Wp/6987/2004 Of Jeevan Prakash, Secunderabad v. Deputg Commlssloner Of Incone Tax, Mumbai

HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD(Special Original Jurisdiction) THURSDAY, THE ELEVENTH DAY OF JANUARYTWO THOUSAND AND TWENTY FOUR PRESENTTHE HONOURABLE SRI JUSTICE P.SAM KOSHYANDTHE HONOURABLE SRI JUSTICE N,TUKARAMJI WRIT PETITION NO: 6987 OF 2004 Between: Jeevan Prakash, S/o: Late Sri Om Prakash, aged about 26 years, Residentof USA, rep.by his G.P.A.Suraj Prakash, S/o Late Om Prakash, No.69.Mudicrt, Secunderabad ...PETITIONER AND 1The Commissioner Of lncome Tax, Hyderabad-V, Budha Bhavan,Secunderabad.Secunderabad. 2. The Assistant Commissioner of lncome Tax,, Circle 1O(1), Budha Bhavan,Secunderabad.Secunderabad. ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in thecircumstances stated in the affidavit filed therewith, the High Court may bepleased to issue a Writ of Certiorari quashing the proceedings of the firstrespondent passed under Section 264 of the lncome Tax Acl, 1961 dated 21-1O-2003 as arbitrary, illegal and ultravires and consequently declare that theliabilities for the Assessment Year 1996-97 is deemed final under the KVSS andall further proceedings. 1.A. NO: 1 OF 2004(WPMP. NO: 9082 OF 2004) Petitbn under Section 151 CPC praying that in the circumstances statedin the affidavit filed in support of the petition, the High Court may be pleased tostay all further proceedings pursuant to orders dated 12-3-1999 passed by the2nd respondent under Sec.143(3) ofthe lncome Tax Act Counsel for the Petitioner: MS. SRAVAN|, REPRESENTTNG FORSRI CHALLA GUNARANJAN Counsel forthe Respondent No.1: MS. SUNITHA Counsel for the Respondent No.2: SRt B. MUKERJEE, REPRESENTING FORSRI GADI PRAVEEN KUMAR, OEPUTYSOLICITOR GENERAL OF INDIASRI GADI PRAVEEN KUMAR, OEPUTYSOLICITOR GENERAL OF INDIA The Court made the following: ORDER --;, o THE HON'BLE SRI JUSTICE P.SAM KOSITYAND THE HON'BLE SRI J(,STICE N.TUI(ARAMJI W.P.No.6987 of 2OO4 OR.DER: [per ]ro n'ble Si Justice P.9AM f,.osEY) Heard Ms. Sravani, learned counsel representing Mr. ChallaGunarajan, Iearned counsel for the petitioner; Ms. Sunitha, learnedcounsel for respondent No. I and Mr. B. Mukerjee, learned SeniorCounsel appearing on behalf of Mr. Gadi Praveen Kumar, learnedDeputy Solicitor General of India appearing for respondent No.2.Perused the enlire record. 2. The present writ petition has been filed assailing the orderpassed by the Commissioner of Income Tax, Hyderabad under Section264 of the Income Tax Act, 196 1 (for short, the ActJ uideF. No.Hyd. / CIT-V / 264 I 5 / 03-04, decided on [2 ]r. lO.2OO3. 3. The present writ petition was immediately filed assailing thesaid order and there is an interim order in the operation in [favour of]the petitioner since ttren. 4 The issue involved in the [present ]writ [petition ]is [whether ][the]assessee who has settled the [dispute ][with ][the ][respondents ][under ][the]Kar Vivad Samadhan Scheme, 1998 [(for ][short, ]['KVSS') ][in ][the ][matter]covered under section 1a3(1)(a) of the Act, [would ][the ][respondent]authorities be permitted to continue [with ]fie [scrutiny ][proceedings]further under section 143(3) of the Act. 5. The Assessment year involved in the present writ petition is1996-97. The petitioner had submitted the return within time.Subsequently, the respondents issued notice under Section 143(21 ofthe Act subjecting the assessment to scrutiny. Eventually, noticeunder Section l43(l)(a) of the Act was also issued on 03.03.1998.Immediately upon receipt of the same, the petitioner approached theDesignated Authority under the KVSS, who in turn passed an orderunder Section 9O of the KVSS on 26.02.1999 followed by the issuanceof Form 3 on 31.03.1999, 5. The Assessment year involved in the present writ petition is1996-97. The petitioner had submitted the return within time.Subsequently, the respondents issued notice under Section 143(21 ofthe Act subjecting the assessment to scrutiny. Eventually, noticeunder Section l43(l)(a) of the Act was also issued on 03.03.1998.Immediately upon receipt of the same, the