Rajinder Mohan Singh v. Commiussioner Of Income Tax (Appeals, Amritsar And Others

IN THE HIGH COURT FOR THE STATES OF PUNJAB ANDHARYANA AT CHANDIGARH CWP No.2956 of 1999Date of decision: February 21, 2014. Rajinder Mohan Singh Petitioner V. Commiussioner of Income Tax (Appeals, Amritsar and others Respondents CORAM:HON'BLE MR. JUSTICERAJIVE BHALLAHON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present:Shri S.C. Nagpal, Advocate, for the Petitioner.Shri Denesh Goyal, Advocate for therespondents §_J Dr. Bharat Bhushan Parsoon The petitioner seeks issuance of a writ in the nature ofcertiorar1 for quashing order dated 27.1.1999 (Annexure P-2)whereby case of the petitioner-assessee under the |Kar VivadSamadhan Scheme, 1998 (hereinafter referred to as the Scheme), hadbeen rejected by the respondents. ? The matter pertains to the assessment year 1994-95. Asearch and seizure operation was carried out by the revenue on25.8.1993 wherein the petitioner had disclosed a sum of Rs.6.00 lacsin the current year as income of unaccounted stock lying at hisbrick-kiln. Subsequent to the date of search, scrutiny assessment 1n|case of the petitioner for assessment years 1992-93 and 1993-94 wascompleted. While framing assessment under Section 143(3) of theIncome Tax Act, 1961 (in short, the Act) for the assessment year1994-95, on 19.3.1997 an amount of Rs.6.00 lacs was added to the CWP? No.2956 of 199 income of the petitioner. In appeal preferred by the petitioner,Commissioner of Income Tax (Appeals) on 26.9.1997 set aside theassessment order and remitted the matter to the Assessing Officer forfresh adjudication. Dissatisfied with this order, the petitionerpreferred an appeal before the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar which was pending till filing of thispetition. | 3)Short question posed for an answer 1s as to whether thepetitioner 1s covered under the Scheme and if yes, whether theimpugned order (Annexure P-2) 1s unsustainable? 4It 18 a conceded fact that to be covered under theScheme, compliance with following conditions was necessary:- “I. Tax arrears should have been determined on or before3/.3.1998,3/.3.1998, 2. The tax arrears should be outstanding as payable on 31.3.1998)and also on the date ofmaking declaration.and also on the date ofmaking declaration. 3. The tax arrears must have been disputed in writ, appeal orreference etc. before the appropriate appellate authority, at thetime ofmaking the declaration.reference etc. before the appropriate appellate authority, at thetime ofmaking the declaration. 4. The writ, appeal or reference etc. should be in time, admittedandpending at the time ofmaking the declaration. ”andpending at the time ofmaking the declaration. ” 4 Declaration (Annexure P-1) made by the petitioner on24.12.1998 under the Scheme for the assessment year 1994-95 wasrejected by the respondents vide impugned order (Annexure P-2) onthe ground that case of the petitioner was not covered under theScheme as no tax arrears were due from the petitioner either on31.3.1998 or at the time of making of the declaration. 6.Plea of the assessee 1s that notwithstanding the fact ofsetting aside of assessment order 1n appeal on 26.9.1997, he washable to pay tax, though quantum of the same _ had not been determined. It is pleaded that even appeal against the order of26.9.1997 was pending before the Tribunal, TdPer contra, contention of the revenue 1s that whenneither there was determination of tax due from the petitioner northere were any arrears outstanding against him and additionally, itsrefund had been made pursuant to order in appeal of 26.9.1997 ofCommissioner of Income Tax (Appeals), Amritsar, the petitioner wasnot covered under the Scheme and thus, there was no applicability ofthe Scheme to the case of the petitioner, 6.Plea of the assessee 1s that notwithstanding the fact ofsetting aside of assessment order 1n appeal on 26.9.1997, he washable to pay tax, though quantum of the same _ had not been determined. It is pleaded that even appeal against the order of26.9.1997 was pending before the Tribunal, TdPer contra, contention of the revenue 1s that whenneither there was determination of tax due from the petitioner northere were any arrears outstanding against him and additionally, itsrefund had been made pursuant to order in appeal of 26.9.1997 ofCommissioner of Income Tax (Appeals), Amritsar, the petitioner wasnot covered under the Scheme and thus, there was no applicability ofthe Scheme to the case of the petitioner, § For applicability of the Scheme, the tax arrears wererequired not only to be determined on or before 31.3.1998, but suchtax arrears should also have been outstanding as payable as on31.3.1998 and should also have been outstanding on the date ofmaking of the declaration. When declaration of the petitioner isexamined in the interface of essential conditions for applicability ofthe Scheme, it clearly emerges that on the date of declaration neitherthere was determination of tax nor there were any such arrearsoutstanding against the petitioner. Q Declaration was made on 24.12.1998, whereas theassessment which was made vide order dated 19.3.1997, had been setaside on 26.9.1997 by Commissioner of Income Tax (Appeals),Amritsar. It had resulted in issuance of refund voucher ofRs.23,452/- to the petitioner. 