Wa/591/2006 Of S.shaffi Muysaliar v. Prescribed To The Declarant Setting Forth Therein The Particulars Of The Tax Arrear And The Sum Payable After Such Determination Towards Full And Final Settleme

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE ACTING CHIEF JUSTICE MR.J.B.KOSHY & THE HONOURABLE MR. JUSTICE P.BHAVADASAN TUESDAY, THE 10TH FEBRUARY 2009 / 21ST MAGHA 1930 WA.No. 591 of 2006() ---------------------------- AGAINST THE JUDGEMENT/ORDER IN OP.20448/2000 DATED 06/10/2005 .................... APPELLANTS/LEGAL REPRESENTATIVES OF THE PETITIONER IN THE WRIT PETITION. ---------------------------------------------------------------------------------------------------------------------------- 1. S.SHAFFI MUSALIAR, S/O.LATE A.M.SAINALABDEEN MUSALIAR, M/S.ZAINAL CASHEW PACKERS, KILIKOLLOOR, KOLLAM. 2. S.NAJUMUDHEEN MUSALIAR, S/O.LATE A.M.SAINALABDEEN MUSALIAR, M/S.ZAINAL CASHEW PACKERS, KILIKOLLOOR, KOLLAM. 3. S.ASHKAR KHAN MUSALIAR, S/O.LATE A.M.SAINALABDEEN MUSALIAR, M/S.ZAINAL CASHEW PACKERS, KILIKOLLOOR, KOLLAM. 4. S.AYOOB KHAN MUSALIAR, S/O.LATE A.M.SAINALABDEEN MUSALIAR, M/S.ZAINAL CASHEW PACKERS, KILIKOLLOOR, KOLLAM. BY ADV. MR.K.I.MAYANKUTTY MATHER MR.SUNIL SHANKER RESPONDENTS/RESPONDENTS. ---------------------------------------------- 1. THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. 2. THE ASSISTANT COMMISSIONER, INCOME TAX CIRCLE I, QUILON. ADV. MR.GEORGE K. GEORGE, SC FOR IT MR.JOSE J., SC FOR IT THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 10/02/2009,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J.B.KOSHY, Ag.C.J. & P.BHAVADASAN, J. -------------------------------------- W.A.No.591 of 2006------------------------------------- Dated 10[th] February, 2009JUDGMENT Koshy, Ag.C.J. The predecessor in interest of the appellants was anassessee of the income tax. He was doing the business of import andexport of cashew. Assessment of income tax for the assessmentyears 1990-91, 1991-92 and 1993-94 was completed and arrears withinterest were due for payment. While demands were pending,Central Government introduced a scheme called `Karvivad SamadhanScheme, 1998 by Finance Act 2 of 1998 with a view to provide achance to the assessee to pay off the arrears at a compounded ratewith substantial concessions. It is contended that under the saidscheme an assessee who is in arrears of tax i.e., principal part of taxand interest and penalty as on 31.3.1998 would be able to settle thearrears by paying 35% of the tax only, to wipe off the whole liabilityunder the heads of tax, interest and penalty. Similarly, an assesseewho is in arrears of interest or penalty as on 31.3.1998 can settle theliability by paying 50% of such arrears. Petitioner approached thefirst respondent for availing the benefits under the KarvivadSamadhan Scheme. Petitioner claimed only the offer to pay 50% of W.A.591/2006 the amount as if there was no arrears of tax. Assessment was madeand the amount fixed as per Ext.P7 was paid. Thereafter, thesettlement amount was modified as interest payable up to 31.3.1998under section 220(2) of the Income Tax Act which was not included inExt.P7 demand raised based on the declaration furnished by theassessee. The amount originally fixed and settled was an interestpayable under section 234(B) and section 234(C) of the Income TaxAct for all the above years on the basis of the declaration filed by him.Since the petitioner has admittedly not included interest underSection 220(2) for settlement under Karvivad Samadhan Scheme, thedeclaration was defective in as much as full liability was not shownthere for settlement. Therefore, further demand was issued. It iscontended that once a claim is settled, no further demands can bemade and also relied on the decision of the Supreme Court inSmt.Sushila Raniv. Commissioner of Income Tax and another((2002) 253 ITR 775). It is further contended that if it is re-opened,the entire matter should be reopened under the Karvivad SamadhanScheme. In this connection, we refer to section 90 of The Finance(No.2) Act, 1998 (Ext.P1) which reads as follows: “90. Time and manner of payment of taxarrear.- (1) Within sixty days from the date ofreceipt of the declaration under section 88, thedesignated authority shall, by order, determinethe amount payable by the declarant inaccordance with the provisions of this Schemeand grant a certificate in such form as may be prescribed to the declarant setting forth thereinthe particulars of the tax arrear and the sumpayable after such determination towards fulland final settlement of tax arrears: Provided that where any materialparticular furnished in the declaration is foundto be false by the designated authority at anystage, it shall be presumed as if the declarationwas never made and all the consequences underthe direct tax enactment or Indirect taxenactment under which the proceedings againstthe declarant are or were pending shall bedeemed to have been revived: Provided further that the designatedauthority may amend the certificate for reasonsto be recorded in writing. (2) The declarant shall pay the sumdetermined by the designated authority withinthirty days of the passing of an order by thedesignated authority and intimate the fact ofsuch payment to the designated authority alongwith proof thereof and the designated authorityshall thereupon issue the certificate to thedeclarant. (3) Every order passed under sub-section(1), determining the sum payable under thisScheme, shall be conclusive as to the mattersstated therein and no matter covered by suchorder shall be reopened in any other proceedingunder the direct tax enactment or indirect taxenactment or under any other law for the timebeing in force.” That shows that if there is any defect in the materials, declarationshall be treated as not a declaration at all. If that be so, evenwithout giving benefit under the Karvivad Samadhan Scheme,department can proceed with the assessment. Here, admittedly, the W.A.591/2006 petitioner did not include interest. Therefore, instead of making fullassessment rejecting declaration in toto, second proviso to section 90of the Finance Act was used and only amended certificate was issuedfor the reasons stated. In fact, what was done was that petitionerthough given the benefit of Karvivad Samadhan Scheme correctedthe settlement amount by including interest which ought to have beenincluded by the petitioner in the declaration. The mistake happeneddue to the wrong declaration filed by the petitioner. But, the learnedJudge found that for 1993-94, the amount has to be corrected in termsof Karvivad Samadhan Scheme taking into consideration that arrearsincluded tax also. No appeal was filed by the department against thatdirection. We are of the view that since the mistake happened due tothe wrong declaration made by the petitioner, department wascompetent to amend the certificate as provided under second provisoto section 90 and no interference is required in the impugnedjudgment at the instance of the assessee. The appeal is dismissed. J.B.KOSHY ACTING CHIEF JUSTICE P.BHAVADASAN JUDGE