petitioner approached theDesignated Authority under the KVSS, who in turn passed an orderunder Section 9O of the KVSS on 26.02.1999 followed by the issuanceof Form 3 on 31.03.1999, 6. Even though the matter stood settled under the KVSS, therespondents continued with the proceedings under section la3(3) ofthe Act and an order of assessment was passed on 12.O3.1999. Thesaid assessment order was subjected to challenge before thecommissioner of Income Tax by way of a revision under Section 264 ofthe Act. The Revisional Authority has subsequently rejected therevision petition vide the order dated 2l.lO.2OO3 leading to the hlingof the present writ petition. 7. Learned counsel for the petitioner placed his reliance to thedecision of the Hon'ble Supreme Court in the case of Kilfick l,ftxonLtd., Mumbai Vs. Deputg Commlssloner of Incone Tax, Mumbai (^' o.nd. othersl, wherein, the Honble Supreme Court in paragraph Nos.8, 9 and 19 held as follows "8. A look at the material provisions of KVSS is necessary toappreciate the contentions urged: "87. In this Sctreme, unless the context otherwise requires (e) "disputed income", in relation to an assessmentyear menns the whole or so much of the total income as isrelatable to the disputed tax; {0 ["disputed tax" ][means ]the total tax determined andpayable in respect of an assessment year under any directtax enactment but which remains unpaid as on the date ofmaking the declaration under Section 88: (m) 'tax arrear" means - (1) in relation to direct tax enactment, the amount oftax p€nalty or interest determined on or before the 3lstday of Mach, 1998 under that enactment in respect of anassessment year as modiared in consequence of givingeffect to an appellate order but remaining unpaid on thedate of declaration;day of Mach, 1998 under that enactment in respect of anassessment year as modiared in consequence of givingeffect to an appellate order but remaining unpaid on thedate of declaration; 88. Section 88 - "Subject to the provisions of this Scheme,where any person makes, on or after the lst day of September,1998 but on or before the 31st day of December, 1998, adeclaration to the designated authority in accordance with theprovisions of Section 89 in respect of tax arrear, then,notwithstanding anything contained in any direct taxenactment or indirect tax enactment or any other provision forany law for the time being in force, ttre amount payable underthe Scheme by the declarant shall be determined at the ratesspecified hereunder, namely :- (a) Where the tax arrear is payable under the [ncome-tax Act, 1961 (a3 of 1961), -tax Act, 1961 (a3 of 1961), - li) [in ][the ][case ][of ][a ][declarant being ]a [company ]or afrrm, at tl-Ie rat€ of thirty-frve perc€nt of the disputedincome;" Section 90 - (i) "Within sixty days from the date of receiptof the declaration under Section 88, the designated authorityshall, by order, determine the amount payabte by the declarantin accordance with the provisions of the Scheme and grant a '(2003) I [145] certificate in such form as may be prescribed to the declarantsetting forth therein the particulars of the tax arrear and thesum payable after such determination towards full and finalsettlement of tax arrears;" Section 94 -"For the removal of doubts, it is herebydeclared that, save as otherwise expressly provided in sub-section (3) ofsection 90, nothing contained in this Schemeshalt be construed as conferring any benefit, concession orimmunity on the declarant in any assessment or proceedingsother than those in relation to which the declaration has beenmade." '(2003) I [145] certificate in such form as may be prescribed to the declarantsetting forth therein the particulars of the tax arrear and thesum payable after such determination towards full and finalsettlement of tax arrears;" Section 94 -"For the removal of doubts, it is herebydeclared that, save as otherwise expressly provided in sub-section (3) ofsection 90, nothing contained in this Schemeshalt be construed as conferring any benefit, concession orimmunity on the declarant in any assessment or proceedingsother than those in relation to which the declaration has beenmade." 