10.Contention of the petitioner assessee 1s that pendency ofappeal against the appellate order of 26.9.1997 before the IncomeTax Appellate Tribunal 1s a circumstance to be reckoned with forapplicability of the Scheme. This plea has no merit. Mere pendencyof appealipso facto1S not sufficient for application of the Scheme to} CWP? No.2956 of 199 the case of the petitioner because there was neither determination ofarrears of tax nor there were any tax arrears outstanding against thepetitioner on the relevant date, 1.e., 31.3.1998. 11.It remains a tact that there were no arrears of taxoutstanding against the petitioner on 31.3.1998 as also on the date ofmaking of the declaration. Rather, after remand of the case byCommissioner of Income Tax (Appeals), Amritsar, the matter hadremained pending and in fact was lying dormant. 12.Counsel for the petitioner citingAll India Federation ofTax Practitioners v. Union of Inda & Others+(1999) 151 CTR (Delhi)1, has urged that no sub-classification could be made within the classof litigating assessees in arrears merely by reference to the fact thatwhether they were prosecuting the litigation or were defending thesame. Counsel for the petitioner has made reference to para 26thereof, which reads as follows CIn our opinion, no sub-classification can therefore, be made inthe class litigating assessees in arrears merely by reference to thefact whether they are prosecuting the litigation or defendingthemselves. In our opinion, once liability to pay the tax wasincurred and determined on or before 31[St]March, 1998, theassessee would be treated to be in arrears in spite of his havingsucceeded at one stage of litigation if the revenue has chosen tocontinue with litigation and there is no reason why the benefit ofthe scheme should be denied to him. To this extent, the scheme isdiscriminatory and violative ofArticle 14 of the Constitution. Allthe assessees litigating and in arrears belong to one class. Anyattempt at carrying out further classes by reference to who is theprosecutor/appellant/applicant in the pending litigation is void asbased on an intelligible differentia. It is arbitrary, irrational andevasive. It will have the no rational relation to the object soughtto be achieved by the Act. The twin laws laid down in R.K. Garg'scase (supra) would fail. On the other hand keeping them in oneclass would enable the twin objective of legislation beingachieved: (i) the reduction of litigation, and (ii) the realization ofrevenue. | 13.Counsel for the revenue citingDr. Mrs. Renuka Datla v.Commissioner of Income Tax and another+(1999) 240 ITR 463 (AP),Commissioner of Income Tax and another+(1999) 240 ITR 463 (AP), has urged that while considering a provision in a Scheme, interalia,providing for an exception in the form of concession to the taxpayer,should be construed strictly in accordance with the plain languageemployed therein. 14.Support has also been sought by the petitioner fromPRIThangavelu _v. Commissioner of Income Ja+(2001) 250 ITR 492(Madras) wherein, inter-alia, it was held that even after remand, if nodetermination of tax payable had been made, order of assessmentmade prior to 31.3.1998 (irrespective of subsequent developmentswith regard to appeal, remand and re-determination) would not affectthe fact that the tax had been determined prior to 31.3.1998. 15,In the said authority, the term “tax arrears” and “disputedincome” as also “disputed tax” were explained. It was held that interms of Section 87(f), “disputed tax” would mean the total taxdetermined and payable in respect of an assessment order and whichremains unpaid as on the date of making the declaration underSection 8&8 of the Act 16.In almost similar circumstances where there was remandorder and the process of re-determination of tax had started thereafterand on the crucial date, 1.e., 31.3.1998, there were no tax arrears, itwas held as under:- “... Lhe position on March 31, 1998, was that there was nodetermination of tax in so far as the aforementioned disputeditems are concerned. The process ofdetermination of tax vis-a-visthe “set aside” item was in a state ofsuspended animation on thecrucial — March 31, 1998. As rightly observed by theCommissioner of Income Tax, the arrears that is sought to besettled under the scheme arises out ofthe determination made anddemand raised on December 31, 1998, i.e., beyond the crucialdate. ...|determination of tax in so far as the aforementioned disputeditems are concerned. The process ofdetermination of tax vis-a-visthe “set aside” item was in a state ofsuspended animation on thecrucial — March 31, 1998. As rightly observed by theCommissioner of Income Tax, the arrears that is sought to besettled under the scheme arises out ofthe determination made anddemand raised on December 31, 1998, i.e., beyond the crucialdate. ...| XXXXXXXXXXXX ... While construing provisions in a scheme, inter alia, providingfor an exception in the form of concession to the tax prayer, theprovisions Should be construed strictly in accordance with theplain language employed therein ....” 