amend thecertificate for reasons to be recorded in writing. (2) The declarant shall pay the sum determined by thedesignated authority within thirty days of the passing of anorder by the designated authority and intimate the fact of suchpayment to the designated authority along with proof thereofand the designated authority shall thereupon issue thecertificate to the declarant. (3) Every order passed under sub-section (1), determiningthe sum payable under this Scheme, shall be conclusive as to thematters stated therein and no matter covered by such order shallbe reopened in any other proceeding under the direct taxenactment or indirect tax enactment or under any other law forthe time being in force." 5. The contention of the learned counsel for the petitioner that theorder passed under section 90(1) of the Finance (No.2) Act, 1998 isconclusive and no matter covered by such order shall be reopened in anyother proceedings appears to be correct, but, a reading of the section 90(1), more particularly, the provisos to the said section would give a wider meaning, viz., the designated authority can revive the proceedingsif any material furnished in the declaration is found to be false and hemay amend the certificate for reasons to be recorded in writing.Therefore, it cannot be stated that the matter covered by the order undersection 90(1) of the Finance (No.2) Act, 1998 shall not be revived. 6. The Apex Court in Killick Nixon Ltd. v. Deputy C.I.T. (258 ITR627) held as under: wider meaning, viz., the designated authority can revive the proceedingsif any material furnished in the declaration is found to be false and hemay amend the certificate for reasons to be recorded in writing.Therefore, it cannot be stated that the matter covered by the order undersection 90(1) of the Finance (No.2) Act, 1998 shall not be revived. 6. The Apex Court in Killick Nixon Ltd. v. Deputy C.I.T. (258 ITR627) held as under: "As far as the provisions of the Kar Vivad Samadhan Scheme areconcerned, we agree with the contention of the learned seniorcounsel for the assessee that the order to be made by thedesignated authority under section 90 is a considered orderwhich is intended to be conclusive in respect of tax arrears andsums payable after such determination towards full and finalsettlement of tax arrears. Once the declarant makes payment ofthe amount so determined under section 90, the immunity undersection 91 springs into effect. We are also of the view thatupon such declaration being made, tax arrears being determined,paid and certificate issued under the Kar Vivad Samadhan Scheme,there is no jurisdiction for the Assessing Officer to reopen theassessment by a notice under section 143 of the Act except wherethe case falls under the proviso (2) of sub-section (1) ofsection 90 as it is found that any material particular furnishedin the declaration is found to be false." (Emphasis supplied) 7. In the present case, the reopening of assessment was made to decidethe question of eligibility of the petitioner for deduction under section80HH of the Act, which material was not available before the designatedauthority while granting certificate under section 90(1) of the Finance(No.2) Act, 1998. While availing the benefit of the Kar Vivad SamadhanScheme, the petitioner had not made any declaration as to its eligibilityto claim deduction under Section 80HH of the Act. Therefore, thedeclaration of the petitioner has to be presumed as if it was never madeand consequently, the petitioner cannot claim that the matter should notbe reopened, as it is a case falling under the provisos to section 90(1)of the Finance(No.2) Act, 1998. 8. In this view of the matter, we hold that the respondent isjustified in reopening the assessment and deciding the tax liability ofthe petitioner by the order impugned in this writ petition. 9. In fine, the writ petition stands dismissed. No costs. It is opento the petitioner to challenge the demand of tax, if it is so advised, inaccordance with law. Sd/-Asst. Registrar. /true copy/ Sub Asst. Registrar.na. ToThe Assistant Commissioner of Income-tax,company Circle III(2), Chennai-34.+ 1 CC To Mrs.Pushya sitaraman, Advocate SR NO. 12033+ 1 CC To Mr. R.Venkatanarayanan, Advocate SR NO. 11800W.P.No.12607 of 2003mj[co]gp/20.3.