East India Petroleum Limited V. The Commissioner of Income Tax and another

WP/5358/1999

AI Insights

The case involves East India Petroleum Limited, the petitioner, who challenged the order of the Commissioner of Income Tax regarding the rejection of their application under the 'Kar Vivad Samadhan Scheme, 1998'. The dispute originated from an income tax assessment for the year 1997-98, where additional tax and interest were demanded based on a prima facie adjustment. The petitioner sought relief under the Scheme, which allows for the termination of ongoing proceedings if the assessee agrees to pay a stipulated amount. However, the Commissioner rejected the application, citing the dismissal of a related revision. The High Court found this approach to be contrary to the intent of the Scheme and set aside the Commissioner's order.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 814360 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 09-07-2014
• Assessment Year: misc
• Other Referred Cases: W.P.No.16170 of 2000 and batch
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: J PRASAD
• Assessee Lawyers: K REDDY
• Keywords: Income Tax; Interest demand; Kar Vivad Samadhan Scheme, 1998; Prima-facie adjustment; Revision; Tax demand
• Section: 234B; 143(1)(a); 264(3)

Judgement Text

" * THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM + Writ Petition No.5358 of 1999 %Date: 09.07.2014 #East India Petroleum Limited. …appellant. and $The Commissioner of Income Tax and another. …Respondents ! Counsel for appellant: Sri K.Raji Reddy ^ Counsel for Respondents : Sri J.V.Prasad < GIST: > HEAD NOTE: ? Cases referred THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM Writ Petition No.5358 of 1999 ORDER: (Per the Hon’ble Sri Justice L.Narasimha Reddy) The petitioner is a Limited Company and is assessed to income tax. In the assessment year 1997-98, the Assessing Authority passed an order, dated 18.03.1998, taking the view that the sum covered by prima facie adjustment of Rs.79,86,590/-, under Section 143(1)(a) of the Income Tax Act, 1961 (for short ‘the Act’), was not proper, and accordingly, made a demand of Rs.47,10,108/-, as tax. Additional tax of Rs.6,86,847/-, under Section 143(1)(a) of the Act and interest of Rs.7,78,680/-, under Section 234B of the Act, was also demanded. The petitioner filed a revision under Section 264(3) of the Act, before the Commissioner of Income Tax, the 1st respondent herein. When the revision was pending, the Parliament introduced ‘Kar Vivad Samadhan Scheme, 1998’ (for short ‘the Scheme’), by amending the Act. It provided for the termination of the proceedings at the stage of appeal, revision or writ petition, before any forum, in case the assessee offers to pay the amount stipulated under the relevant provisions of the Scheme. With a view to avail the benefit under the Scheme, the petitioner submitted an application in the prescribed form on 16.12.1998. Incidentally, the 1st respondent is the designated authority to process the application and he is the one, before whom the revision filed by the petitioner was pending. The 1st respondent passed an order, dated 01.02.1999, in the revision, rejecting the claim of the petitioner. Few days thereafter, i.e. on 26.02.1999, he rejected the application, filed under the Scheme. This writ petition is filed challenging the order, dated 26.02.1999. Heard Sri K.Raji Reddy, learned counsel for the petitioner, and Sri J.V.Prasad, learned Standing Counsel for the respondents. The petitioner felt aggrieved by the order passed by the Income Tax Authority, imposing tax, penalty and interest on a sum covered by prima facie adjustment. The remedy of revision under Section 264(3) of the Act, was availed before the 1st respondent. During the pendency of that revision, the Scheme came into force. Accordingly, an application was filed in the prescribed form. One of the conditions for extending the benefit under the Scheme is that a revision, appeal or proceedings must be pending before the Authorities or Tribunal, created under the Act, or High Court or Supreme Court. That condition stood fulfilled, on account of the pendnecy of the revision before the 1st respondent. A perusal of the Scheme discloses that the extension of benefit thereunder is independent of merits, or otherwise of the claims in the appeals, revision or other proceedings. Further, once it emerges that an appeal, revision or other proceedings were pending by the time the application was filed, it hardly makes any difference, if such proceedings are terminated by the concerned authority, unmindful of the pendency of the application. In the instant case, the 1st respondent was the authority to deal with the application filed under the Scheme as well as to hear the revision. Knowing fully well that the application filed by the petitioner is pending before him, he has chosen to take up the revision and dismissed the same through order, dated 01.02.1999. He cited the dismissal thereof as a ground for refusing to extend the benefit under the Scheme. The approach of the 1st respondent is totally untenable, apart from being opposed to the letter and spirit of the Scheme. In a way, he has read certain aspects into the Scheme, which the parliament did not intend to. The mere fact that a revision, which was pending before him was dismissed, cannot constitute the basis to deny the relief under the Scheme. We have taken similar view in W.P.No.16170 of 2000 and batch. We, therefore, allow the writ petition and set aside the impugned order. There shall be no order as to costs. The miscellaneous petition filed in this writ petition shall also stand disposed of. ____________________ L.NARASIMHA REDDY, J. _____________________ CHALLA KODANDA RAM, J. Date:09.07.2014 GJ "