17.Further support by the Revenue has also been soughtfrom JNarula Traders v. Commissioner of Income Jax and another+(2003) 262 ITR 78 (P&H), wherein interpreting tax arrears in termsof the Scheme, it was held that the amount of tax, penalty or interestshould have been determined on or before the 31[% ]day of March,1998 and should have remained unpaid on the date of declaration,from JNarula Traders v. Commissioner of Income Jax and another+(2003) 262 ITR 78 (P&H), wherein interpreting tax arrears in termsof the Scheme, it was held that the amount of tax, penalty or interestshould have been determined on or before the 31[% ]day of March,1998 and should have remained unpaid on the date of declaration, 18.It 1s undisputed that there 1s no determination of taxhability on or before 31.3.1998. Admittedly, no adjudication hadbeen made by the Assessing Officer after the case was remitted tohim vide order of Commissioner of Income Tax (Appeals), Amritsar, 18.It 1s undisputed that there 1s no determination of taxhability on or before 31.3.1998. Admittedly, no adjudication hadbeen made by the Assessing Officer after the case was remitted tohim vide order of Commissioner of Income Tax (Appeals), Amritsar, 19.We are not inclined to give an extended meaning to theterm ‘determination’ used in condition No.! explained in Para No.4(ibid)upon which scope and meaning of condition No.2 thereof alsodepends. Any determination of liability of payment of tax cannot besaid to be surviving for implementation once such order ofdetermination of tax has been set aside, rendering such determinationto be no more 1n existence. We are in respectful disagreement withthe extending meaning of term determination given in the authorityand, therefore, hold that the word “determined” used 1n conditionNo.1ibidof the Scheme would be construed to mean only concludeddetermination by quantification of tax payable by the assessee. 20)On this analogy, the term “tax arrears” 1n condition No.2ibidof the applicability of the Scheme, would mean only such arrearswhich on determination of lability of payment of tax remainoutstanding as payable on 31.3.1998 as also on the date of making ofdeclaration under the Scheme. The term 'tax arrears' would not mean CWP? No.2956 of 199 any non-existent liability which may or may not arise 1n future. Evenfluidity regarding quantum of tax payable is to be taken to bemilitating against the clear and specific term “determined”, referringto tax arrears, which 1s used in conditions No.1! and 2 ibid of thScheme. D1.So far as support fromHansmukhlal Thakordas Dalwalav. Commissioner of Income Tax, Surat and others, 1999 Tax. J.R. 635(Gujarat) sought by the petitioner 1s concerned, facts in the case inhand are entirely different. In the said case, assessments had alreadybeen completed. Application of the assessee under Section 245(D)(1) of the Act, was held to be not barred to seek benefit of theScheme. Concededly, concluded assessment were intact and had notbeen set aside. In the case in hand, there 1s no subsisting assessmentsand sequelly, there 1s no determination of lability of tax payable bythe assessee. Admittedly, there 1s neither tax liability nor tax arrearsoutstanding against the assessee as on 31.3.1998. 2).Keeping in view the totality of facts and circumstancesof the case, declaration Annexure P-1 made by the petitioner assesseeon 24.12.1998 for the assessment year 1994-95 is not covered underthe Scheme. 3|So far as plea of discrimination taken by the petitioneris concerned, it also has no merit because there 1s neither anydiscrimination nor bias nor arbitrariness. If we visualize the entireconcept behind floating of the Scheme by the respondents, it is clearthat the Scheme was sought to cover cases where there were arrearsof tax, those were not being paid and had rather been subject matterof litigation. Claim of the petitioner rather is a result ofmisconstruction and wrong interpretation of the conditions of theScheme. D4.By way of passing reference, it may also be mentionedthat following the judgment of Delhi High Court, the assessees whowanted to make declaration under the Scheme in respect of taxesdetermined against them but the same were subject matter of appealsfiled by the Department, could do so. It may be noticed that prior tothis judgment, as per provisions of the Scheme, the assessee couldfile declaration only in respect of appeal filed by him. This changethus was brought about only qua the appeals filed by the Department.In cases of appeals preferred by the assessees, the declarations wereto be regulated by the existing provisions of the Scheme. DS.In the instant case, declaration filed by the assesseeirrespective of pendency of the appeal before the Tribunal filed byhim, 1s not covered under the provisions of the Scheme as there wereno tax arrears either determined or outstanding at the time of makingof declaration by him. DS.In the instant case, declaration filed by the assesseeirrespective of pendency of the appeal before the Tribunal filed byhim, 1s not covered under the provisions of the Scheme as there wereno tax arrears either determined or outstanding at the time of makingof declaration by him. 26.Consequently, the impugned order does not suffer fromfactual or legal errors. There being no merit in the appeal, the same1S dismissed. |Dr. Bharat Bhushan Parsoon|Judge February 21, 2014.kadyan ||Rajive Bhalla|Judge