2005 (10) TMI 67 - HC - Income Tax

Petitioner seeks to challenge the action of respondent No. 1 rejecting the declaration made by the petitioner under the Kar Vivad Samadhan Scheme 1998 in respect of tax arrears of the late Prince Sayajirao Gaekwar under the Wealth-tax Act 1957 contending that the order of rejection suffers from non-application of mind and is contrary to the provisions of the Kar Vivad Samadhan Scheme. - In the case at hand during the pendency of this petition the Tribunal entertained and allowed appeals filed by the petitioner challenging the orders refusing to condone delay in filing the first appeals. The delay in filing the appeals came to be condoned. The matters were remitted back to the first appellate authority for consideration on the merits. Thus the order of the Tribunal condoning delay will now relate back to the original date of presentation of appeals. If that be so on the date when the declarations were filed all the appeals will have to be treated as pending in the eye of law. Consequently the order rejecting declarations filed by the petitioner will become unsustainable in view of subsequent events.

Issues Involved:
1. Rejection of declarations under the Kar Vivad Samadhan Scheme, 1998.
2. Whether an appeal against the order refusing to condone delay can be considered a pending appeal under section 95(i)(c) of the Finance Act, 1998.

Detailed Analysis:

1. Rejection of Declarations under the Kar Vivad Samadhan Scheme, 1998:
The petitioner, a legal heir of the deceased Prince Sayajirao Gaekwar, challenged the rejection of declarations made under the Kar Vivad Samadhan Scheme (KVS Scheme) for tax arrears under the Wealth-tax Act, 1957. The Commissioner of Income-tax (respondent No. 1) rejected these declarations on the grounds that the appeals related to the tax arrears were not pending before the appellate authority on the date of the declarations. The petitioner contended that the rejection was due to non-application of mind and contrary to the provisions of the KVS Scheme.

2. Whether an Appeal Against the Order Refusing to Condon Delay Can Be Considered a Pending Appeal Under Section 95(i)(c) of the Finance Act, 1998:
The main issue was whether an appeal against the order refusing to condone delay (which is tenable under the Act) can be considered a pending appeal as contemplated under section 95(i)(c).

Submissions by Petitioner:
The petitioner argued that the appeals before the Tribunal against the order dated December 29, 1998, by the Commissioner of Wealth-tax (Appeals), were valid and pending. The petitioner cited various judgments, including Mela Ram and Sons v. CIT, Sheodan Singh v. Daryao Kunwar, and Essar Constructions v. N.P. Rama Krishna Reddy, to support the argument that an appeal presented out of time is still an appeal, and the dismissal of such an appeal on preliminary grounds like limitation is a decision in the appeal.

Submissions by Revenue:
The Revenue contended that an appeal could not be considered pending without an order condoning the delay in filing it. They relied on the judgment in Computwel Systems P. Ltd. v. W. Hasan, which held that an appeal could be treated as regular only when the delay in filing the appeal is condoned.

Court's Analysis:
The court examined various judgments to determine the principles applicable to the issue. The court noted that:
- In Mela Ram and Sons, the apex court held that an appeal presented out of time is an appeal, and an order dismissing it as time-barred is one passed in appeal.
- In Sheodan Singh, the apex court held that dismissal of an appeal on preliminary grounds like limitation amounts to the appeal being heard and finally decided on the merits.
- In Essar Constructions, the apex court ruled that a suit dismissed on the ground of limitation could be appealed against as a decree.

The court found no conflict between the judgments in Computwel Systems P. Ltd. and Shatrusailya Digvijaysingh Jadeja, noting that in the latter, the appeal was pending for consideration of the prayer seeking condonation of delay.

Conclusion:
The court concluded that the appeals filed before the Tribunal were competent and tenable. Since the Tribunal subsequently allowed the appeals and condoned the delay, the declarations under the KVS Scheme were valid. The court held that the order rejecting the declarations was unsustainable and quashed it. The petitioner was granted 15 days to make the payment of tax liability as per the KVS Scheme after receiving intimation from respondent No. 1, who was directed to communicate the same within 30 days.

Final Order:
The petition was allowed, and the impugned action was set aside. The declarations made by the petitioner were held to be legal and valid. The petitioner was given 15 days to make the payment of tax liability as per the KVS Scheme after receiving intimation from respondent No. 1.

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