Wp/1256/1999 Of Mina Fusade v. Shibaji Dash Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1256 OF 1999. Ms.Mina Fusade,legal heir of the latePrince Sayajirao Gaekwar,having her address atC/o.M/s.Y.K.Bhagwagar & Co.,Ador House, 6th Floor,6, K.Dubash Marg,Mumbai- 400 001. V/s. 1. Mr.Shibaiji Dash,the Commissioner of Income-taxMumbai City-XIII, having hisoffice at Room No.469,Aayakar Bhavan, Maharshi KarveRoad, Mumbai- 400 020. 2. The Income-tax AppellateTribunal, constituted by theCentral Government underSection 252(1) of the IncomeTax Act, 1961 and having itsoffice at the old CGO Bldg.,4th floor, Maharshi Karve Road,Mumbai- 400 020. 3. The Union of India. ... Petitioner. ... Respondents. Nitesh Joshi i/b. Arun Sapkal & Co.for the petitioner. Ashok Kotangale for the respondents. CORAM : V.C.DAGA AND J.P.DEVADHAR, JJ. RESERVED ON :11th October 2005. PRONOUNCED ON : 25th October 2005. JUDGMENT : (Per V.C.Daga, J.)-------- .The petitioner in this petition seeks to challenge action of respondent No.1 rejecting the mind and is contrary to the provisions of KVS Scheme. Factual Scenario :---------------- 2.The factual scenario giving rise to the present petition in nutshell is as under: presently residing in Monaco in the South of France. limitation, the copy of which was received by the petitioner on 1st January, 1999. 6. That prior to the receipt of copy of the declarations and the petitioner, therefore, was not eligible for being admitted under the KVS Scheme. 7.Being aggrieved by the order passed by the on 21st and 22nd January, 1999 not only against the refusal to condone delay but also on merits. 8.On 28th January, 1999, the petitioner by the deceased which were subject matters of appeals filed before the Tribunal on 21st and 22nd January, 1999 as stated hereinabove. the petitioner for condonation of delay, did not amount to appeals "pending" against the orders of assessment. 226 of the Constitution of India. Submissions : declarations under KVS Scheme was apparently erroneous and contrary to the record. 12.According to Mr.Joshi, disqualification under section 95(i)(c) of the Finance Act appliesonly to the case where no appeal is pending beforethe appellate authority. He submits that if theassessee has an appeal pending before any appellateauthority, then he is eligible for the benefit ofKVS Scheme irrespective of the grounds raised insuch appeal. He, therefore, submits that evenassuming, whilst denying, that the petitioner hadchallenged the orders of the first appellateauthority dated 29th December, 1998 only on theground that it had erred in not condoning thealleged delay in filing such appeals and not onmerits, even then, the petitioner could not bedisqualified under the provisions of section95(i)(c) of the Finance Act. In his submission,there were validly presented because there weresubsisting appeals; filed by the petitioner beforethe Tribunal. He further submits that respondentNo.1 has admitted and acknowledged in the impugnedorder that the appeals of the petitioner were verymuch pending before the Tribunal. In that view ofthe matter, he submits that the impugned order is unsustainable and the same is liable to be quashed and set aside. ground that the appeal was barred by limitation was a decision in appeal. The Apex Court held: which had applied the principle stated in Mela Ram & Mela Ram & Sons case (supra). of limitation, was nothing but refusal to set aside the award. principle the impugned order refusing to accept thedeclarations made by the petitioner in respect ofassessments of the deceased is liable to be quashed and set aside and the declarations are liable to be held as legal and valid. Per Contra :---------- unsustainable and the same is liable to be quashed and set aside. ground that the appeal was barred by limitation was a decision in appeal. The Apex Court held: which had applied the principle stated in Mela Ram & Mela Ram & Sons case (supra). of limitation, was nothing but refusal to set aside the award. principle the impugned order refusing to accept thedeclarations made by the petitioner in respect ofassessments of the deceased is liable to be quashed and set aside and the declarations are liable to be held as legal and valid. Per Contra :---------- 16.Mr.Kotangale, learned counsel appearingfor the Revenue submits that an appeal could not besaid to be pending in absence of order condoningdelay in filing it. In his submission, in theinstant case, delay in filing appeals had not beencondoned as no ground for its condonation was made out by the petitioner, as such the declarations were rightly not entertained and rejected. 17.Learned counsel for the Revenue, relyingupon the decision of three judges Bench of the ApexCourt in the case of Computwel Systems P.Ltd. v.W.Hasan , & anr.