2004 (11) TMI 41 - HC - Income Tax

Application for settlement of tax payable under Kar Vivad Samadhan Scheme - petitioner seeks a writ, order or direction Commissioner to entertain the application under the Kar Vivad Samadhan Scheme, 1998, filed on December 22, 1998, for the assessment year 1993-94 and issue necessary order under the aforesaid scheme and other consequential reliefs. Held that once the delay has been condoned by the Tribunal, the appeal would be said to be pending before the Tribunal on the date when a declaration was filed and, therefore, the Commissioner of Income-tax, Allahabad, was not justified in rejecting the declaration on this ground. - writ petition succeeds and is allowed.

Summary

Issues Involved:
1. Legality of the Commissioner's order dated February 15, 1999.
2. Applicability of the Kar Vivad Samadhan Scheme, 1998.
3. Interpretation of the terms "admitted and pending" in Section 95(i)(c) of the Act.
4. Procedural requirements for an appeal to be considered pending.

Detailed Analysis:

1. Legality of the Commissioner's Order:
The petitioner contended that the order dated February 15, 1999, passed by the Commissioner of Income-tax was wholly illegal, violating principles of equity, fair play, and natural justice as no show cause notice or opportunity of hearing was given. The court found merit in this argument, noting that the Commissioner should have provided an opportunity for the petitioner to be heard before rejecting the application under the Kar Vivad Samadhan Scheme.

2. Applicability of the Kar Vivad Samadhan Scheme, 1998:
The Scheme, introduced by the Central Government, aimed to settle tax disputes and collect revenue by avoiding litigation. Section 95 of the Act specified that the scheme would not apply in cases where no appeal, reference, or writ petition was admitted and pending on the date of filing the declaration. The petitioner had filed an appeal along with an application for condonation of delay on January 31, 1996, and subsequently applied for settlement under the Scheme on December 22, 1998. The Commissioner rejected this application, stating that no appeal was pending on the date of the declaration.

3. Interpretation of "Admitted and Pending":
The court examined whether the appeal filed by the petitioner could be considered "admitted and pending" under Section 95(i)(c) of the Act. The court reviewed several precedents, including:
- Mela Ram and Sons v. CIT [1956] 29 ITR 607 (SC): An appeal presented out of time is still an appeal, and an order dismissing it as time-barred is one passed in appeal.
- S.B. Jain, ITO v. Mahendra [1972] 83 ITR 104 (SC): The actual pendency of a proceeding is required, irrespective of whether it is barred by limitation.
- Sheth Enterprises (P.) Ltd. v. Commr. of Customs [1999] 154 CTR 195 (Guj): An appeal filed beyond the period of limitation but pending consideration for condonation of delay is still considered pending.
- Shatrushailya Digvijaysingh Jadeja v. CIT [2003] 259 ITR 149 (Guj): The term "admitted and pending" applies differently to appeals and revisions.

4. Procedural Requirements for an Appeal to be Considered Pending:
The court noted that under the Appellate Tribunal Rules, 1963, there is no provision for admitting an appeal by the Tribunal. The Registrar has the power to scrutinize appeals for defects and place them before the Bench for orders. The court concluded that once the delay in filing the appeal is condoned, it relates back to the date of filing, making the appeal pending as of that date.

Conclusion:
The court held that the appeal filed by the petitioner should be considered pending once the delay was condoned by the Tribunal. Therefore, the Commissioner's rejection of the application under the Scheme was unjustified. The court set aside the order dated February 15, 1999, and directed the Commissioner to pass appropriate orders on the declaration filed by the petitioner in accordance with the law.

Judgment:
The writ petition was allowed, and the Commissioner of Income-tax, Allahabad, was directed to reconsider the petitioner's application under the Kar Vivad Samadhan Scheme, 1998, in light of the court's observations. The parties were to bear their own costs.