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TMI Blog2003 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment year 1989-90 against the tax payable of Rs. 31,11,623 under the Kar Vivad Samadhan Scheme, 1998, for the assessment year 1990-91. Other consequential prayers are also sought for by the petitioners. Facts in brief : The petitioner is carrying on business as excise contractor. He is an assessee in terms of the Income-tax Act, 1961 (for short, "the Act"). For the assessment year 1990-91, the petitioner filed a return of income on February 5, 1991, declaring his income as Rs. 1,16,22,373 and taxes of Rs. 49,27,210 (advance tax and TDS) were paid and an order of assessment was made on March 31, 1993, by the Assistant Commissioner of Income-tax, Central Circle-IV, Bangalore, determining the total income at Rs. 3,09,700 and assessed to tax with interest at Rs. 83,78,804. The petitioner preferred an appeal against the order of assessment before the appellate authority. The appeal was partly allowed in terms of the order, dated January 25, 1994. A second appeal was filed before the Appellate Tribunal, Bangalore, on June 28, 1994, and the appeal is pending. The Finance (No. 2) Act, 1998, introduced a Scheme called Kar Vivad Samadhan Scheme, 1998 ("the Scheme" for sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenge rejection of application in terms of annexure K. Writ Petitions Nos. 33426-27 of 1999 are filed by Smt. R. Sarojamma and Ranganatha Associates ; Writ Petitions Nos. 33428-29 of 1999 are filed by Sri D. Ravindranath and Ranganatha Associates ; and Writ Petitions Nos. 33430-31 of 1999 are filed by Sri D. Dasappa and Ranganatha Associates. In these petitions also the petitioners challenge similar endorsements of rejection as in the previous cases. Writ Petitions Nos. 33432-33 of 1999 are filed by Sri D. Ramachandrappa and Ranganatha Associates ; Writ Petitions Nos. 33434-35 of 1999 are filed by Sri D. Jairaj and Ranganatha Associates ; and Writ Petitions Nos. 33436-37 of 1999 are filed by Sri D. Vijayakumar and Ranganatha Associates. In all these petitions also the petitioners challenge rejection of their applications. The respondent-Department has filed a detailed counter-statement taking the same or a similar stand in all these cases. Sri Sarangan, learned senior counsel appears for the petitioners along with Sri E. S. Kiresur. Sri M. V. Sheshachala, learned standing counsel appears for the Income-tax Department. Sri P. S. Dinesh Kumar, Central Government standing co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of these cases. The admitted facts are that the petitioners did file applications in terms of the Scheme. Their applications were scrutinised and certain payments were determined as tax payable in terms of the Scheme as per Form No. 2A issued under section 90(1) of the Finance (No. 2) Act. The admitted facts, however, reveal a factum of refund order in terms of annexure C dated March 25, 1999, an order passed by the Joint Commissioner of Income-tax (Assessment), Special Range-3, Bangalore. The admitted facts further reveal a request for adjustment and the rejection of the same in terms of annexure J dated August 5, 1999. In all these cases, the Department after rejecting their request for adjustment, has chosen to issue endorsements stating therein that the petitions filed by the petitioners seeking benefit of the Scheme are rejected on the ground of non-payment of the tax within 30 days. In the light of the arguments of learned counsel on either side, two questions emerge for my consideration (1) Permissibility of adjustment/set off of refund available with the Department towards tax arrears in terms of the Scheme. (2) Time schedule in terms of section 90(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any authority or tribunal or court, then, notwithstanding anything contained in any other provisions of any law for the time being in force, such appeal or reference or reply shall be deemed to have been withdrawn on the day on which the order referred to in sub-section (2) is passed : Provided that where the declarant has filed a writ petition or appeal or reference before any High Court or the Supreme Court against any order in respect of the tax arrear, the declarant shall file an application before such High Court or the Supreme Court for withdrawing such writ petition, appeal or reference and after withdrawal of such writ petition, appeal or reference with the leave of the court, furnish proof of such withdrawal along with the intimation referred to in sub-section (2)." Section 90(1) provides for determination by the designated authority of the declaration made under section 88 within 60 days. It provides for grant of a certificate in such form as may be prescribed to the declarant setting forth therein the particulars of tax arrear and the sum payable after such determination towards full and final settlement of tax arrears. In the event of any false information, a presu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Department. It is no doubt true that section 245 provides for set off of refund against the tax remaining payable in terms of the provisions of the Act. It also provides for an intimation in writing to such person of tile action to set off proposed to be taken under the Scheme. In the case on hand, a reading of the Scheme would show that this Scheme is introduced with the laudable object of early recovery and closure of long pending litigations. The Scheme as such does not provide for any such adjustment as a matter of fact. Learned counsel wants me to read section 