M/s Chida Spinning Mills Pvt.Ltd, Chttoor District V. ACIT, Tirupathi

ITA 1068/HYD/2003

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53694 (ITAT-HYDERABAD)
• Duration Of Justice: 8 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1995-1996
• Appeal Filed On: 18-09-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: BANUSEKAR
• Keywords: Recovery proceedings; Depreciation; Rectification of order; Wrong claim; Revenue expenditure; Capital expenditure
• Section: 263; 12; 90; 154; 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. ASHA VIJAYA RAGHAVAN, JUDICIAL MEMBER AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.1068 /HYD/2003 ASSESSMENT YEAR 1995-96 M/S CHIDA SPINNING MILLS (P) LTD., PUTTUR, CHITTOR DISTRICT (PAN AABCC 2353 C) VS THE ACIT, CIRCLE 2(1 ), TIRUPATHI APPELLANT RESPONDENT APPELLANT BY : SHRI BANUSEKAR RESPONDENT BY : SHRI B.V. PRASAD REDDY DATE OF HEARING : 22.9.2011 DATE OF PRONOUNCEMENT : 13.10.2011 ORDER PER ASHA VIJAYA RAGHAVAN, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIREC TED AGAINST THE ORDER PASSED BY THE CIT(A) THIRUPATHI DATED 19.9.2002 AND PERTAINS TO THE ASSESSMENT YEAR 1995- 96. 2. THERE IS A DELAY OF 286 DAYS IN FILING THE PRES ENT APPEAL BEFORE THE TRIBUNAL. THE REASON FOR DELAY H AS BEEN AFFIRMED BY AFFIDAVIT DATED 9.9.2003 BY THE DIRECTO R SHRI A.R. MURUGAPPAN OF M/S CHIDA SPINNING MILLS (PVT.) LTD. (THE ASSESSEE ) HEREIN. THE LEARNED COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE DELAY MAY BE CONDONED AND RELIED ON THE FOLLOWING CASE LAWS: 1. CIT VS. K.S.P. SHANMUGAVEL NADAR & ORS. (1985) (153 ITR 596) (MAD.). INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 2 2. BAJAJ HINDUSTHAN LTD. VS. JCIT (2005) (92 ITD 411) (MUM.) 3. VENKATADRI TRADERS LTD. VS. CIT & ANR. (2001) 248 IT R 681) (MAD.) 4. KARAM CHAND PREMCHAND (P) LTD. VS. CIT (1975) (101 ITR 46) (GUJ) 5. CWT VS. MAHARAJA BAHADUR SINGH KASLIWAL & ANR. (1996 ) (220 ITR 319) (MP) 6. CIT VS. SOTHIA MINING & MFG. CORPN. (1990) 186 ITR 1 82 (CAL.) 7. P. BALASUBRAMANIAM VS. ACIT IN IT(SS)A NOS.183 & 184 /MDS. 2003). 3. IT HAS BEEN HELD IN CIT VS. K.S.P. SHANMUGAVEL NADAR & ORS. (1985) (153 ITR 596) (MAD.) THAT WHERE ASSESSEE HAS BEEN PROSECUTING OTHER REMEDIES BEFORE FILING AN APPEAL, THE TIME TAKEN BY THOSE PROCEEDINGS SHOU LD BE TAKEN INTO ACCOUNT WHILE DETERMINING THE QUESTION WHETHER THE ASSESSEE HAD SUFFICIENT CAUSE FOR NOT PRESENTIN G THE APPEAL IN TIME. 4. FOLLOWING THE RATIO OF THE ABOVE DECISION WE CO NDONE THE DELAY OF 286 DAYS AND PROCEED TO HEAR THE APPEA L. 5. THE