(2003) 260 ITR 86, submits that anappeal can be treated as regular appeal only whenthe delay in filing appeal is condoned. In theinstant case, the limitation in preferring appealshaving not been condoned by the first appellateauthority the appeals filed before it were not competent, hence, no appeals were pending on the date when the declarations were made. declarations filed by the petitioner under KVS Scheme. support the impugned order and prayed for dismissal of the petition. 22.Learned counsel for the petitioner further rejecting declarations under KVS Scheme is liable to be quashed and set aside. 23. Learned counsel for the petitioner, The Issue :--------- Emerging Principles : ------------------- ------------------- observations made by the Privy Council read as under: "there is no definition of appeal in theCivil Procedure Code, but their Lordshipshave no doubt that any application by aparty to an appellate Court, asking it toset aside or revise a decision of a others v. The State of Bombay, 1954 SCR 384. and finally decided on the merits, whatever may be the ground for dismissal of the appeal. Court further went on to observe that if section39(1)(vi) and section 17 of the Arbitration Act areread together, it would follow that application forsetting aside the award which was rejected on theground that it was delayed and that no sufficient cause had been made out under section 5 of the Limitation Act would be an appealable order. 30.In the case of Shatrushailya DigvijaysinghJadeja(supra), the Apex Court was dealing with theKVS Scheme; wherein, in respect of assessment years1984-85 to 1991-92, the assessee was held liable topay tax under assessment orders passed under section143(3) of the Income-tax Act, 1961 and also underthe assessment orders passed under the Wealth-taxAct, 1957. Being aggrieved by the assessmentorders, the assessee therein, had preferred appealsto the Commissioner (Appeals). The appeals were,however, dismissed in the year 1992-93 as theappellants did not make pre-deposit and failed topay self-assessed tax. The Finance Act introducedKVS Scheme. The appellants filed appeals andrevisions on 28/29th December, 1998 along withapplications for condonation of delay and appliedfor settlement of tax dues under the KVS Scheme bymaking requisite declarations. The designated authority rejected declarations made by the assesseein relation to the revision applications. On a writpetition preferred by the assessee the High Courtheld that the word "pending" appearing in section95(i)(c) of the Finance Act, in relation to revisionproceedings meant "factually pending" and the factthat the revision petitions were not filed withinthe period of limitation did not detract from thefact that the proceedings were pending and thedesignated authority was directed to accept thedeclarations. The Apex Court, on appeal by thedepartment, confirmed the decision of the High Courton this count observing that the mere fact that therevision applications were filed beyond the periodof limitation and might result in rejection on theground of delay did not follow that there were norevision applications pending before theCommissioner (Appeals). The orders of the designated authority rejecting declarations were held to be bad and illegal. 31.The Apex Court, while taking survey of previous judgments, relied upon its own judgment inthe case of Dr.Mrs.Renuka Datla v. , C.I.T.(2003)259 ITR 258 (SC); wherein the Apex Court hadinterpreted section 95(i)(c) of the KVS Scheme; wherein it was held that if the appeal or revisionis pending on the date of filing of the declarationunder section 88 of the Scheme, it was not open tothe designated authority to hold that theappeal/revision was sham, ineffective orinfructuous. The Apex Court has also relied uponits other judgments delivered in the case of RajaKulkarni(supra) and Tirupati Balaji Developers (P)Ltd. v. , State of Bihar(2004) 5 SCC 1; wherein it was held that the an appeal does not cease to be an appeal though irregular and incompetent. 32.In the judgment of three judge Bench ofthe Apex Court in the case of Computwel SystemsP.Ltd.(supra), the factual scenario depicts that adelayed revision petition filed under section 264 ofthe Income-tax Act came to be dismissed for want ofcondonation of delay. The Commissioner, thus, didnot entertain the declaration made by the petitionerunder the KVS Scheme. The writ petition filed inthe High Court came to be dismissed. On a petitionfor special leave to appeal the Apex Court whileaffirming the decision of the Commissioner anddismissing the petition for special leave held thatthe revision petition could be said to be pendingonly if the delay had been condoned and, since the delay was not condoned, the revision petition was not pending on the date of the declaration and the declaration could not be entertained. 