2006 (7) TMI 116 - HC - Income Tax

Petitioner is assailing the assessment made under the Kar Vivad Samadhan Scheme - submission of the petitioner is that the disputed income has been worked out on the basis of disputed tax which does not include levy of additional tax u/s 143(1A) as per CBDT clarifications additional tax is treated a part of the tax - Commissioner has not committed an illegality in computation - Inclusion of additional tax in disputed tax is found to be proper for determination of disputed income

Summary

Issues:
Assessment under the Kar Vivad Samadhan Scheme, 1998 based on disputed tax not including additional tax under section 143(1A) of the Income-tax Act, 1961.

Analysis:
The petitioner contested the assessment made under the Kar Vivad Samadhan Scheme, 1998, arguing that the disputed income calculation did not consider the additional tax under section 143(1A) of the Income-tax Act, 1961. The petitioner filed a declaration for settlement of tax payable, which was disputed by the tax authority. The petitioner objected to the inclusion of additional tax in the determination of tax payable, citing that it was a penalty, not related to income determination. The petitioner sought quashment of the assessment order (P/4) based on these grounds.

The tax authority justified the inclusion of additional tax in the disputed income calculation for the assessment years in question. They clarified that additional tax is considered a part of the total tax payable and should be included in the determination of disputed income. The authority relied on the Central Board of Direct Taxes' clarification that additional tax is categorized as a tax under the Income-tax Act. The authority maintained that the assessment was in line with the Scheme's provisions and relevant clarifications, dismissing the petitioner's contentions.

The court analyzed the definitions of "tax arrear," "disputed tax," and "disputed income" under the Scheme. It concluded that additional tax imposed under section 143(1A) is indeed a form of tax and should be included in the calculation of disputed income. The court found that the tax authority's computation, including the additional tax, was lawful and aligned with the Scheme's provisions and the Central Board of Direct Taxes' clarifications. The court dismissed the petition, ruling in favor of the tax authority's assessment under the Kar Vivad Samadhan Scheme, 1998.