ASSESSEE IS IN APPEAL CHALLENGING THE VALID ITY OF THE RECTIFICATION ORDER U/S 154 DATED 27.11.2000 PA SSED BY THE JOINT COMMISSIONER OF INCOME TAX (ASSTS), SPECI AL RANGE, GUNTUR. AS A RESULT OF RECTIFICATION, THE A SSESSING OFFICER HAS DISALLOWED WRONG CLAIM OF DEPRECIATION ON ASSETS WHICH HAVE BEEN USED FOR LESS THAN 182 DAYS. THE RECTIFICATION ORDER HAS RESULTED AN ADDITIONAL TAX OF DEMAND OF RS 51,19,412/-. 6. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNING A SPINNING MILL WHICH HAS GONE FOR AN EXTENSIVE MODERNISATION BY REPLACING OLD AND WORN OUT RING FR AMES, SPINDLES ETC., DURING THE YEAR OF ACCOUNT, THE APPE LLANT HAS INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 3 REPLACED ASSETS WORTH RS 1,17,05,275/- BEING OLD LI NE OF MACHINERIES IN ACCORDANCE WITH THE SCHEME OF MODERNISATION. THIS WAS CLAIMED AS REVENUE EXPENDI TURE. THE JOINT COMMISSIONER OF INCOME TAX DISALLOWED THI S CLAIM OF ENTIRE EXPENSES BUT ALLOWED DEPRECIATION O N THE SAID AMOUNT AT 25%. THE APPEAL OF THE ASSESSEE TO C IT(A) WAS DISMISSED. THE APPELLANT PREFERRED THE SECOND APPEAL BEFORE THE I.T.A.T. 6.1. DURING THE PENDENCY OF THIS APPEAL, THE KAR V IVAD SAMADHAN SCHEME, 1998 CAME INTO FORCE. IN RESPECT OF THE ARREARS OF RS.55,38,220/- RAISED U/S 143(3) BY THE JOINT COMMISSIONER OF INCOME TAX THE APPELLANT FILED FORM -2A, AND FORM-3 HAS BEEN ISSUED BY THE DESIGNATED AUTHOR ITY TO THE APPELLANT, FINALLY SETTLING THE TAX ARREARS COV ERED BY THE APPELLANTS DECLARATION UNDER THE SCHEME. THE APPE LLANT PAID THE SUM DECLARED IN THE CERTIFICATE ISSUED BY THE DESIGNATED AUTHORITY. THE ASSESSEE WAS ALSO ISSUED A CERTIFICATE IN FORM 3 CERTIFYING THE PAYMENT OF THE AMOUNT DEMANDED UNDER THE KVS SCHEME. 7. SUBSEQUENTLY, UNDER A ROUTINE CHECK, THE ASSESSING OFFICER FOUND THAT WHILE GRANTING DEPRECIATION ON T HE INSTALLED MACHINERY, RING FRAMES, SPINDLES ETC., IS GRANTED FOR THE FULL PERIOD OF 365 DAYS, EVEN IN RESPECT OF MACHINERY, THE INSTALLATION WHICH WAS AFTER OCTOBER. SINCE, T HIS WAS A MISTAKE APPARENT FROM RECORDS. HE HAS PROCEEDED TO RECTIFY THE PROCEEDINGS AFTER ISSUING NOTICE TO THE APPELLA NT. AFTER CONSIDERING APPELLANTS OBJECTION, THE ASSESSING OF FICER HAS RESTRICTED THE DEPRECIATION IN RESPECT OF MACHINERY INSTALLED AFTER 01.10.1994 TO 50% OF NORMAL ALLOWABLE DEPRECI ATION. IN THE ORDER OF RECTIFICATION DATED 27.11.2000 HE H AS ALLOWED DEPRECIATION OF RS. 91,42,319/- AS AGAINST THE INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 4 AMOUNT OF RS. 1,20,88,115/- ACTUALLY ALLOWED IN THE ORIGINAL ASSESSMENT. THE AO HAD ARRIVED AT ADDITIONAL TAX DE MAND OF RS. 51,19,412/-. 