9. The Scheme of the KVSS is to cut short litigationspertaining to taxes which were frittering away the ener$r' of theRevenue Department and to encourage litigants to comeforward and pay up a reasonable amount of tax payable inaccordance with the Scheme after declaration thereunder. 19. As far as the provisions of KVSS are concerned, we agreewith the contention of the learned Senior Counsel for theassessee that the order to be made by the Designated Authorityunder Section 9O is a considered order which is intended to beconclusive in respect of tax arreals and sums payable aftersuch Cetermination towards full and final settlement of taxarrears. Once the declarant makes payment of the amount sodetermined under Section 90, the immunity under Section91 springs into effect. We are also of the view t-hat upon suchdeclaration being made, tax arrears being determined, paid aldcertifrcate issued under the KVSS, there is no jurisdiction forthe Assessing Ofiicer to reopen the assessment by a noticeunder Section 143 of the Act except where tl:e case falls underthe provisio (2) of sub-section (l) of Section 90 as it is foundthat any material particular furnished in the declaration isfound to be false. [n the present case, it is not the case of theRevenue that any material particula-r fumished by theappellant-assessee in the declaration was found to be false.Consequently, the Assessing Olficer could not have re-openedthe assessment by a notice under Section 143 of the Act'. A plain reading of the principles of law laid down by the Hon'ble Supreme Court in the case of Ktlltck Nkon (suprQ, what has reallyculled out is once when a litigant has accepted to settle the matterunder the KVSS, then the respondent authorities would not have anyfurther scope of pursuing with the same assessment which thepetitioner as also the Department have accepted under the KVSS.The aforesaid view gets further fordiflgd by a recent decision of the t' Division Bench [of ][the ][Bombay ][High Court ][in ][the ][case ][of Citg ][Bank] JV.A. Vs. S.K. [Oihain ][W.P.No.218 ][9 ][of ][2OOO, ][dated ][09'05'2O23' ][where]again, the decision [rendered ][by ][the ][Hontrle ][Supreme ][Court ][in ][the]case of Kitltc k [Nixon ][(sttpra) ][has been ][reiterated']8. In view of the aforesaid [legal ][position ][as ][it ][stands, ][we ][are of the]considered opinion [that ][the ][impugned order dated ][2l'lO'2023 ][passed]Revisional [Authority under ][Section ][264 ][of ][tk'e ][Act ][as ][also ][tlle]by the Assessment Order [passed ][under ][Section ][143 ][on ][12'03'1999 ][would]not be sustainable. [In ][the light ][of ][the ][matter having ][being ][settled]between the [parties ][under ][the ] [vide ][the ][impugned ][order ][dated]26.02.1999 and [as ][a ][consequence ][of which, form ][3 ][was ][issued ][on]31.03.1999, [the ][Writ ][Petition stands ][allowed ][and the two ][impugned]orders dated [2 ][1. ][1O.2OO3 ][and ][12.03. ][1999 ][stands ][set ][aside/quashed'] Consequently, [miscellaneous ][petitions ][pending, ][if ][any' ][shall] stand closed. [No ][order ][as ][to ][costs.] That Rule [Nisi has been ][made ][absolute ][as'above'] WitnessTHEHON'BLETHECHIEFJUSTICEALOKARADHE'onthisThursday'the Eleventh [Day ][of January Two Thousand and Twenty Four'] SD/. K.SREERAMA ASSISTANT BEGISTRAR\,,V,/SECTION /TTRUE COPY// Consequently, [miscellaneous ][petitions ][pending, ][if ][any' ][shall] stand closed. [No ][order ][as ][to ][costs.] That Rule [Nisi has been ][made ][absolute ][as'above'] WitnessTHEHON'BLETHECHIEFJUSTICEALOKARADHE'onthisThursday'the Eleventh [Day ][of January Two Thousand and Twenty Four'] SD/. K.SREERAMA ASSISTANT BEGISTRAR\,,V,/SECTION /TTRUE COPY// One Fair Copyto [the ][Hon'ble Sri ][Justice ][P' SAM KOSHY]if'or [Uis ][LordshiPs ][Kind Perusal)]one Fair [copy ][to,n. ][,o,iJl3"i ][Justice ][N'.TUKRAMJI](For His LordshiPs [Kind Perusal)] I I\HIGH COURT DATED:1'llO1l2O24 ORDER WP.No.6987 of 2004 ALLOWING THE WITHOUT COSTS. N\0-w4.-lI 1tr [STAI€]kqooIi rit20ztc)z..'i...+tvor'sFAi c