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SCA/3573/1999 7/ 7 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 3573 of 1999
For
Approval and Signature:
HONOURABLE
MR.JUSTICE K.A.PUJ Sd/-
HONOURABLE
MR.JUSTICE BANKIM.N.MEHTA Sd/-
====================================
1.
Whether
Reporters of Local Papers may be allowed to see the judgment ?
YES
2.
To
be referred to the Reporter or not ?
NO
3.
Whether
their Lordships wish to see the fair copy of the judgment ?
NO
4.
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
NO
5.
Whether
it is to be circulated to the civil judge ?
NO
====================================
MANILAL
KUNVARJI SHAH - Petitioner
Versus
JG
ARORA DESIGNATED AUTHORITY UNDER & 1 - Respondents
====================================
Appearance
:
MR SN SOPARKAR, Senior Advocate for
Petitioner.
MRS MAUNA M BHATT for
Respondent.
====================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE BANKIM.N.MEHTA
Date
: 23/07/2008
ORAL JUDGMENT
(Per
: HONOURABLE MR.JUSTICE K.A.PUJ)
The
petitioner has filed this petition under Article 226 of the
Constitution of India challenging the order dated 23.02.1999 passed
by the respondent the Commissioner of Income-tax, Gujarat-2,
Baroda rejecting the petitioner’s declaration filed under Section 89
of the Finance (No.2) Act, 1998 made under Kar Vivad Samadhan Scheme
(‘KVSS’ for short).
This
Court has admitted the petition and rule was issued by this Court on
11.06.1998.
It
is the case of the petitioner that during the assessment years 1991
92 & 1992 93, the petitioner was a partner of the firm,
namely, M/s. Mahavir Trading Company. The petitioner had filed his
return of income for the respective years declaring his share income
from the firm on the basis of returns of income filed by the firm,
and as per the allocation of his share of income, according to the
said returns of income of the firm. The said firm approached the
Settlement Commission for settlement of its taxes for the assessment
years 1991 92 & 1992 93. The Settlement Commission
passed order under Section 245D (4) of the Income Tax Act, 1961, on
29.09.1997 whereby the income of the firm was computed and allocated
the said income in the hands of its partners. As a result, the
share income towards the petitioner from the firm was increased.
For
the purpose of giving effect to the order of the Settlement
Commission, the Assistant Commissioner of Income-tax, Circle 10 (1),
Ahmedabad passed orders under Section 155 of the Act on 18.09.1998
rectifying the assessment orders made earlier, as a result of which,
the petitioner was found liable to pay taxes for the assessment
years 1991 92 and 1992 93. The petitioner preferred two
revision petitions under Section 264 of the Act on 21.12.1998 for
the respective years and the said revisions were pending. The
petitioner filed a declaration in Form No. 1A of KVSS Rules seeking
settlement of tax disputes for the assessment years 1991 92 and
1992 93. The respondent vide his order dated 22.02.1999
rejected the declaration on the ground that there was no tax arrear
in petitioner’s case as on 31.03.1998 for the respective assessment
years. The demand in the petitioner’s case has been determined on
18.09.1998 i.e. after 31.03.1998 by giving effect to the order of
the Settlement Commission in case of the firm, in which the
petitioner was a partner. Therefore, in view of the provisions of
Section 95 (i) (b) of the Finance (No.2) Act, 1998, the petitioner’s
case cannot be covered under the KVSS, 1998. Accordingly, the
declaration filed by the petitioner for the assessment years 1991
92 and 1992 93 was dismissed as infructuous.
It
is this order which is under challenge in the present petition.
Mr.
S. N. Soparkar, learned Senior counsel appearing for the petitioner
has submitted that the respondent has erred in not appreciating the
Scheme of the Act as also KVSS in proper perspective. Admittedly,
the demand arose against the petitioner, pursuant to the order
passed by the Settlement Commission on 29.09.1997. Once Settlement
Commission passed the order, the Assessing Officer was bound to
rectify the assessment, in the case of the petitioner, under Section
155 (1) (a) of the Act. The Assessing Officer ought to have done
that immediately after 29.09.1997 i.e. the date of the order of the
Settlement Commission. If there was delay on the part of the
Assessing Officer in passing the consequential order, pursuant to
the order of the Settlement Commission, that would not lead to a
conclusion that as on 31.03.1998, there was no tax liability. He
has also referred to and relied on the Circular dated 07.10.1998
issued by the Central Board of Direct Taxes. Question No. 31 seeks
the clarification as to what happens to the amount of tax arrear if
the same is modified by an order under Section 154 passed after
31.03.1998. In reply to this question, the Board has clarified that
the order under Section 154 would rectify the apparent mistake in
the order passed on or before 31.03.1998 and hence, it would relate
back to that order. The tax arrear would accordingly stand modified
and in such cases, the modified tax arrear will constitute the tax
arrear for the purpose of declaration under the Scheme.
Mr.
Soparkar has, however, submitted that identical issue arose before
this Court in Special Civil Application No. 2221 of 1999 decided
on 01.07.2008 wherein this Court has held that the contention
based on the above Circular of the Board dated 17.10.1998 does not
merit acceptance. Section 155 of the Act cannot be equated with
Section 154 of the Act the former provisions being in relation
to various other consequential amendments, while Section 154 of the
Act specifically relates to rectification of any mistake apparent
from the record. The Court, therefore, held that the petitioner is
not entitled to seek a mandamus or any other writ to the respondent
authority to accept the declaration made by the petitioner.
Mrs.
Mauna M. Bhatt, learned Standing Counsel appearing for the revenue
relied on the above decision of this Court which was rendered after
considering the Circular relied upon by the petitioner.
After
having heard learned Senior Counsel Mr. S. N. Soparkar appearing for
the petitioner and Mrs. Mauna M. Bhatt, learned Standing Counsel
appearing for the revenue and after considering the facts of the
present case in light of the earlier decision of this Court in the
case of Kailash T. Agrawal V/s. M. S. Thanvi Designated
Authority (supra), we are of
the view that since there is no demand outstanding as on 31.03.1998,
the petitioner is not entitled to seek a mandamus or any other writ
to the respondent authority to accept the declaration made by the
petitioner. In absence of any error in the impugned order dated
23.02.1999, the petition fails and is accordingly dismissed. Rule
is discharged without any order as to costs.
Sd/-
Sd/-
[K.
A. PUJ, J.] [B. N. MEHTA, J.]
Savariya
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