8. ON APPEAL BEFORE THE CIT(A), THE REPRESENTATI VES ARGUED THAT THE ORDER U/S 143(3) HAS BEEN THE SUBJECT MATT ER OF CONSIDERATION UNDER KAR VIVAD SAMADHAN SCHEME. THE COMMISSIONER OF INCOME TAX HAS CONSIDERED THE ORDER AND SETTLED THE TAX ARREARS. HENCE, THE RECTIFICATION M ADE BY THE ASSESSING OFFICER IS BAD IN LAW AND DEMANDED THAT RECTIFICATION ORDER BE SET ASIDE. 9. THE CIT(A) DISMISSED THE APPEAL B THE ASSESSEE HOLDING AS UNDER: I HAVE CONSIDERED THE POINT IN DETAIL AND ALSO THE ARGUMENTS OF THE REPRESENTATIVE. THE ASSESSING OFFICER WAS LEGALLY CORRECTED IN RECTIFYING THE MIS TAKE AND CORRECTING THE COMPUTATION OF DEPRECIATION. TH AT IT IS AN APPARENT MISTAKE EVIDENT FROM RECORD IS NO T DENIED BY THE APPELLANT. THE ASSESSING OFFICER HAV ING DENIED DEDUCTION OF REVENUE EXPENDITURE OF THE COST OF THE ENTIRE PLANT AND MACHINERY, HAS CONSIDERED RS.1,17,05,275/- AS CAPITAL EXPENDITURE. WHILE COMPUTING THE DEPRECIATION, HE HAS MISSED A FACT, THAT MACHINERY WAS PUT TO USE ONLY AFTER 03.10.1994 AND HENCE ELIGIBLE DEPRECIATION IS 12.5% THEREFORE HE HAS ALLOWED DEPRECIATION WRONGLY AT 25% ON THE ENTI RE COST OF THE MACHINERY. ACCORDING TO SUPREME COURT DECISION IN 82 ITR 50, THE MISTAKE APPARENT FROM TH E RECORD MAY BE AN OBVIOUS AND APPARENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE TWO INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 5 OPINIONS DECISION ON A DEBATABLE POINT OF LAW IS N OT A MISTAKE APPARENT FROM THE RECORD. IN THE LIGHT OF T HE ABOVE, IT CONSTITUTES THE APPARENT MISTAKE, AND THE WITHDRAWAL OF DEPRECIATION IS WELL IN THE SCOPE OF SECTION 154. 10. THE REPRESENTATIVES ARGUED THAT THE MATTER HAS BEEN CONCLUDED BY THE CITS FINAL ORDER UNDER KAR VIVAD SAMADHAN SCHEME. HENCE, ANY RECTIFICATION OF ORDER U/S 143(3) CAN BE MADE ONLY THE COMMISSIONER OF INCOME TAX UNDER KAR VIVAD SAMADHAN SCHEME AND NOT BY THE INCO ME TAX OFFICER. THE KAR VIVAD SAMADHAN SCHEME WAS INTRODUCED ONLY FOR THE PURPOSE OF SETTLING TAX ARR EARS LOCKED IN LITIGATION, AT A SUBSTANTIAL DISCOUNT. IT IS REALLY A RECOVERY SCHEME AND NOT A LITIGATION SETTLEMENT SCH EME. THE INTRODUCTORY PARAGRAPH OF THE SCHEME READS AS U NDER: THE SCHEME MAKES AN OFFER BY THE GOVERNMENT FOR SE TTLING TAX ARREARS, LOCKED IN LITIGATION, AT A SUBSTANTIAL DISCOUNT. IT IS REALLY A RECOVERY SCHEME AND NOT NECESSARILY A LITIGATION SETTLEMENT SCHEME. THE SCHEME PROVIDES THAT ANY TAX ARREARS, UNDER DIRECT OR INDIRECT TAX LAWS, CAN BE SETTLED BY DECLARING THEM AND PAYING THE PRESCRIBED AMOUNT, IN