Shreeji Shroff V. Commissioner of Income Tax-II

SCA/10085/1999

AI Insights

The case revolves around the interpretation of the Kar Vivad Samadhan Scheme, 1998 (KVSS), specifically concerning the timing of tax payment by the petitioner, M/S Shreeji Shroff, following a tax arrear determination by the Commissioner of Income Tax-II. The petitioner challenged the orders denying them the benefits under KVSS, arguing that their payment was timely when calculated from the date of receipt of the order, not the date of the order itself. The court examined the provisions of KVSS and relevant precedents to determine the correct interpretation of the time limit for payment under the scheme.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 794698 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 02-07-2008
• Assessment Year: misc
• Other Referred Cases: D. SAIBABA vs. BAR COUNCIL OF INDIA
• Laws Referred To: Kar Vivad Samadhan Scheme, 1998
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: S N SOPARKAR; VARUN PATEL
• Keywords: Income Tax; KVSS; Legal interpretation; Payment Deadline; Tax arrears
• Section: 90(2)

Judgement Text

"SCA/10085/1999 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 10085 of 1999 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MR.JUSTICE H.B.ANTANI ========================================================= = 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 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 ? 5 Whether it is to be circulated to the civil judge ? ========================================================= = M/S.SHREEJI SHROFF Versus COMMISSIONER OF INCOME TAX-II ========================================================= = Appearance : MR SN SOPARKAR, learned senior Advocate with MR. VARUN K. PATEL, learned advocate for Petitioner. MRS Mauna M BHATT for Respondent. ========================================================= = CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and SCA/10085/1999 2/6 JUDGMENT HONOURABLE MR.JUSTICE H.B.ANTANI Date : 02/07/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE H.B.ANTANI) By filing the present petition, the petitioner challenges the orders dated 22.07.99 and 03.11.99 passed by the respondent, annexures 'B' and 'E' respectively. The petitioner is a partnership firm. For A.Y. 1994-95, certain additions were made to the returned income of the petitioner, which is the subject matter of an appeal before the Income Tax Appellate Tribunal, Ahmedabad. The said appeal is pending. It is submitted that in the meanwhile, Kar Vivad Samadhan Scheme, 1998 [KVSS] was formulated and under the KVSS, every assessee desirous of taking advantage of KVSS was required to make a declaration in respect of tax arrears and a determination of the amount payable under KVSS and on payment of such determined tax, the disputes between the department and the assessee were regarded as settled. The petitioner filed a declaration under KVSS on 31.12.98. In pursuance thereof, the respondent, vide order dated 27.01.99, which was served on the petitioner on 04.02.99, determined the amount of tax arrears payable by the petitioner to the extent of Rs.17,410-00 insofar as the quantum appeal is concerned. It is submitted that on 03.03.99, the petitioner paid all the tax arrears as determined by the respondent and requested the respondent to issue certificate under KVSS. However, vide order dated 22.07.99 [annexure 'B'], the respondent informed SCA/10085/1999 3/6 JUDGMENT the petitioner that as the petitioner did not pay the sum determined under KVSS within 30 days from the date of the order, the payment made is beyond the prescribed time limit and cannot be treated as payment under KVSS. The representations made by the petitioner have also been rejected. Thus, the petitioner was denied the benefit under the KVSS. The petitioner has challenged the said orders by way of the present petition. Learned senior advocate Mr. S.N. Soparkar placed reliance on section 90 (2) of KVSS, which prescribes time limit, and the same is reproduced hereinbelow: 90.(2). The declarant shall pay, the sum determined by the designated authority within thirty days of the passing of an order by the designated authority and intimate the fact of such payment to the designated authority along with proof thereof and the designated authority shall thereupon issue the certificate to the declarant.” Learned advocate submitted that as per sub-section (2) of Section 90, the declarant is required to pay the sum determined by the designated authority within 30 days of the passing of the order by the designated authority, and thereafter intimate the fact of such payment to the designated authority along with the proof thereof, and thereupon the authority is required to issue certificate to the declarant. Learned advocate submitted that the designated authority passed the order on 27.01.99 which was communicated to the petitioner on 04.02.99. The petitioner made the payment on 03.03.99. Learned SCA/10085/1999 4/6 JUDGMENT advocate submitted that after receipt of the order on 04.02.99, the petitioner immediately, within the prescribed period of 30 days as provided under sub- section (2) of section 90 of KVSS has paid the amount in question. However, the respondent mis-interpreted the provisions contained in sub-section (2) of section 90 of the KVSS and rejected the request for granting the benefit under KVSS, vide order dated 03.11.99. Learned advocate submitted that the period of 30 days is required to be computed from the date of receipt of the order, and not from the date on which the order is passed. If the period is computed from the date of receipt of the order, then the payment made by the petitioner was well within time. Learned advocate placed reliance on the judgment rendered by the Apex Court in the case of D. SAIBABA vs. BAR COUNCIL OF INDIA reported in AIR 2003 SC 2502. Considering the ratio laid down by the Apex Court, the learned advocate submitted that if the period is computed from the date of receipt of the order passed by the designated authority, then the petitioner had complied with the provisions contained in sub-section (2) of section 90 of the KVSS and the designated authority ought to have accepted the amount in question determined by the authority. Save and except the aforesaid submission, no other contention is raised by the learned advocate for the petitioner. Learned counsel for the Revenue vehemently submitted that the language employed in sub-section (2) of section SCA/10085/1999 5/6 JUDGMENT 90 of the KVSS makes it abundantly clear that the period of 30 days is required to be computed from the date of the order, and not from the date of receipt of the order. As the petitioner has not complied with the provisions contained under sub-section (2) of section 90, the petition is liable to be dismissed. Learned advocate also placed heavy reliance on the affidavit filed by one P.M. Sharma on behalf of the respondent in support of the submissions canvassed at the bar. Heard learned advocate Mr S.N. Soparkar and Ms. Mauna Bhatt for the respondent at length and in great detail. We have also perused the averments made in the petition as well as the affidavit filed on behalf of the respondent by one P.M. Sharma. On a bare perusal of sub-section (2) of section 90, it becomes clear that the declarant has to pay the sum which is determined by the designated authority within 30 days of the passing of the order by the designated authority and thereafter he is required to intimate the fact of such payment to the designated authority. The designated authority, in turn, would thereafter issue the necessary certificate to the declarant. Considering the ratio laid down by the apex Court in the case of D. SAIBABA [supra], the period required to be computed for the purpose of calculating 30 days as provided under sub- section (2) of section 90 is from the date of receipt of the order, and not from the date of the order itself. If the said period is calculated from the date of receipt of the order, then it becomes clear that designated authority passed the order on 27.1.99, which is at Annexure 'A'. The petitioner received the order on SCA/10085/1999 6/6 JUDGMENT 04.02.99 and made payment as determined by the designated authority on 03.03.99. Therefore the submission of the petitioner is that the payment was made as per the provisions contained in sub-section (2) of section 90 of KVSS. In the light of the ratio laid down by the Apex Court, the payment was made by the petitioner in time i.e. within 30 days under sub-section (2) of section 90 of KVSS. In view of the foregoing discussions, the petition is required to be allowed on the short ground as discussed hereinabove. The order dated 22nd July 1999 passed by the designated authority vide annexure 'B' and order dated 03.11.99 at annexure 'E' are hereby quashed and set aside. Rule is made absolute, with no order as to costs. [D.A.MEHTA, J.] mathew [H.B.ANTANI, J.] "