2005 (11) TMI 46 - HC - Income Tax

Benefits of the Kar Vivad Samadhan Scheme, 1998 - application to derive the benefits under the said Scheme - when the appellant wanted to derive the benefits under the Scheme, it is the bounden duty of the appellant to satisfy the norms within which she could claim the benefits. Therefore, when admittedly the prosecution was initiated long prior to the coming into force of the Scheme itself and was pending as on the date when the operation of the Scheme was in vogue, it is too late in the day for the appellant to contend that irrespective of the said position, the appellant s application under the Scheme should have been entertained on the basis of compounding of such offence

Summary

Issues:
- Applicability of Kar Vivad Samadhan Scheme, 1998
- Rejection of application under the Scheme based on prosecution for concealment
- Validity of the order rejecting the application
- Opportunity for personal hearing and its impact on the order

Analysis:

1. Applicability of Kar Vivad Samadhan Scheme, 1998:
The appellant contended that she was entitled to benefits under the Kar Vivad Samadhan Scheme, 1998. However, the Scheme had a provision under paragraph 95(i)(a) stating that the Scheme shall not apply if prosecution for concealment had been instituted before the filing of the declaration under section 88 of any direct tax enactment. The appellant's application was rejected based on this exclusion clause.

2. Rejection of application under the Scheme based on prosecution for concealment:
The appellant challenged the rejection of her application, arguing that compounding the offence for earlier assessment years should invalidate the initiation of prosecution. However, the court held that the prosecution had been initiated long before the declaration under section 88. The court emphasized that the appellant's challenge to the refusal of compounding for a subsequent assessment year did not negate the initiation of prosecution.

3. Validity of the order rejecting the application:
The court found that the second respondent was justified in refusing the appellant's application under the Scheme due to the initiation of prosecution prior to the Scheme's period of applicability. The court cited the Supreme Court's decision emphasizing strict compliance with the Scheme's conditions and the lack of equitable considerations in such cases. The court concluded that the rejection of the appellant's application was appropriate.

4. Opportunity for personal hearing and its impact on the order:
The appellant raised a concern regarding the timing of the order passed by the second respondent, which was two days before the scheduled personal hearing. However, the court noted that the appellant's reply on February 23, 1999, indicated a lack of intention to avail of the personal hearing. The court found no grounds to interfere with the order of the learned single judge or the second respondent based on this contention.

In conclusion, the court dismissed the writ appeal, stating that the appellant's contentions were rightly rejected. The court imposed a cost for an abuse of the court's process. The judgment highlights the importance of strict compliance with statutory schemes and the limited scope for equitable considerations in such matters.