RESPECT OF TAX ARREARS. IT IS ALSO OFFERS SOME OTH ER BENEFITS AND IMMUNITIES FROM PENALTY AND PROSECUTION. THUS, THE OBJECT OF THE SCHEME IS SETTLEMENT OF TAX DISPUTES AND QUICK RECOVERY OF TAXES. THE RELEVANT PORTION OF FORM- 2A READS AS UNDER: NOW THEREFORE IN EXERCISE OF THE POWERS CONFERRED BY SUB SECTION (1) OF SECTION 90 OF THE FINANCE (NO.2) ACT, 1998, THE DESIGNATED AUTHORITY AFTER CONSIDERATION OF RELEVANT INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 6 MATERIAL, HEREBY DETERMINES THE FOLLOWING AMOUNT PAYABLE BY THE DECLARANT TOWARDS THE FULL AND FINAL SETTLEMENT OF HIS/HER/THEIR TAX ARREARS COVERED BY THE SAID DECLARATION UNDER THE SCHEME. SL.NO. DIRECT TAX ENACTMENT ASST.YEAR TAX ARR EARS AMOUNT PAYABLE THE DECLARANT IS HEREBY DIRECTED TO MAKE THE PAYMENT OF SUM PAYABLE WITHIN THIRTY DAYS OF THE DATE OF CERTIFICATE. 11. THE CIT(A) HELD AS FOLLOWS: FROM THE ABOVE FORMAT IT IS CLEAR THAT THE STARTING POINT OF THE SCHEME IS ONLY THE TAX ARREARS AND NOT THE TOTA L INCOME. THE COMMISSIONER OF INCOME TAX PASSED THE ORDER U/S 91 OF THE FINANCE ACT BASED UPON TAX ARRE ARS OUTSTANDING. HE DOES NOT APPLY HIS MIND AND ACTIVEL Y CONSIDER THE COMPUTATION OF INCOME AND THE LEGAL AS PECTS OF THE CASE. THEREFORE, THE ASSESSEES ARGUMENT IN INVOKING THE DOCTRINE OF MERGERIN HIS FAVOUR IS N OT CORRECT. THE SETTLED VIEW IS DOCTRINE OF MERGERA PPLIES ONLY TO THE MATTERS, WHICH WERE THE SUBJECTED MATTE R OF DECISION BY THE APPELLATE AUTHORITY AND HAS NO APPL ICATION FOR MATTERS WHICH HAS NOT BEEN TOUCHED BY THAT AUTH ORITY. SUCH UNTOUCHED MATTERS MAY BE SUBJECTED T RECTIFICA TION VIDE REFERENCE IN 164 ITR 197 AND 140 ITR 677. THE COMMISSIONER OF INCOME TAX HAS NOT APPLIED HIS MIND AND ACTIVELY CONSIDERED THE COMPUTATION OF DEPRECIA TION. HENCE THE ASSESSING OFFICER IS WELL WITHIN HIS POWE RS TO RECTIFY THE ASSESSMENT AND WITHDRAW THE EXCESS DEPRECIATION GRANTED. INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 7 THE APPELLANT HAS ALSO SUBMITTED COPY OF THE RECTIF ICATION PETITION HAS BEEN MADE BEFORE THE COMMISSIONER OF INCOME TAX, TIRUPATI, THE PENDENCY OF THIS PETITION CANNOT IN ANY WAY AFFECT THIS APPEAL. SINCE SECTION 91 OF KAR VIVAD SAMADHAN SCHEME DOES NOT EXCLUDE SUCH RECTIFICATION OR DISPOSAL OF APPEAL. UNDER THE CIRCUMSTANCES, I DO NOT FIND ANY INFIRMITY IN THE O RDER OF THE ASSESSING OFFICER, HENCE, APPEAL IS DISMISSED. 