SCA/3644/1999 1/8 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 3644 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 ==================================== APURV R HATHI - Petitioner Versus JG ARORA OR SUCCESSOR DESIGNATED AUTHORITY UNDER - Respondent ==================================== Appearance : MR SN SOPARKAR, Senior Advocate for Petitioner. MRS MAUNA M. BHATT for Respondent. ==================================== SCA/3644/1999 2/8 JUDGMENT 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) 1. The petitioner has filed this petition under Article 226 of the Constitution of India challenging the order dated 26.02.1999 passed by the respondent rejecting the petitioner's declaration under Section 89 of the Finance (Act) No.2 of 1998 under Kar Vivad Samadhan Scheme ('KVSS' for short) for the assessment years 1993 – 94, 1994-95 and 1995 – 96. 2. The petition was admitted by this Court and rule was issued by this Court on 07.09.1999. 3. It is the case of the petitioner that for the assessment years 1993 – 94, 1994 – 95 and 1995 – 96, the petitioner did not file his return of income in time. On account of financial difficulties, based on the correct position of the returns filed and the assessments framed, the petitioner could not pay the amount of SCA/3644/1999 3/8 JUDGMENT taxes due, as per the returned income, as required under Section 140 (A) of the Income-tax Act, 1961. The Assessing Officer passed assessment orders on 31.03.1998. The petitioner preferred Appeals before the Commissioner of Income-tax (Appeals), Baroda on 24.04.1998 which were pending at the relevant time. The petitioner filed a declaration under KVSS on 31.12.1998 before the respondent seeking a certificate under the KVSS. 4. The petitioner was given to understand that in view of non-payment of self-assessment taxes, the appeals of the petitioners, might not be entertained by the Appellate Authority. The petitioner, therefore, filed revision petitions before the Commissioner of Income- tax, Gujarat, Ahmedabad under Section 264 of the Act for each of the three assessment years. The said three revisions were pending at the relevant time. The learned CIT (Appeals), Baroda had dismissed appeals for all the three years holding them to be not maintainable for non-payment of self assessment tax. SCA/3644/1999 4/8 JUDGMENT 5. The declaration filed by the petitioner was dismissed as infructuous by the respondent vide his order dated 26.02.1999 on the ground that no valid appeals were pending on the date of filing of the petitioner's declaration for the respective assessment years. It was further observed that the revision petition was filed in the month of January 1999 after filing of the petitioner's declaration on 31.12.1998 and hence, such revision cannot validate the petitioner's declaration since as per the provision contained in Section 95 (1) (c) of the Finance (Act) No.2, 1998, there has to be pendency of a valid appeal / reference / writ / revision petition on the date of declaration. 6. It is this order which is under challenge n the present petition. 7. Mr. S. N. Soparkar, learned Senior advocate appearing for the petitioner has submitted that the impugned order of the respondent in rejecting the declaration under KVSS on the ground that appeals were not maintainable under Section 249 (4) (a) of the Act is SCA/3644/1999 5/8 JUDGMENT bad, illegal and contrary to law. The respondent, as a designated authority under the KVSS, has no authority to examine the validity or otherwise of an appeal, once an appeal is filed. It is deemed to be a valid appeal, unless it is rejected by the Appellate Authority. He has further submitted that out of abundant caution, the petitioner had preferred revision petitions. Inspite of that, the respondent has rejected the declaration on the ground that the revision petitions were filed after filing of the declaration. He has further submitted that the respondent has interpreted the provisions of KVSS in a hyper technical manner. Under Section 95 (i) (c) of the Finance (No.2) Act, 1998, the requirement is that, on the date of filing of declaration, appeal or revision must be pending. The appeals of the petitioner were pending. Based on that, the petitioner filed a declaration. The moment petitioner realized that validity of the appeal may be disputed by the respondent, the petitioner filed revisions. On the date on which the order is passed by the respondent, appeals as well as revisions were pending. He has, therefore, submitted that it cannot be said that the SCA/3644/1999 6/8 JUDGMENT petitioner had acquiesced into the assessment orders. In fact, had the petitioner realized that the respondent would have taken such a hyper technical view, the petitioner would have filed, after filing of the revision petitions, second set of declaration because the same could have been filed on 29.01.1999. 8. Mr. Soparkar has further submitted that similar issue arose before this Court as well as before the Hon'ble Supreme Court. While disposing of Special Civil Application No. 1888 of 1999 on 01.07.2008, this Court has considered all the earlier decisions of this Court as well as the Apex Court and took the view that the issue raised by the petitioner stands concluded in favour of the petitioner by virtue of ratio enunciated by the Apex Court on analysing the scheme of KVSS. It was not open to the designated authority to decide in the proceedings under KVSS whether the revision application was barred by limitation or not; or whether the delay was required to be condoned or not. The petitioner was, therefore, held to be justified in claiming that the petitioner's case is required to be SCA/3644/1999 7/8 JUDGMENT covered under KVSS and the declaration made by the petitioner in relation to disputed amount of tax is required to be accepted. The Court has considered the earlier decision of this Court in the case of Shatrushailya Digvijaysingh Jadeja V/s. CIT, (2003) 259 ITR 149 (Guj.) wherein it is held that there was no distinction between a proceeding which is pending, whether the proceeding has been initiated within a period of limitation, or beyond the period of limitation accompanied by an application seeking condonation of delay. This view expressed by this Court has been confirmed by the Apex Court in the case of CIT V/s. Shatrushailya Digvijaysingh Jadeja, (2005) 277 ITR 435 (SC). 9. Mrs. Mauna Bhatt, learned Standing Counsel appearing for the revenue did not dispute the fact that the issue raised in the present petition is squarely covered by the decision of this Court in the case of Sheela Ashokkumar Goenka V/s. Designated Authority under KVSS, in Special Civil Application No.1888 of 1999. SCA/3644/1999 8/8 JUDGMENT 10.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 having considered the entire facts and circumstances of the case as well as the decision of this Court rendered on 01.07.2008 in Special Civil Application No.1888 of 1999, we are of the view that the communication dated 26.02.1999 in so far as it rejects the declaration filed by the petitioner in relation to income-tax liability for the assessment years 1993 – 94, 1994 – 95 and 1995 – 96 is required to be quashed and set aside. It is accordingly quashed and set aside. The respondent – designated authority is hereby directed to issue fresh order under KVSS by including the Income Tax liability arising out of assessments for Assessment years 1993 – 94, 1994 – 95 and 1995 – 96. The petition is allowed accordingly. Rule made absolute without any order as to costs. Sd/- Sd/- [K. A. PUJ, J.] [B. N. MEHTA, J.] Savariya