Jeevan Prakash, S/o: Late Sri Om Prakash V. The Commissioner Of Income Tax, Hyderabad-V and The Assistant Commissioner of Income Tax, Circle 10(1)

WP/6987/2004

AI Insights

The case involves Jeevan Prakash, represented by his General Power of Attorney, Suraj Prakash, challenging the proceedings initiated by the Income Tax Department under Sections 143(3) and 264 of the Income Tax Act, 1961, for the Assessment Year 1996-97. The petitioner had settled the tax dispute under the KVSS, which was intended to resolve pending tax disputes and reduce litigation. Despite the settlement, the Income Tax Department continued with the scrutiny proceedings, leading to the challenge in the High Court. The court examined whether the authorities could proceed with the assessment after a settlement under KVSS and found that the authorities were not permitted to do so, based on precedents and the specific provisions of the KVSS.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 677083 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 11-01-2024
• Assessment Year: misc
• Other Referred Cases: Kilfick Nixon Ltd., Mumbai Vs. Deputy Commissioner of Income Tax, Mumbai, City Bank JV.A. Vs. S.K. Othain
• Laws Referred To: Income Tax Act, 1961, Kar Vivad Samadhan Scheme, 1998
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SUNITHA; B MUKERJEE
• Assessee Lawyers: SRAVANI
• Keywords: Assessment Year 1996-97; Income Tax; KVSS; Revision petition; Scrutiny proceedings; Writ of Certiorari
• Section: 143(3); 90; 264; 143(1)(a); 226; 88; 94