12. AGGRIEVED THE ASSESSEE IS ON APPEAL BEFORE US. 13. IT WAS SUBMITTED BY THE ASSESSEES COUNSEL SHR I BHANUSEKAR THAT THE ONCE THE ASSESSMENT FOR THE EN TIRE YEAR HAS BEEN SETTLED BY FOLLOWING THE PROVISIONS O F THE KAR VIVAD SAMADHAN SCHEME AND THE DESIGNATED AUTHORITY AFTER APPLICATION OF MIND HAS MADE AN ORDER UNDER SECTION 90, WHICH HAS BEEN COMPLIED WITH BY MAKING PAYMENT OF T HE TAX COMPUTED UNDER THE SCHEME, THERE IS NO QUESTION OF RE OPENING OR RECTIFICATION OF ANY ISSUE WHICH HAS BEE N THE SUBJECT MATTER OF THE ORDER OF THE DESIGNATED AUTHO RITY AND THE HONBLE SUPREME COURT HAS RECENTLY IN THE CASE OF KILLICK NIXON LTD VS DEPUTY C.I.T. (2002) 258 ITR 6 27 (S.C) HELD THAT THE ORDER TO BE MADE BY THE DESIGNATED A UTHORITY UNDER THE KAR VIVAD SAMADHAN SCHEME UNDER SECTION 9 0 OF THE FINANCE (NO.2) ACT, 1998 IS A CONSIDERED ORDER WHICH IS INTENDED TO BE CONCLUSIVE IN RESPECT OF TAX ARREARS AND SUMS PAYABLE AFTER SUCH DETERMINATION TOWARDS FULL AND FINAL SETTLEMENT OF TAX ARREARS. IT WAS ALSO POINT ED OUT THAT ONCE THE DECLARANT MAKES PAYMENT OF THE AMOUNT SO DETERMINED UNDER SECTION 90, THE IMMUNITY UNDER SEC TION 91 SPRINGS INTO EFFECT. UPON SUCH DECLARATION BEIN G MADE, INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 8 TAX ARREARS BEING DETERMINED, PAID AND CERTIFICATE ISSUED UNDER THE KAR VIVAD SAMADHAN SCHEME, THERE IS NO JURISDICTION FOR THE ASSESSING OFFICER TO REOPEN TH E ASSESSMENT BY A NOTICE UNDER SECTION 143 OF THE ACT . 14. THE LEARNED COUNSEL SHRI BHANUSEKAR FURTHER SUBMITTED THAT THE COMMISSIONER OUGHT TO HAVE CONSI DERED THE FACT THAT AS PER SUB SECTION (3) OF SECTION 90 OF THE FINANCE (NO.2) ACT, 1998, EVERY ORDER PASSED UNDER SUB SECTION (1), DETERMINING THE SUM PAYABLE UNDER THE SCHEME, SHALL BE CONCLUSIVE AS TO THE MATTERS STATED THEREI N AND NO MATTER COVERED BY SUCH ORDER SHALL BE REOPENED IN A NY OTHER PROCEEDING UNDER THE DIRECT TAX ENACTMENT OR INDIRE CT TAX ENACTMENT OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE. 15. WITHOUT PREJUDICE TO THE ABOVE, IT WAS SUBMIT TED THAT ASSUMING THAT THE ORDER OF THE ASSESSING OFFICER UN DER SECTION 143(3) WHICH HAS BEEN THE SUBJECT MATTER SE TTLED UNDER THE KAR VIVAD SAMADHAN SCHEME COULD BE RECTIF IED, THE COMMISSIONER OUGHT TO HAVE CONSIDERED THE FACT THAT THE SAME COULD BE RECTIFIED ONLY BY THE DESIGNATED AUTHORITY, AS THE RECTIFICATION ORDER PASSED UNDER SECTION 154 RECTIFIES THE MISTAKE IN THE ORDER PASSED ON OR BEFORE 31.3.1998. THE CENTRAL BOARD OF DIRECT TAXES, IN A QUERY IN THE CONTEXT OF THE KAR VIVAD SAMADHAN SCHEME AS TO WHAT HAPPENS TO THE AMOUNT OF TAX ARREARS IF THE SAME IS MODIFIED BY AN ORDER UNDER SECTION 154 PASSED AFTER 31.03.1998 HAD REPLIED THAT THE ORDER UNDER SECTIO N 154 