2018 (4) TMI 934 - HC - Income Tax

Settlement under the Samadhan Scheme - grievance of the Petitioner is that the Designated Authority has computed disputed income on the basis of tax paid, while in terms of Section 87(e) and (f) of the Samadhan Scheme the disputed income has to be arrived at on the basis of tax unpaid on the date of filing declaration under Section 88 of the Samadhan Scheme - Held that - Authorities under the Samadhan Scheme have to implement scheme in terms of the its provisions. Circulars/clarifications issued by the CBDT even for the purpose of appropriate administration of the scheme cannot be inconsistent with the provisions of the scheme which is legislative enactment. This Petition is disposed of by directing the Respondents to recompute income and thereafter calculate the amount payable by the Petitioner for settlement under the Samadhan Scheme. The Designated Authority is directed to complete entire exercise of computing disputed income and the amount payable for settlement as expeditiously as possible and within a period of six weeks from today and as the Petitioner had paid the amounts as computed by the Designated Authority in his certificate dated 10.2.1999, the Designated Authority shall refund excess paid by the Petitioner, if any, as so found on re-computation of the amount payable after computing disputed income on the basis of unpaid taxes.

Summary

Issues:
Challenge to certificate issued under Kar Vivad Samadhan Scheme, 1998 for Assessment Year 1994-95.

Analysis:
1. The petitioner challenged a certificate issued by the Designated Authority under the Kar Vivad Samadhan Scheme, 1998, based on the disputed income calculation for Assessment Year 1994-95. The petitioner contended that the amount payable was higher than required under the Scheme.

2. The petitioner filed the petition in 1999, seeking relief from the enhanced income determined by the Assessing Officer. Despite interim relief not granted, the petitioner made payments according to the certificate issued by the Designated Authority.

3. The petitioner's income was enhanced by the Assessing Officer, leading to a demand of ?1.39 Lakhs. The petitioner's appeal to the Commissioner of Income-tax (Appeals) was dismissed, resulting in an appeal to the Income Tax Appellate Tribunal.

4. The Samadhan Scheme aimed to settle tax disputes effectively, incentivizing taxpayers to resolve pending disputes. The petitioner filed a declaration under the Scheme to settle the dispute pending before the Tribunal.

5. The Designated Authority issued a certificate determining the amount payable for settlement at ?1.66 Lakhs, based on the tax paid, contrary to the petitioner's calculation based on unpaid tax.

6. The primary grievance was that the disputed income was computed based on tax paid, while the Scheme required it to be determined based on tax unpaid at the time of declaration.

7. The court analyzed the provisions of the Samadhan Scheme and held that disputed income must be calculated based on unpaid tax, not tax paid. The court agreed with a Delhi High Court decision that the circular directing the use of tax paid was erroneous.

8. The court emphasized that circulars cannot amend legislative enactments like the Samadhan Scheme and directed the Designated Authority to recompute the income and amount payable based on unpaid taxes within six weeks.

9. The court ordered the refund of any excess amount paid by the petitioner and disposed of the petition without costs.