2016 (10) TMI 774 - HC - Income Tax

Withdrawal of relief in levy of penalty - rectification of order u/s 154 - relief of 50% of penalty under Section 271(1)(c) - scope of Section 273A(1) as well as 273A(4) - availing benefit of KVSS - Held that - As clarified by the Circular dated 7th October, 1998 issued under Section 96 of Samadhan Scheme, a mere initiation of criminal proceedings would by itself not be a bar, if the assessee concerned has been discharged. The only exclusion is of pending proceedings for conviction or conviction prior to filing of the declaration. The Circular dated 7th October, 1998 clarifies that where an assessee has been discharged before the filing of the declaration, then, he is entitled to avail of the Samadhan Scheme. Without considering the other contentions raised by the petitioner, we set aside the order dated 30th November, 1998 passed by the designated Authority under the Samadhan Scheme and restore the issue for fresh consideration, to include satisfaction of all other requirements. In terms of Section 90 of the Finance No.2 Act, the designated Authority is required to dispose of an application under the Samadhan Scheme within 60 days from the date of its receipt. - Decided partly in favor of assessee.

Summary

Issues:
Challenge to Order under Section 154 of Income Tax Act, 1961 and Order under Kar Vivad Samadhan Scheme, 1998.

Analysis:
1. The petition challenged an order rectifying the relief of 50% penalty under Section 271(1)(c) of the Income Tax Act, 1961, and the rejection of the petitioner's application under the Kar Vivad Samadhan Scheme, 1998.
2. The petitioner pressed for relief regarding the order under the Samadhan Scheme, introduced by the Finance No.2 Act, 1998, Chapter IV.
3. The relevant facts included assessment for A.Y. 1989-90, penalty imposition, waiver application, discharge from prosecution, and a declaration under the Samadhan Scheme.
4. The Designated Authority rejected the petitioner's Samadhan Scheme declaration based on pending prosecution and the Revenue's Criminal Revision Petition.
5. Section 95(1)(c) of the Samadhan Scheme and Circular dated 7th October, 1998 were crucial in interpreting the application of the Scheme.
6. The petitioner argued that the rejection was unjustified as the Criminal Revision Petition was rejected, and the Circular allowed for settlement post-discharge.
7. The Revenue did not challenge the rejection of the declaration, focusing on the legality of the orders under the Act.
8. The Court found merit in the petitioner's argument, emphasizing the Circular's clarity on discharge allowing for Scheme application.
9. The rejection based on the potential Criminal Revision Petition was deemed irrelevant as it had been rejected, and the Revenue had not pursued it further.
10. The Court set aside the Designated Authority's order, directing a fresh consideration within 60 days, as per Section 90 of the Finance No.2 Act.
11. Other issues raised in the petition were not addressed, given the petitioner's focus on the Samadhan Scheme order.
12. The petition was disposed of without costs, emphasizing the specific relief granted regarding the Samadhan Scheme order.