WOULD RECTIFY THE APPARENT MISTAKE IN THE ORDER PAS SED ON OR BEFORE 31.3.1998 HENCE IT WOULD RELATE BACK TO T HAT ORDER. THE TAX ARREARS WOULD ACCORDINGLY STAND MODI FIED AND IN SUCH CASES THE MODIFIED TAX ARREARS WILL CON STITUTE INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 9 THE TAX ARREARS FOR THE PURPOSES OF DECLARATION UND ER THIS SCHEME. AS PER THE SECOND PROVISO TO SECTION 90(1) OF THE FINANCE ACT, 1998, THE DESIGNATED AUTHORITY MAY AME ND THE CERTIFICATE FOR REASONS TO BE RECORDED IN WRITING. 16. THE LEARNED COUNSEL CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THE DECISION OF THE GUJARAT HIGH COURT, UPHELD BY THE SUPREME COURT (258 ITR 437) IN SHAILY ENGINE ERING PLASTICS LTD VS DESIGNATED AUTHORITY (1999) 239 ITR 90 (GUJ) WHEREIN THE COURT CONCLUDED THAT EVEN IN CASE , THE EXISTING TAX LIABILITY WHICH INCLUDED BOTH ADMITTED AS WELL AS DISPUTED LIABILITY IS REDUCED TO ADMITTED LIABIL ITY AS A RESULT OF A SUBSEQUENT ORDER, IT STILL DOES NOT TAK E THE CASE OUTSIDE THE PURVIEW OF SCHEME, THOUGH IT MAY AFFECT THE QUESTION OF DETERMINING THE QUANTUM OF AMOUNT PAYAB LE UNDER THE SCHEME, WHICH WILL HAVE TO BE DETERMINED BY THE DESIGNATED AUTHORITY AND THEREBY SET ASIDE THE ORDE R OF THE ASSESSING OFFICER UNDER SECTION 154 AS HAVING BECOM E INFRUCTUOUS AND DIRECTED THE DESIGNATED AUTHORITY T O CONSIDER THE DECLARATION AFRESH IN ACCORDANCE WITH LAW. 17. AGGRIEVED THE ASSESSEE IS ON APPEAL BEFORE US. HEARD BOTH SIDES. IT IS AN UNDISPUTED FACT THAT THE ASSE SSEE HAS FILED A RETURN CLAIMING COST OF REPLACEMENT OF ASSE TS AS REVENUE EXPENDITURE. THE ASSESSING OFFICER HAS REJ ECTED THE CLAIM AND HAS COMPUTED AND GRANTED DEPRECIATION ON THE SAME. INCOME COMPUTED BY THE ASSESSING OFFICER WHI CH IS EXCLUSION OF DEPRECIATION AND OTHER EXPENSES ALLOWE D WAS THE SUBJECT MATTER OF APPEAL BEFORE THE CIT(A) WHIC H WAS REJECTED BY THE CIT(A). THE ASSESSEE HAD GONE ON FU RTHER APPEAL BEFORE THE TRIBUNAL. AT THAT POINT OF TIME, THE ASSESSEE HAD FILED AN APPLICATION UNDER THE KVSS, T HE SAME INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 10 HAS BEEN ACCEPTED AND THE APPROPRIATE AUTHORITY HAD ISSUED CERTIFICATE DETERMINING THE TAX PAYABLE UNDE R THE SCHEME. THE ASSESSEE HAS PAID THE TAX IN ACCORDANC E WITH LAW AND DEMAND HAS BEEN RAISED BY THE DESIGNATED AUTHORITY. SUBSEQUENTLY THE ASSESSING OFFICER HAS CHOSEN TO RECTIFY THE ORDER OF ASSESSMENT AND WITHDRAW THE PO RTION OF THE DEPRECIATION GRANTED. THIS APPEAL IS AGAINST T HE ORDER OF ASSESSING OFFICER RECTIFYING THE ASSESSMENT, WHI CH WAS THE SUBJECT MATTER OF KVSS AND REWORKING THE TAX PA YABLE. 