2014 (3) TMI 894 - HC - Income Tax

Rejection for the registering the Kar Vivad Samadhan Scheme Jurisdiction u/s 264 of the Act - The registration was rejected on the ground that on the date of filing the declarations, there is no dispute pending in the eye of law as the revisions filed by them u/s 264 of the Act are not maintainable and are beyond the scope of jurisdiction u/s 264 of the Act - Held that - The decision in COMMR. OF INCOME TAX, RAJKOT Versus SHATRUSAILYA DIGVIJAYSINGH JADEJA 2005 (9) TMI 362 - SUPREME COURT OF INDIA followed - while processing the declarations filed by the assessees under the Scheme, there is no scope for the designated authority to consider the object and motive of a particular declarant in filing the declarations in terms of the Scheme - What all the designated authority is required to consider is that whether the petitioners are eligible to file such declarations in terms of the Scheme, and if so, the designated authority is left with no option but to process the same - the designated authority is directed to process the declarations filed by the petitioners in terms of the K.V.S.S. and pass appropriate orders Decided in favour of Assessee.

Summary

Issues:
1. Rejection of declarations filed under the Kar Vivad Samadhan Scheme, 1998 by the designated authority.
2. Dispute regarding the eligibility of the petitioners to file declarations under the Scheme.
3. Interpretation of Section 264 of the Income-tax Act, 1961 in relation to the Scheme.
4. Consideration of object and motive behind filing declarations under the Scheme.

Analysis:
The High Court of Andhra Pradesh addressed multiple issues in a consolidated judgment involving four writ petitions related to the Kar Vivad Samadhan Scheme, 1998. The petitioners, shareholders, and directors of a company named "M/s. Lakshmi Granites Ltd." and a company engaged in manufacturing steel products, sought to take advantage of the Scheme. They filed declarations under the Scheme, which were rejected by the designated authority on the grounds that the subject matter was not within the scope of revisionary jurisdiction under Section 264 of the Income-tax Act, 1961. The rejection was based on the argument that there was no dispute pending in the eye of the law as the revisions filed by the petitioners were deemed not maintainable under Section 264. The petitioners contended that their declarations should be considered under the Scheme as long as there were tax arrears and pending proceedings before authorities, citing relevant judgments of the Supreme Court.

The Court deliberated on the arguments presented by both parties. The learned counsel for the petitioners emphasized that the motive behind filing declarations should not affect their eligibility under the Scheme, as long as the conditions of tax arrears and pending proceedings were met. On the other hand, the Senior Counsel for the Income-tax Department argued that the petitioners filed revisions merely to exploit the Scheme and that there was no legitimate cause for revisions where returns were voluntarily filed and accepted. The Court, after considering the Supreme Court judgments cited by both parties, concluded that the designated authority should focus on the eligibility criteria for filing declarations under the Scheme and not delve into the motives of the declarants. The Court highlighted that the Scheme aimed to settle tax arrears and end litigation, not create further disputes.

In light of the Supreme Court's authoritative pronouncements on similar issues, the High Court allowed the writ petitions, directing the designated authority to process the declarations filed by the petitioners under the Kar Vivad Samadhan Scheme, 1998. The Court also instructed the authority to consider the payment of disputed tax arrears by the petitioners in accordance with interim orders. The judgment emphasized the importance of adhering to the Scheme's provisions and eligibility criteria while processing declarations, without delving into the motives behind the filings. Ultimately, the Court ruled in favor of the petitioners, allowing the writ petitions without any costs imposed.