2001 (2) TMI 79 - HC - Income Tax

Summary

Issues:
1. Eligibility of the petitioner to avail benefit under the Kar Vivad Samadhan Scheme.
2. Interpretation of the term "arrears" in the context of tax determination.
3. Comparison of conflicting judgments in Dr. Mrs. Renuka Datla v. CIT and All India Federation of Tax Practitioners v. Union of India cases.

Analysis:
1. The judgment addresses the issue of the petitioner's eligibility to benefit from the Kar Vivad Samadhan Scheme. The Revenue had initially declined the petitioner's request due to a determination of tax in the assessment order prior to March 31, 1998, which was set aside in appeal by the Tribunal. The court rejected the Revenue's argument, emphasizing that the redetermination to be made by the Commissioner would be a continuation of the assessment order. The scheme aims to provide resolution instead of prolonged litigation, and the fact that redetermination was pending did not negate the initial determination of tax prior to the deadline.

2. The judgment delves into the interpretation of the term "arrears" concerning tax determination. Referring to the All India Federation of Tax Practitioners v. Union of India case, the court highlighted that once a liability to pay tax was determined before March 31, 1998, the assessee should be considered in arrears, irrespective of the stage of litigation. The court emphasized that the key factor is the initial determination of tax before the specified date, and subsequent legal proceedings should not impact the eligibility for the scheme.

3. The judgment also addresses the conflicting views presented in the Dr. Mrs. Renuka Datla v. CIT case. The court disagreed with the interpretation in that case, stating that the fact an assessment was set aside and redetermination pending during the scheme's validity did not disqualify the assessee from benefiting from the scheme. The focus remained on the initial tax determination before March 31, 1998, regardless of subsequent legal proceedings. Ultimately, the court allowed the writ petitions, affirming the petitioner's eligibility under the Kar Vivad Samadhan Scheme.