18. UNDER SECTION 88 / 89, OF THE FINANCE (NO.2), ACT, 1998 THE ASSESSEE SHALL FILE A DECLARATION BEFORE T HE DESIGNATED AUTHORITY IN RESPECT OF AMOUNT / TAX OUTSTANDING. WITHIN 60 DAYS FROM THE DATE OF RECEIP T OF THE DECLARATION, THE DESIGNATED AUTHORITY SHALL ISSUE A N ORDER U/S 90(1) DETERMINING THE AMOUNT PAYABLE BY THE DEC LARANT IN ACCORDANCE WITH THE PROVISIONS OF THE SCHEME AND GRANT A CERTIFICATE IN SUCH FORM AS MAY BE PRESCRIBED TO THE DECLARANT STATING FORTHWITH THEREIN PARTICULARS OF TAX ARREARS AND THE SUM PAYABLE AFTER SUCH DETERMINATION TOWARD S FULL AND FINAL SETTLEMENT OF TAX ARREARS. AS PER SEC 90( 2), THE DECLARANT SHALL PAY A SUM DETERMINED BY THE DESIGNA TED AUTHORITY WITHIN 30 DAYS FROM THE DATE OF PASSING O F THE ORDER BY THE DESIGNATED AUTHORITY AND INTIMATE THE FACT OF PAYMENT ALONG WITH THE PROOF THEREOF. THE DESIGNAT ED AUTHORITY SHALL THEREUPON ISSUE CERTIFICATE TO THE DECLARANT. IN THE PRESENT CASE, EVERYTHING HAS TAKEN PLACE IN ACCORDANCE WITH THE PROVISIONS OF THE SCHEME. SUBSEQUENTLY, ON 27.11.2000, THE ASSESSING OFFICER HAS PASSED AN ORDER OF RECTIFICATION OF THE ASSESSMENT REWORKING THE DEMAND PAYABLE BY THE ASSESSEE, ON APPEAL THE C IT(A) HAS REJECTED THE CONTENTION OF THE ASSESSEE AND HAS UPHELD INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 11 THE ORDER OF RECTIFICATION BY THE ASSESSING OFFICER . THEREUPON THE ASSESSEE HAD FILED A PETITION BEFORE THE COMMISSIONER REQUESTING FOR THE RECTIFICATION OF TH E ORDER UNDER KVSS TO INCLUDE DISALLOWANCE PROPOSED BY THE ASSESSING OFFICER UNDER SECTION 154. THE SAME HAS N OT BEEN ACTED UPON. 19. IN THIS APPEAL THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING AUTHORITY HAS NO RIGHT TO RECTIFY THE ORD ER REVISING THE TAX ARREARS, WHICH HAS BEEN ORIGINALLY ACCEPTED UNDER KVSS. THE ASSESSEE HAS FILED DECLARATION UNDER SEC TION 88 OF KVSS. THE DESIGNATED AUTHORITY PASSED AN ORDER QUANTIFYING THE SUM PA EVERY ORDER PASSED U/S 90(1) DETERMINING THE SUM PAYABLE UNDER THE SCHEME SHALL BE CONCLUSIVE AS TO THE MATTERS STATED THEREIN AND NO MATER COVERED BY SUCH ORDER SHALL BE REOPENED IN ANY OTHE R PROCEEDINGS UNDER THE DIRECT TAX ACT OR UNDER ANY O THER LAW IN FORCE. FURTHER UNDER FIRST PROVISO TO CLAUS E 90(1), IT HAS BEEN PROVIDED THAT IF ANY THE MATERIAL PARTICUL ARS FURNISHED IN THE DECLARATION IS FOUND TO BE FALSE, IT SHALL BE PRESUMED DECLARATION WAS NEVER MADE AND THE SECOND PROVISO TO SEC 90(1) PERMITS THAT DESIGNATED AUTHOR ITY MAY AMEND THE CERTIFICATE FOR THE REASONS TO BE RECORD IN WRITING. 