2013 (3) TMI 96 - HC - Income Tax

KAR VIVAD SAMADHAN SCHEME - assessee is a partnership firm deriving income from Sarafa business - assessment completed u/s 144 - Whether the appellant having opted for the scheme and its appeal having been allowed to be withdrawn the Tribunal was justified in proceeding and deciding the appeal of the Revenue on merits? - Held that - In view of the provisions of Section 90(4) of KAR VIVAD SAMADHAN SCHEME, 1998 as the declaration filed by the appellant for the assessment year 1980-81 has been accepted by the CIT being the designated authority, the Tribunal has erred in law in deciding on merit when the appeal ought to have been dismissed as withdrawn. As decided in Nishit Construction Company P. Ltd. v. Income Tax Officer (2006 (4) TMI 114 - MADHYA PRADESH HIGH COURT) & All India Federation of Tax Practitioners Vs. Union of India 1998 (11) TMI 113 - DELHI HIGH COURT wherein held that if a declaration has been made under KAR VIVAD SAMADHAN SCHEME, 1998 then the appeals preferred by the assessee as also the department in respect of the same assessment year cannot be proceeded with. Thus the Tribunal has erred in law in remanding the matter to the CIT(A) for decision afresh as the declaration under KAR VIVAD SAMADHAN SCHEME, 1998 has been accepted by the designated authority.

Summary

Issues:
1. Interpretation of Section 260A of the Income-tax Act, 1961.
2. Validity of Tribunal's decision in proceeding with the appeal of the Revenue.
3. Application of KAR VIVAD SAMADHAN SCHEME, 1998 in the assessment proceedings.
4. Compliance with the provisions of the Scheme by the appellant.
5. Comparison with relevant decisions of other High Courts.

The High Court heard an appeal filed under Section 260A of the Income-tax Act, 1961 against an order passed by the Income Tax Appellate Tribunal, Allahabad, relating to Assessment Year 1980-81. The substantial question of law raised was whether the Tribunal was justified in proceeding with the Revenue's appeal on merits after the appellant opted for the KAR VIVAD SAMADHAN SCHEME and withdrew their appeal. The appellant, a partnership firm deriving income from Sarafa business, had their assessment reopened under Section 147 of the Act and a reassessment order was passed. The appellant applied under the KAR VIVAD SAMADHAN SCHEME, 1998 for the assessment year and deposited the required tax amount, which was accepted by the designated authority. The Tribunal allowed the appellant's appeal to be withdrawn based on the Scheme's provisions but proceeded with the Revenue's appeal separately. The appellant argued that the Tribunal erred in deciding on the merits instead of dismissing the appeal as withdrawn, citing relevant decisions from the Madhya Pradesh and Delhi High Courts supporting their position.

The Court considered the appellant's submission regarding the acceptance of their declaration under the KAR VIVAD SAMADHAN SCHEME, 1998 and the Tribunal's error in proceeding with the appeal. The Court noted the absence of any contrary decisions presented by the Department's counsel and agreed with the interpretations of the Madhya Pradesh and Delhi High Courts on the issue. Consequently, the Court held that the Tribunal had erred in remanding the matter for the Assessment Year 1980-81 to the Commissioner of Income Tax(Appeals) and set aside the Tribunal's order. The Court allowed the appeal, concluding that the Tribunal should have dismissed the appeal as withdrawn in light of the accepted declaration under the Scheme, thereby ruling in favor of the appellant based on the Scheme's provisions and relevant legal precedents.