Wp/6237/1999 Of Indira Plastics Pvt.ltd v. The Commissioner Of Income Tax

HON'BLE SRI JUSTICE G.CHANDRAIAH& HON’BLE SRI JUSTICE CHALLA KODANDA RAMW.P. No. 6237 of 1999 DATE: 13.02.2014 Between: Indira Plastics Pvt. Ltd. .. Petitioner And The Commissioner of Income-tax and another .. Respondents O R D E R:- (per Hon’ble Sri Justice Challa Kodanda Ram) This writ petition is filed questioning the order dated –26.02.1999 passed by the 1[st]respondent Commissioner of Income-tax who is the designatedauthority under the Kar Vivad Samadhan Scheme, 1998(hereafter referred to as “K.V.S.S.”) intimating thepetitioner - assessee that the declarations filed by theassessee were rejected. The brief facts of the case are set out as below: The petitioner is a Private Limited Company. On31.03.1993, it was assessed to gift tax by the assessingofficer for the assessment year 1989-90 and demanded topay gift tax of Rs.37,266/- and interest of Rs.26,040/-. Being aggrieved by the assessment order, the petitionerpreferred an appeal before the Commissioner of Gift Tax( A p p e a l s - I I ) , Hyderabad through authorizedrepresentative, M/s. M. Anandam & Company CharteredAccountants. As per the averments made in the affidavit,though initially, appeal was addressed to theCommissioner of Gift Tax (Appeals-II), but as theauthorized representative was informed that jurisdiction ofthe appellate authority had undergone a change, the address in the covering letter dated 14.07.1993 of theappeal appeared to have been changed to DeputyCommissioner of Gift Tax (Appeals-II), Hyderabad byadding the word “Deputy” before the words“Commissioner of Gift Tax (Appeals-II)”. The appealpapers were received by the authorities concerned on14.07.1993 and for some reason or the other the appealswere pending as on 31.03.1998. The Finance (No.2) Act, 1998 introduced a Schemecalled Kar Vivad Samadhan Scheme, 1998. Broadly, theScheme makes an offer by the Government for settling taxarrears locked in litigation subject to the provisionscontained in Chapter IV of the Finance Act. The petitionerbeing eligible under the KVSS made a declaration underSections 88/89 of the Finance Act in Form 1(A) to the firstrespondent who is the designated authority under theK.V.S.S. Copy of Form 1(A) declaration under the K.V.S.Sfiled by the petitioner on 29.12.1998 is annexure ‘E’. Thedeclaration made by the petitioner was to settle the taxdues in respect of the pending gift tax appeal. As per theprovisions of the KVSS, the petitioner would have to makepayment of the outstanding tax of Rs.37,266/-. Thereafter, the petitioner received a letter dated26.02.1999 from the first respondent indicating that sincethere was no valid appeal filed by the petitioner before theappropriate appellate authority, the petitioner was notentitled to make a declaration under the K.V.S.S. and the declaration under Section 89 of the Finance (No.2) Act,1998 is never deemed to have been made. Copy of theletter of the first respondent dated 26.02.1999 is annexure‘F’. It is submitted that the letter of the first respondentrejecting the KVSS declaration filed by the petitioner isarbitrary, unjust and illegal. The letter of the firstrespondent does not disclose any reasons whatsoeverwhy the appeal filed by the petitioner is not valid. Thepetitioner filed the appeal within the time limit of 30 daysprescribed under the Gift Tax Act. A counter affidavit is filed on behalf of the declaration under Section 89 of the Finance (No.2) Act,1998 is never deemed to have been made. Copy of theletter of the first respondent dated 26.02.1999 is annexure‘F’. It is submitted that the letter of the first respondentrejecting the KVSS declaration filed by the petitioner isarbitrary, unjust and illegal. The letter of the firstrespondent does not disclose any reasons whatsoeverwhy the appeal filed by the petitioner is not valid. Thepetitioner filed the appeal within the time limit of 30 daysprescribed under the Gift Tax Act. A counter affidavit is filed on behalf of the 1[st] respondent wherein there is no denial of the fact ofreceipt of the appeal through the covering letter dated14.07.1993. However, it is sought to be contended thatinasmuch as there is no Deputy Commissioner of Gift Tax(Appeals-II) in relation to the companies, the appealalleged to have been filed by the petitioner was not filedbefore the competent authority in the eye of law and theappeal addressed to Deputy Commissioner can never betreated as an appeal. It was further contended, as therewas no valid appeal pending as on the crucial date i.e.31.03.1993 for the purpose of considering the declarationfiled under the KVSS, the impugned order rejecting thedeclaration is proper and justified. We have heard the learned counsel for both theparties and perused the material placed on record. In the facts and circumstances of the case, it cannot be said that there was no appeal pending before theDepartment inasmuch as there is no categorical denial ofthe fact that the petitioner filed the appeal before theDepartment though the same has been addressed to theDeputy Commissioner of Income Tax (Appeals-II). Wemay not loose sight of the fact that the appeal was filed asfar back as on 14.07.1993 and for one reason or theother, the same was not disposed of. Assuming that theappeal filed by the petitioner was addressed to a wrongofficer nothing prevented the Department from intimatingthe assessee to return the papers to enable them to filethe same before the appropriate authority or in thealternative making over the appeal papers to thecompetent authority in the hierarchy. This exercisehaving not been done by the Department and thepetitioner having never been informed of its appeal notbeing accepted on the technical ground that the samewas addressed to the Deputy Commissioner of Income-tax (Appeals-II), it is not open for the Department to turnround and say that the appeal was not filed before thecompetent authority. Having regard to the facts of thiscase, we are satisfied that there was no lapse on the partof the petitioner in filing the declaration, and in our opinion,the authorities ought to have considered the declarationfiled by the petitioner under the KVSS on merits. It is to be taken note of that at the time of admissionof the writ petition, the petitioner sought leave of this Court to deposit the tax arrears in terms of the Scheme. Now, itis submitted that the tax arrears have been deposited. In the above view of the matter, this is a fit case toset aside the order dated 26.02.1999 passed by the 1[st]respondent – Commissioner of Income-tax. Accordingly, the writ petition is allowed setting asidethe order dated 26.02.1999 of the 1[st] respondent anddirecting him to process the declaration filed by thepetitioner under the KVSS. It is made clear that assubmitted by the petitioner if tax arrears are deposited, the1[st] respondent, while passing orders under the K.V.S.S.,shall give credit to the amount deposited. No order as tocosts. _________________ G. CHANDRAIAH, J 13.02.2014 bcj ______________________ CHALLA KODANDA RAM,J