P.r.thangavelu v. The Commissioner Of Income Tax-Iii,67A, Race Course Road,Coimbatore-18

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM P.R.Thangavelu .. Petitioner Versus The Commissioner of Income Tax-III,67A, Race Course Road,Coimbatore-18. .. Respondent Prayer: Petition filed under Article 226 of the Constitutionof India, seeking for a Writ of Mandamus to direct theRespondent to refund a sum of Rs.76,292/- being the differencebetween Rs.1,08,558/- paid by the Petitioner on 25.03.1999 asper the directions of this Hon'ble Court in W.M.P.No.7050 and7053 of 1999 in W.P.No.4893 and 4894 of 1999 dated 24.03.1999and Rs.32,266/- payable by the Petitioner under KVSS as perthe revised Form 2A dated 21.09.2001 issued by the Respondentafter giving effect to the Order of this Hon'ble Court dated23.02.2001 in W.P.No.4893 and 4894 of 1999. Heard Mr.M.P.Senthil Kumar, learned counsel appearing forthe petitioner and Mr.S.Rajasekar, learned Standing Counselappearing for the respondent Department. 2. In this writ petition, the petitioner seeks for adirection upon the respondent to refund a sum of Rs.76,292/-being the difference between Rs.1,08,558/- paid by thepetitioner on 25.03.1999, as per the direction of this Courtin W.M.P.Nos.7050 and 7053 of 1999 in W.P.Nos.4893 and 4894 of1999 dated 24.03.1999 and Rs.32,266/- payable by thepetitioner under Kar Vivad Samadhan Scheme Rules, 1998 (KVSSRules) as per the revised Form 2A dated 21.09.2001 issued bythe respondent after giving effect to the final order passedin W.P.No.4893 and 4894 of 1999 dated 23.02.2001. 3. The petitioner filed declaration under section 89 ofthe Finance (No.2) Act, 1998 in respect of the KVSS, in Form-1A as per Rule 3(1)(a) of the KVSS Rules 1998, before therespondent, who is the Designated Authority, on 28.12.1998 forhttps://hcservices.ecourts.gov.in/hcservices/the assessment year 1985-86. 4. The petitioner in the said declaration stated that theassessed total income is Rs.6,33,390/- and the amount payableas per the assessment order is Rs.5,77,795/-, which is made upof tax in a sum of Rs.3,69,690/- and interest in a sum ofRs.2,08,105/-; tax arrears outstanding as on 31.03.1998 beinginterest amount to Rs.1,84,601/-. However, the tax arrearsoutstanding as on the date of declaration under Section 88 wasdeclared as consisting of the tax of Rs.626/- being the tax onincome of Rs.39,000/- and interest of Rs.1,72,978/-; thedisputed income was declared as Rs.1,89,000/- and thepetitioner arrived at the amount payable under the scheme asRs.400/-. 5. The respondent issued an intimation under Section 90(1) of Finance (No.2) Act, 1998, in respect of the KVSS anddetermined the amount payable by the petitioner at Rs.3,13,635as against the amount of Rs.400/- as per the statement of thepetitioner. 6. The petitioner filed a petition dated 26.02.1999 forclarification to treat the sum of Rs.78,000/- as income, whichdispute has been remanded back to the Commissioner of IncomeTax (Appeals) by the Income Tax Appellate Tribunal (ITAT) byorder dated 24.03.1998 and this sum has to be allocatedbetween two years 1985-86 and 1986-87 i.e., 39,000/- eachyear. Since the clarification given by the petitioner did notfind favour with the designated authority, the petitionerfiled Writ Petitions before this court in W.P.No.4893 and 4894of 1999 setting out all the facts, and interim order wasgranted in the said Writ Petition in W.M.P.No.7050 and 7053 of1999 dated 24.03.1999, directing the petitioner to pay 50% ofthe interest arrears. Accordingly, the petitioner had paid asum of Rs.92,300/- for the assessment year 1985-86 andRs.16,258/- for the assessment year 1986-87 and in allRs.1,08,558/-. After which the Writ Petitions were taken upfor final disposal and the Writ Petitions were allowed by anorder dated 23.02.2001 and the operative portion of the orderreads as follows: “..... 5. Learned Counsel for the Revenue,however, submitted that the view taken by theRevenue is in accordance with the Law laid downin the case of Dr.Mrs.Renuka Datia vs.Commissioner of Income Tax and another (240T.T.R. 463). With respect to the learned Judgeswho decided that case, I am unable to subscribeto the view taken by them that the fact that anassessment made before 31.03.1998 had been setaside and the re-determination was still to bedone, at the time the scheme was in force,would disentitle the assessee from claiming thebenefit of that scheme. https://hcservices.ecourts.gov.in/hcservices/ 6. It is not the person who took thematter in appeal, or the fact of that matterhaving been remanded without being finallydecided, or the fact of the re-determinationnot having been made after the remand, that isrelevant. What is relevant is that thedetermination of the tax had been made prior to31.03.1998 in an order of assessment. Thesubsequent developments with regard to appeal,remand and re-determination will not affect thefact that the tax had been determined prior to31.03.1998. The Writ Petitions are therefore,allowed.” 