Judgement Text

"[ 337e ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE ELEVENTH DAY OF JANUARY TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N,TUKARAMJI WRIT PETITION NO: 6987 OF 2004 Between: Jeevan Prakash, S/o: Late Sri Om Prakash, aged about 26 years, Resident of USA, rep.by his G.P.A.Suraj Prakash, S/o Late Om Prakash, No.69. Mudicrt, Secunderabad ...PETITIONER AND 1 The Commissioner Of lncome Tax, Hyderabad-V, Budha Bhavan, Secunderabad. 2. The Assistant Commissioner of lncome Tax,, Circle 1O(1), Budha Bhavan, Secunderabad. ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ of Certiorari quashing the proceedings of the first respondent passed under Section 264 of the lncome Tax Acl, 1961 dated 21-1O- 2003 as arbitrary, illegal and ultravires and consequently declare that the liabilities for the Assessment Year 1996-97 is deemed final under the KVSS and all further proceedings. 1.A. NO: 1 OF 2004(WPMP. NO: 9082 OF 2004) Petitbn under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings pursuant to orders dated 12-3-1999 passed by the 2nd respondent under Sec.143(3) ofthe lncome Tax Act Counsel for the Petitioner: MS. SRAVAN|, REPRESENTTNG FOR SRI CHALLA GUNARANJAN Counsel forthe Respondent No.1: MS. SUNITHA Counsel for the Respondent No.2: SRt B. MUKERJEE, REPRESENTING FOR SRI GADI PRAVEEN KUMAR, OEPUTY SOLICITOR GENERAL OF INDIA The Court made the following: ORDER o THE HON'BLE SRI JUSTICE P.SAM KOSITY AND 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. Challa Gunarajan, Iearned counsel for the petitioner; Ms. Sunitha, learned counsel for respondent No. I and Mr. B. Mukerjee, learned Senior Counsel appearing on behalf of Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India appearing for respondent No.2. Perused the enlire record. 2. The present writ petition has been filed assailing the order passed by the Commissioner of Income Tax, Hyderabad under Section 264 of the Income Tax Act, 196 1 (for short, the ActJ uide F. No.Hyd. / CIT-V / 264 I 5 / 03-04, decided on 2 r. lO.2OO3. 3. The present writ petition was immediately filed assailing the said 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. --;, 2 5. The Assessment year involved in the present writ petition is 1996-97. The petitioner had submitted the return within time. Subsequently, the respondents issued notice under Section 143(21 of the Act subjecting the assessment to scrutiny. Eventually, notice under Section l43(l)(a) of the Act was also issued on 03.03.1998. Immediately upon receipt of the same, the petitioner approached the Designated Authority under the KVSS, who in turn passed an order under Section 9O of the KVSS on 26.02.1999 followed by the issuance of Form 3 on 31.03.1999, 6. Even though the matter stood settled under the KVSS, the respondents continued with the proceedings under section la3(3) of the Act and an order of assessment was passed on 12.O3.1999. The said assessment order was subjected to challenge before the commissioner of Income Tax by way of a revision under Section 264 of the Act. The Revisional Authority has subsequently rejected the revision petition vide the order dated 2l.lO.2OO3 leading to the hling of the present writ petition. 7. Learned counsel for the petitioner placed his reliance to the decision of the Hon'ble Supreme Court in the case of Kilfick l,ftxon Ltd., Mumbai Vs. Deputg Commlssloner of Incone Tax, Mumbai { 3 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 to appreciate the contentions urged: \"87. In this Sctreme, unless the context otherwise requires (e) \"disputed income\", in relation to an assessment year menns the whole or so much of the total income as is relatable to the disputed tax; {0 \"disputed tax\" means the total tax determined and payable in respect of an assessment year under any direct tax enactment but which remains unpaid as on the date of making the declaration under Section 88: (m) 'tax arrear\" means - (1) in relation to direct tax enactment, the amount of tax p€nalty or interest determined on or before the 3lst day of Mach, 1998 under that enactment in respect of an assessment year as modiared in consequence of giving effect to an appellate order but remaining unpaid on the date 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, a declaration to the designated authority in accordance with the provisions of Section 89 in respect of tax arrear, then, notwithstanding anything contained in any direct tax enactment or indirect tax enactment or any other provision for any law for the time being in force, ttre amount payable under the Scheme by the declarant shall be determined at the rates specified hereunder, namely :- (a) Where the tax arrear is payable under the [ncome- tax Act, 1961 (a3 of 1961), - li) in the case of a declarant being a company or a frrm, at tl-Ie rat€ of thirty-frve perc€nt of the disputed income;\" Section 90 - (i) \"Within sixty days from the date of receipt of the declaration under Section 88, the designated authority shall, by order, determine the amount payabte by the declarant in accordance with the provisions of the Scheme and grant a '(2003) I SCC 145 (^' t' 4 certificate in such form as may be prescribed to the declarant setting forth therein the particulars of the tax arrear and the sum payable after such determination towards full and final settlement of tax arrears;\" Section 94 -\"For the removal of doubts, it is hereby declared that, save as otherwise expressly provided in sub- section (3) ofsection 90, nothing contained in this Scheme shalt be construed as conferring any benefit, concession or immunity on the declarant in any assessment or proceedings other than those in relation to which the declaration has been made.\" 9. The Scheme of the KVSS is to cut short litigations pertaining to taxes which were frittering away the ener$r' of the Revenue Department and to encourage litigants to come forward and pay up a reasonable amount of tax payable in accordance with the Scheme after declaration thereunder. 19. As far as the provisions of KVSS are concerned, we agree with the contention of the learned Senior Counsel for the assessee that the order to be made by the Designated Authority under Section 9O is a considered order which is intended to be conclusive in respect of tax arreals and sums payable after such Cetermination towards full and final settlement of tax arrears. Once the declarant makes payment of the amount so determined under Section 90, the immunity under Section 91 springs into effect. We are also of the view t-hat upon such declaration being made, tax arrears being determined, paid ald certifrcate issued under the KVSS, there is no jurisdiction for the Assessing Ofiicer to reopen the assessment by a notice under Section 143 of the Act except where tl:e case falls under the provisio (2) of sub-section (l) of Section 90 as it is found that any material particular furnished in the declaration is found to be false. [n the present case, it is not the case of the Revenue that any material particula-r fumished by the appellant-assessee in the declaration was found to be false. Consequently, the Assessing Olficer could not have re-opened the 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 really culled out is once when a litigant has accepted to settle the matter under the KVSS, then the respondent authorities would not have any further scope of pursuing with the same assessment which the petitioner as also the Department have accepted under the KVSS. The aforesaid view gets further fordiflgd by a recent decision of the ,z 5 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 by the Revisional Authority under Section 264 of tk'e Act as also tlle 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 KVSS 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' I /TTRUE COPY// SD/. K.SREERAMA MURTHY ASSISTANT BEGISTRAR ,, V,/ SECTION OFFICER 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) to'',. ,n\" Commissioner of lncome Tax, Hyderabad-V' Budha Bhavan' Secunderabad 3 4. 5. , *:n:.J:jil::ommissioner of lncome rax,, circte 1 0( 1 ), Budha Bhavan, 11 LR Copies. I?:,X:flil.;:,fitary, union of tndra rvlinistry of Law, Jusrice and company The Secretary, Telanoana Advocates Association, Library, High Court Buildings Hyderabad. . 9n.99 to Sri Challa Gunaranjan, Advocate fOpUCl ' ?J:33 3;|:S*' praveen xuma'ibJp-tltv soticitor Generar or rndia[opUC] t / 6 7 8 9 TJ GJP I t a HIGH COURT DATED:1'llO1l2O24 ORDER WP.No.6987 of 2004 ALLOWING THE WRIT PETITION WITHOUT COSTS. N 0- t 0z t q o o 1trI STAI€ or'sFAi c v 2 Ii rit ...+ .'i .-l I w4 z. c) k "