20. A CONJOINT READING OF THE ABOVE PROVISIONS, WO ULD SHOW ONCE THE DECLARATION MADE AND ACCEPTED AND TAX PAID IN ACCORDANCE WITH KVSS, DEPARTMENT CAN NOT AMEND T HE SAME AND REVISE THE TAX DEMAND SUBSEQUENTLY. IT CA N ONLY BE BY RECTIFICATION OF THE ORDER OF KVSS UNDER SECO ND PROVISO TO CLAUSE 90(1). THIS LEGAL POSITION HAS B EEN CONFIRMED BY THE HIGH COURT OF ALLAHABAD IN THE CAS E OF CIT VS GOEL LOTTERY CENTS REPORTED IN 323 ITR 262 WHERE IN IT HAS BEEN STATED THAT THE ORDER PASSED BY THE SUB-SE CTION (1) INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 12 OF SECTION 90 DETERMINING THE AMOUNT PAYABLE IS CON CLUSIVE IN RESPECT OF MATTER STATED THEREIN AND THEREFORE H ELD THAT THE SUBSEQUENT ORDER PASSED UNDER SECTION 154 RAISI NG ADDITIONAL DEMAND OF INTEREST UNDER SECTION 234B I S ERRONEOUS AND WITHOUT JURISDICTION AS THE ASSESSING AUTHORITY HAS NO RIGHT TO SIT OVER THE CERTIFICATE ISSUED BY THE DESIGNATED AUTHORITY. 21. SIMILARLY, THE MADHYA PRADESH HIGH COURT IN TH E CASE OF SIDDHARTHA TUBES LTD VS CIT REPORTED IN 292 ITR 533 HAS HELD THAT ONCE THE DECLARATION FILED BY HE ASSE SSEE UNDER THE KVSS HAS BEEN ACCEPTED AS FULL AND FINAL SETTLEMENT AND CERTIFICATE ISSUED UNDER SECTION 90( 2) THEREAFTER, IT IS NOT OPEN TO THE CIT TO PASS AN OR DER UNDER SECTION 263 WHICH IS NOT ON ACCOUNT OF CONCEALMENT OF INFORMATION BUT FOR SOME OTHER REASONS. THE MADHYA PRADESH HIGH COURT RELIED ON THE DECISION OF THE AP EX COURT IN THE CASE OF KILLICK NIXON LTD VS DCIT REPORTED I N 258 ITR 627. 22. RESPECTFULLY APPLYING THE RATIO OF THE ABOVE DECISION, WE HOLD THAT THE ASSESSING OFFICER DID NO T HAVE JURISDICTION TO RECTIFY THE ASSESSMENT ORDER WHICH HAS BEEN THE SUBJECT MATTER OF KVSS IN WHICH DECLARATION MAD E BY THE ASSESSEE HAS BEEN ACCEPTED AND THE TAX AS DETER MINED BY THE DESIGNATED AUTHORITY U/S 90(1) OF THE KVSS H AS BEEN PAID BY THE ASSESSEE AS PER THE PROVISION OF KVSS. 23. IN THE CIRCUMSTANCES, WE ACCEPT THE CONTENTIONS OF THE ASSESSEE AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. INCOME TAX ACT, 1961 NO.1068/HYD/2003 M/S CHIDA SPINNING MILLS LTD., CHITTOOR 13 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT 13.10.2 011 S D/ - (AKBER BASHA) S D/ - (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 13 TH OCTOBER, 2011 COPY FORWARDED TO: 1. M/S CHIDA SPINNING MILLS P LTD., PUTTUR, CHITTOR DISTRICT, ANDHRA PRADESH 2. THE ACIT, CIRCLE 2(1), HYDERABAD 3. THE CIT(A) THIRUPATHI 4. THE JCIT (ASSTS.) SPECIAL RANGE , GUNTUR 5. THE CIT, HYDERABAD 6. THE DR, ITAT, HYDERABAD NP/