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TMI Blog2014 (9) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... aid the amount in accordance with Clause (a)(iii) of Section 88 of the Act, it is declared that he is not in arrears of any tax nor he is under obligation to pay any further amount, with reference to the assessment year 1996-97 – Decided in favour of assessee. - W. P. No. 4202 of 1999 - - - Dated:- 8-7-2014 - L. Narasimha Reddy And Challa Kodanda Ram,JJ. For the Petitioner : Sri A. V. Krishna Kowndinya For the Respondent : Sri J. V. Prasad ORDER (Per LNR,J) This writ petition involves the interpretation of some provisions of Karvivad Samadhan Scheme, 1998 (for short the Scheme). The petitioner is an individual assessee. He undertakes works of construction mainly for the Indian Railways. He submitted his income tax returns for the year 1996-97, showing the income of ₹ 2,31,490/-. The Income Tax Officer passed an order dated 02.02.1998 observing that the taxable income of the petitioner is ₹ 7,70,200/-, by adding certain items. In an appeal preferred before the Commissioner (Appeals), the taxable income was marginally reduced to ₹ 7,43,650/-. Not satisfied with the relief granted therein, the petitioner approached the Income Tax Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case as falling under Clause (a)(iv) of Section 88 of the Act. Sri J.V.Prasad, learned Standing Counsel for the Income Tax Department, on the other hand, submits that the impugned order was passed strictly in accordance with the provisions of the Act and the Scheme. He contends that the mere fact that there existed some arrears of tax would not relieve the petitioner from the obligation to pay the amount on all three components. He further submits that the penalty levied against the petitioner was, in relation to a matter, totally unconnected with the assessment and the clarification issued by the CBDT dealt with such cases. The Parliament introduced the Scheme by substituting Chapter IV through the Act. The objective appears to be to reduce the pendency of litigation in the field of taxation. The Scheme covers not only the cases under the Income Tax Act but also the cases under other taxation enactments. The various expressions that become relevant in operation of the Scheme are defined under Section 87 of the Act. One expression, which becomes relevant in the context of the present case is tax arrear. It is defined under clause (m) as under: (m) tax arrear means,- (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be calculated varies. In his declaration, as prescribed under the Scheme, in clause (f), the petitioner has shown the following components: (i) Tax - ₹ 1,05,977/- (ii) Interest - ₹ 53,593/- (iii) Penalty - ₹ 4,50,000/- Stating that the income referable to tax is ₹ 2,64,943/- the petitioner deposited 30% thereof being ₹ 79,483/-. The 1st respondent however took the view that the petitioner is liable to pay 50% of all the three components aggregating to ₹ 3,04,483/-. He appears to have been guided by the clarification issued by the CBDT. The relevant clarification, which was extracted in the counter affidavit, reads: Q.No.7. The scheme offers full waiver of interest and penalty where the tax arrear includes such interest or penalty along with tax. What kind of interest and penalty would be open for such waiver? Ans. All interest and penalties that are directly related to assessed income or arrears of taxes will be open for full waiver, if the taxes are outstanding on the specified dates, e.g., interest u/s.234A, 234B, 234C, 139(B), 215, 216, 217, 158BFA, 220(2) or penalties u/s. 271(1)(c), 221, 158BFA, 273 etc. But where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his treatise on The Interpretation of Statutes observed, Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity which can hardly have been intended, a construction may be put upon it which modifies the meaning of the words and even the structure of the sentence. This may be done by departing from the rules of grammar, by giving an unusual meaning to particular words, or by rejecting them altogether, on the ground that the legislature could not possibly have intended what its words signify, and that the modifications made are mere corrections of careless language and really give the true meaning. Where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftsmans unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used. He referred to the relevant precedents in this behalf. Two illustrations in the form of precedence would make the principle involved clear. In Adler v. George, the relevant law prohibited any person to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this formal logic that Lord Halsbury had in mind when he said that every lawyer must acknowledge that the law is not always logical. The American Holmes J is remembered for saying that The life of the law has not been logic: it has been experience. While in formal logic the conclusion must inexorably follow from applying the minor premiss (the facts) to the major premiss (the legal rule), in informal logic it is the major premiss itself that is suspect. On application of these principles to the facts of the case, it becomes clear that the view expressed by the authorities under the Act, vis-a-vis the claim of the petitioner that benefit under the Scheme cannot be sustained in law. We, therefore, allow the writ petition and set aside the impugned order. Since the petitioner has already paid the amount in accordance with Clause (a)(iii) of Section 88 of the Act, it is declared that he is not in arrears of any tax nor he is under obligation to pay any further amount, with reference to the assessment year 1996-97. It is left open to the 1st respondent to pass consequential orders, if any. The miscellaneous petition filed in this writ petition shall also stand disposed of. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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