33. One more judgment of the Apex Court in the though restricted in its scope was held to be tenable. 34.In the case of Raja Mechanical Company Beecham Co. Health C.Ltd. (supra). independent of the above judgments. Consideration : ------------- action. Let us, therefore, examine to what extentthis case helps the Revenue. In that case, therevision petition itself was barred by limitation.Since the delay was not condoned, the revisionpetition was held as not pending on the date of declaration; as such it was held that declaration was not maintainable. 37.In Shatrushailya Digvijaysingh Jadeja(supra), appeal was pending for consideration ofprayer seeking condonation of delay. In otherwords, the prayer for condonation of delay wasneither granted nor rejected. In that view of thematter, the Apex Court held that the appeal was verymuch pending though it was delayed.38.We do not see any conflict of views inthree judge Bench decision of the Apex Court inComputwel Systems P.Ltd.(supra) and two judgeBench decision in Shatrushailya Digvijaysingh Jadeja(supra). As a matter of fact, in the case ofShatrushailya Digvijaysingh Jadeja, earlier judgmentin the case of Computwel Systems P.Ltd.has been,specifically, referred by the Apex Court but no suchconflict was noticed by it. 39.In the case athand, the very appeals, which were pending before 37.In Shatrushailya Digvijaysingh Jadeja(supra), appeal was pending for consideration ofprayer seeking condonation of delay. In otherwords, the prayer for condonation of delay wasneither granted nor rejected. In that view of thematter, the Apex Court held that the appeal was verymuch pending though it was delayed.38.We do not see any conflict of views inthree judge Bench decision of the Apex Court inComputwel Systems P.Ltd.(supra) and two judgeBench decision in Shatrushailya Digvijaysingh Jadeja(supra). As a matter of fact, in the case ofShatrushailya Digvijaysingh Jadeja, earlier judgmentin the case of Computwel Systems P.Ltd.has been,specifically, referred by the Apex Court but no suchconflict was noticed by it. 39.In the case athand, the very appeals, which were pending before the Tribunal, were well within limitation thoughthey were against the order refusing to condonedelay. Such appeals were competent appeals, in viewof the judgments of the Apex Court in the case ofEssar Constructions(supra) and Smithkline Beecham Co. Health C.Ltd. (supra), though the scope of the appeal was restricted. 40.The appeals filed before the Tribunal were very much competent and tenable. Ultimately, theappeals have been allowed. The delay in filingappeals before the first appellate authority came tobe condoned. As such presentation of appeals filedbefore the first appellate authority against theorders giving rise to tax arrears became competent.Had there been a refusal to condone delay by theTribunal, the orders rejecting declarations filed bythe petitioner under KVS Scheme would have beenjustified in view of the decision of the Apex Courtin the case of Computwel Systems P.Ltd.(supra).The factual scenario of the presence case at hand isaltogether different than what was noticed by the Apex Court in the case of Computwel Systems P.Ltd. (supra) 41. Considered from another angle, as pointed out hereinabove, the appeals challenging the ordersrefusing to condone delay, were pending before theTribunal. Such appeals were perfectly maintainableunder the provisions of the Act under which theywere preferred. The case at hand stands on littlebetter footing than that of ShatrushailyaDigvijaysingh Jadeja(supra) decided by the ApexCourt; wherein the Apex Court held that revisionpetition which was filed beyond the period oflimitation along with prayer for condonation ofdelay was perfectly maintainable in the eye of law.In this view of the matter, applying the ratio ofthe said judgment, in our considered view, on thedate on which second declarations were filed by thepetitioner, the appeals before the Tribunal werevery much pending and the declarations under KVS Scheme were very much in accordance with the Scheme. 42. The four judge Bench in Sheodan Singh v. Daryao Kumar(supra), had an occasion to consider asimilar question "whether dismissal of an appealfrom a decree on the ground that the appeal wasbarred by limitation was a decision in the appeal".While considering this question, it was held thatsuch appeal was very much competent. Same view has been followed by three judge Bench of the Apex Court in Shyam Sundar Sarma’s case (supra) the KVS Scheme after getting intimation fromrespondent No.1, who shall communicate the samewithin 30 days from the date of receipt of copy ofthis order..Rule is made absolute in terms of this order with no order as to costs. (J.P.DEVADHAR, J.)(V.C.DAGA, J.)