Full Judgment Text
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CASE NO.:
Appeal (civil) 4403-4410 of 2003
PETITIONER:
Shatrusailya Digvijaysingh Jadeja
RESPONDENT:
Commissioner of Income Tax,Rajkot.
DATE OF JUDGMENT: 01/09/2005
BENCH:
B.P. SINGH & S.H. KAPADIA
JUDGMENT:
J U D G M E N T
KAPADIA, J.
These appeals by special leave have been filed against an
additional direction given by the Gujarat High Court vide
judgment dated 25.9.2002 holding the appellant liable to pay
interest under the Kar Vivad Samadhan Scheme, 1998 (for
short "the Scheme") on the tax arrears to be determined by the
designated authority (for short "DA").
The appellant filed a writ petition in the Gujarat High
Court against the rejection of the declarations made by the
assessee under the said Scheme.
By the impugned judgment, the High Court held that the
declarations filed by the appellant herein were competent as the
assessee’s revision applications were pending on the date of
filing of the declarations. The department was, therefore,
directed to entertain the declarations, to determine the amount
payable and to grant a certificate under section 90(1).
The decision of the Gujarat High Court dated 25.9.2002
was challenged by the department before this Court vide Civil
Appeal No.4411 of 2003. By judgment pronounced today by
this Court, we have upheld the decision of the Gujarat High
Court in holding that the declarations filed by the assessee
under section 88 of the Scheme were competent and that the
High Court was right in directing the DA to determine the
amount payable under section 90(1) of the Scheme.
In these appeals, the only grievance of the appellant is
that the additional direction given by the impugned judgment
making the appellant liable to pay interest on the amount
payable under section 90 was illegal and without authority of
law.
Mr. M.L. Varma, learned senior counsel appearing on
behalf of the appellant submitted that under the Scheme, there
was no provision for charging interest in cases where the DA
wrongly refused to accept the declarations filed by the assessee
under section 88, as found by the High Court. He contended
that the appellant cannot be faulted particularly when it is found
that the DA had erred in rejecting the declarations filed under
section 88; that by the impugned judgment, the DA was
required to undertake the assessment under section 90 and
determine the amount payable on the basis whereof the DA was
required to issue a certificate and on that basis the appellant had
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to pay the amount; that the appellant cannot be asked to pay
interest on the amount which was not ascertainable at the
relevant time for error on the part of the DA and in the
circumstances, the additional direction given by the High Court
should be cancelled.
The Finance (No.2) Act, 1998 introduced a Scheme
called Kar Vivad Samadhan Scheme, 1998. It was a recovery
scheme. Under the Scheme, the tax arrear had to be
outstanding as on 31.3.1998. Under section 87(f), "disputed
tax" was defined to mean total tax determined and payable
under the IT Act/Wealth Tax Act in respect of an assessment
year but which remained unpaid as on the date of making of the
declaration from which TDS, self-assessed tax, advanced tax
paid, if any, had to be deducted under section 90; the DA had to
determine the amount payable and for that purpose, he had to
determine the tax arrear as well as the disputed amount as
defined under section 87(f). Thus, the DA had to make an
assessment of tax arrears, disputed amount and amount payable
for each year of assessment; that appeal was barred against the
order under section 90 (see section 92); that such determination
had to be done within 60 days from the receipt of the
declaration and based thereon the DA had to issue a certificate.
In other words, till the completion of the aforestated exercise,
the appellant could not have paid the amount of tax and,
therefore, the appellant was not liable to pay interest as his
liability accrued only after the ascertainment of the amount
payable under section 90.
For the aforestated reasons, on the facts of this case, we
set aside the additional direction given by the impugned
judgment directing the appellant to pay interest, particularly
when the department had wrongly rejected the declarations filed
under section 88.
Accordingly, these appeals are allowed, with no order as
to costs.