2003 (7) TMI 23 - HC - Income Tax

Whether declaration filed by the respondent can be one which could be considered in terms of the Kar Vivad Samadhan Scheme, 1998. It is contended by the Revenue that, to consider a declaration applying the Scheme, there shall be some proceedings pending before the concerned authority, and such proceedings shall be in terms of the law providing for such proceedings - revision under section 264 of the Income-tax Act has been pending on the date of filing declaration Thus, it cannot be said that the provisions of this scheme do not apply to the case of the respondent Held that revision can be considered as a revision petition pending to attract the application of the KVSS, 1998, in terms of section 95(i)(c) thereof.

Summary

Issues:
1. Interpretation of whether exhibit P3 declaration can be considered under the Kar Vivad Samadhan Scheme, 1998.
2. Validity of exhibit P2 revision petition under section 264 of the Income-tax Act.
3. Application of the Kar Vivad Samadhan Scheme, 1998, in the context of exhibit P2 revision petition.

Issue 1: Interpretation of exhibit P3 declaration under the Kar Vivad Samadhan Scheme, 1998:
The central question in this appeal was whether exhibit P3 declaration filed by the respondent could be considered under the Kar Vivad Samadhan Scheme, 1998. The Revenue argued that for a declaration to be considered under the Scheme, there must be pending proceedings before the relevant authority as per the applicable law. The respondent had filed exhibit P3 declaration after filing a revision petition exhibit P2 under section 264 of the Income-tax Act. The revision petition was dismissed, leading to the rejection of exhibit P3. The court analyzed the sequence of events and held that exhibit P2 was a valid revision petition, making exhibit P3 eligible for consideration under the Scheme. The court emphasized that exhibit P3 should not have been dismissed solely on the ground of no valid revision petition pending.

Issue 2: Validity of exhibit P2 revision petition under section 264 of the Income-tax Act:
The validity of exhibit P2 revision petition under section 264 of the Income-tax Act was a key aspect of the case. The Revenue contended that exhibit P2, which sought relief regarding interest calculation, was not a valid revision petition as it was filed before the Commissioner and not the Chief Commissioner, who has jurisdiction over interest waiver matters. However, the court disagreed with this argument, stating that the Commissioner had the authority to inquire into the legality of orders passed by subordinate authorities, including issues related to interest calculation. The court found exhibit P2 to be maintainable before the Commissioner, making it eligible for consideration under the Kar Vivad Samadhan Scheme, 1998.

Issue 3: Application of the Kar Vivad Samadhan Scheme, 1998, in the context of exhibit P2 revision petition:
The court analyzed the provisions of the Kar Vivad Samadhan Scheme, 1998, in relation to the pending exhibit P2 revision petition. Section 95 of the Scheme specified conditions under which the Scheme would not apply, including cases where no appeal or revision application was pending before the relevant authorities. The court concluded that exhibit P2, concerning the calculation of interest, was a valid revision petition pending before the Commissioner. Therefore, the court held that the provisions of the Scheme applied to the respondent's case, and the dismissal of exhibit P3 based on the absence of a valid revision petition was erroneous. The court dismissed the Revenue's contentions and upheld the validity of exhibit P2 for consideration under the Scheme.

In summary, the High Court of Kerala addressed the issues surrounding the interpretation of exhibit P3 declaration, the validity of exhibit P2 revision petition, and the application of the Kar Vivad Samadhan Scheme, 1998. The court ruled in favor of the respondent, emphasizing the maintainability of exhibit P2 before the Commissioner and its eligibility for consideration under the Scheme. The court's detailed analysis of the legal provisions and sequence of events led to the dismissal of the Revenue's contentions and the affirmation of the respondent's position in the case.