7. The Revenue accepted the order and no appeal waspreferred by them. Consequently, the respondent, by way ofimplementation of the order based on the Writ Petitions,passed an order on 21.09.2001, stating that there is areduction in demand being a sum of Rs.2,97,627/-. Thereafter,the respondent issued a Form of Certificate for full and finalsettlement of the tax arrears under Section 90(2) read withSection 91 of the Finance (No.2) Act, 1998 in respect of KVSS,dated 22.10.2002. 8. The petitioner submitted a representation dated28.10.2002 stating that they paid Rs.1,08,558/-, as per theinterim order in the earlier Writ Petitions and as per thefinal order, the amount payable is only Rs.32,266/-. Hence,the petitioner requested for refund of the balance amount ofRs.76,292/-. This has been rejected by the impugned orderstating that no refund of tax paid pursuant to thedeclaration, is permissible as per Section 93 of the FinanceAct, 1998 under KVSS. Section 93 of the Finance Act statesthat any amount paid in pursuance of the declaration madeunder Section 88, shall not be refundable under anycircumstances. However, in the instant case, the factualposition is clear that the amount paid by the petitioner, isRs.1,08,558/-. No amount was paid in pursuance of thedeclaration made under Section 88. But the said amount waspaid as per the interim direction issued by the Court in theearlier Writ Petitions. It is settled legal principle thatamount which is tendered pursuant to the interim direction,shall abide by the final order in the Writ Petition. 9. Therefore, even assuming the expression “paid” isused, it would still be construed as the payment effected bythe petitioner without prejudice to the outcome of the writpetition. If such interpretation is not given, then the verypurpose of granting interim orders would stand defeated. 10. Under normal circumstances, the respondent would bejustified in stating that no refund is payable on any amounthttps://hcservices.ecourts.gov.in/hcservices/paid pursuant to the declaration made under Section 88, in the 9. Therefore, even assuming the expression “paid” isused, it would still be construed as the payment effected bythe petitioner without prejudice to the outcome of the writpetition. If such interpretation is not given, then the verypurpose of granting interim orders would stand defeated. 10. Under normal circumstances, the respondent would bejustified in stating that no refund is payable on any amounthttps://hcservices.ecourts.gov.in/hcservices/paid pursuant to the declaration made under Section 88, in the light of the statutory embargo under Section 93. However, thefacts of the present case are different and amount has beenpaid based on interim direction. The further fact which has tobe taken note of is that the petitioner succeeded in theearlier petitions, which were allowed by order dated23.02.2001 and the said order was implemented by giving effectto the stay order and the Department passed consequentialorder on 21.09.2001, wherein it has been stated that there isa reduction in the demand of Rs.2,97,627/-. That apart, thecase also having been settled under the KVSS, the petitioneris entitled for refund of the excess amount paid as per theactual amount payable as per the revised demand pursuant tothe order passed in the earlier Writ Petitions. 11. Accordingly, the Writ Petition is allowed and theimpugned order is set aside and the respondent is directed torefund the excess amount paid by the petitioner, viz.,Rs.76,292/-. However, the plea for interest stands rejected. The above direction shall be complied with by therespondent within a period of four weeks from the date ofreceipt of copy of this order. No cots. Sd/- Asst.Registrar (J) /true copy/ To Sub Asst. Registrar The Commissioner of Income Tax-III,67A, Race Course Road,Coimbatore-18. +1 cc to Mr.T.Pramodhkumar,advocate,sr.51736. vd(co)krd 28/9