2008 (10) TMI 125 - HC - Income Tax

AO has granted relief only of interest under KVSS and adjusted refund of AY 1982-83 to the demand of AY 1984-85. Petitioner has challenged the authority of the relief under KVSS to claim benefit beyond interest and adjustment of refund without prior intimation under section 245 HC did not find the merit in the case and rejected the writ petition.

Summary

Issues:
Challenge to orders under Kar Vivad Samadhan Scheme, 1998 and Income-tax Act, 1961.

Analysis:
The appellant contested the exhibit P5 order under the Kar Vivad Samadhan Scheme, 1998, and the exhibit P3 order under the Income-tax Act, 1961. The late Viswambharan, the original petitioner, questioned the adjustments made by the assessing authority for the assessment years 1982-83 and 1984-85. The appellant sought relief under the Kar Vivad Samadhan Scheme, 1998, and requested fresh orders from the designated authority. The late Viswambharan's son took over the case upon his demise during the original petition proceedings.

The designated authority passed the exhibit P5 order granting relief only on interest payable by the petitioner. The appellant challenged this order along with the exhibit P3 order by the assessing authority. The appellant's counsel argued that both orders were contrary to the provisions of the Kar Vivad Samadhan Scheme and the Income-tax Act. The court examined the provisions of the Scheme, specifically defining terms like "declarant," "designated authority," "disputed chargeable interest," "disputed income," "disputed tax," and "tax arrear."

The court highlighted the settlement process under the Scheme, emphasizing the rates applicable for disputed income, tax arrears, and interest or penalty levied. The assessing authority had modified the assessment orders for the appellant for the assessment year 1982-83 and 1984-85. The authority adjusted the refunds due for the assessment year 1984-85 towards the tax liability for the assessment year 1982-83. The appellant failed to produce any order challenging this adjustment before the designated authority, indicating the finality of the assessing authority's decision.

The appellant's counsel argued that the assessing authority's adjustment was against statutory provisions, specifically section 245 of the Income-tax Act. However, the court held that the orders passed by the assessing authority, though possibly irregular, were not void or null in the eyes of the law. Therefore, the designated authority's decision to grant relief under sub-section (iv) of section 88(a) of the Finance Act was deemed justified. Consequently, the court upheld the rejection of the writ petition by the learned single judge, leading to the dismissal of the appeal.