245 into the Scheme for the purpose of payment in terms of section 90(2). I am unable to accept this submission. The Scheme is an independent Scheme and a self-contained Scheme. Courts cannot introduce what is not available in the Scheme in the case on hand. The clarification as referred to has to be understood as against the demand of the previous order and it cannot be understood as an adjustment of refund towards tax arrears. In fact, the respondents have clarified to me that the said adjustment is permissible at the instance of the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in of the revising authority. The mere fact that the revising authority also happens to be the designated authority, he cannot merge the two distinct jurisdictions and obligations into one and reflect one order into another. As a designated authority, he has jurisdiction to see only the existence of the conditions which makes the Kar Vivad Samadhan Scheme operative in the case. If requirement of the Scheme is that a revision in respect of tax arrears is pending, his jurisdiction as designated authority stops to go further on finding as on the date of declaration a revision in respect of the order determining the tax demand out of which the whole or part sum remains unpaid, is pending. Whether the revision has merit or will be successful, is not his domain. That is the domain of the revising authority. That jurisdiction he may not be called upon to exercise if on determining the amount payable under the Scheme the assessee deposits the same within the time prescribed. Because in such event the revision is deemed to be withdrawn under section 90(4) of the Finance (No. 2) Act of 1998. An authority discharging both the functions cannot by deciding a pending revision on merit and reflec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long with the declaration, interest at the rate of 2 per cent. for every month or 'part of a month' could be charged. Therefore, the order passed by the Commissioner of Income-tax was liable to be set aside." This judgment was noticed by the High Courts of Madras, Bombay and Madhya Pradesh. The Madhya Pradesh High Court noticing Smt. Laxmi Mittal's case [1999] 238 ITR 97 (P H), ruled that the delay in deposit can be condoned. The Madras High Court also has ruled following Smt. Laxmi Mittal's case [1999] 238 ITR 97 (P H), that the delay can be condoned. The Bombay High Court noticing Smt. Laxmi Mittal's case [1999] 238 ITR 97 (P H) and E. Prahalatha Babu's case [2000] 241 ITR 457 (Mad) also has ruled that the Scheme is for the benefit of the assessee and a beneficial interpretation has to be given to it, and the word "shall" may be interpreted as "may". The court ruled that the explanation for delay can be condoned. However, a learned single judge of this court in the case of Smt. Atamjit Singh v. CIT [2001] 247 ITR 356 noticed Smt. Laxmi Mittal's case [1999] 238 ITR 97 (P H) and has categorically ruled that this court disagrees with the said view of the Punjab and Haryana High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dantly clear that if the declarant fails to pay the tax within the period of three months as specified, the declaration filed shall be deemed never to have been made under the Scheme. In other words, the consequences of non-compliance with the provisions of section 67(1) relating to the payment have been provided. It is well-settled that when consequences of the failure to comply with the prescribed requirement is provided by the statute itself, there can be no manner of doubt that such statutory requirement must be interpreted as mandatory (see Maqbul Ahmad v. Onkar Pratap Narain Singh, AIR 1935 PC 85, 88). Besides the Scheme has conferred a benefit on those who had not disclosed their income earlier by affording them protection against the possible legal consequences of such non-disclosure under the provisions of the Income-tax Act. Where the assessees seek to claim the benefit under the statutory Scheme they are bound to comply strictly with the conditions under which the benefit is granted. There is no scope for the application of any equitable consideration when the statutory provisions of the Scheme are stated in such plain language. Seen from the angle of the designated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities must be and are hereby allowed. However, having held that the assessees are not entitled to the benefit of the Scheme since the payments made by them were not in terms of the Scheme, we direct the Revenue authorities to refund or adjust the amounts already deposited by the assessees in purported compliance with the provisions of the Scheme to the concerned assessees in accordance with law. All the appeals are accordingly disposed of without any order as to costs." In the light of the binding apex court ruling, this court has no option but to reject the theory of equity and also deny the benefit of extension to the petitioner for the purpose of the benefit under the Scheme, particularly when payments are not made within the time-frame of 30 days in terms of the Scheme. In the circumstances, and in the given set of facts, I have no hesitation in holding that the impugned endorsement does not require my interference. The petitioners' case cannot be considered in the light of a clear ruling in favour of the Revenue and against the petitioners. Sri Sarangan, learned senior counsel, however, invited my attention to a subsequent judgment in Hemalatha Gargya v. CIT [2003] 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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