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TMI Blog1999 (8) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has been waived. Hence, there is no dispute. 3. The arrear that is sought to be settled relates to the current demand raised on December 31, 1998, which is entirely different from the arrear demand." The declarations relate to the income assessed for the years 1989-90 and 1992-93. The assessments of the petitioners for the aforementioned years were made under section 143(3) of the Income-tax Act. The assessee-petitioner preferred appeals. The Commissioner of Income-tax (Appeals) by his orders dated July 31, 1997, and September 30, 1997, partly allowed the appeals, by giving partial relief in respect of unexplained investment in the co-ownership property of Raju Investments and also setting aside the addition in regard to unexplained investment in shares in one case and gold and jewellery in another case. For giving effect to the appellate order, modification orders were passed on September 30, 1997, and November 17, 1997, recomputing the income. The tax payable thereon was specified at Rs. 4,82,727 and Rs. 6,56,042 respectively. Thereafter, the competent authority granted waiver of interest payable under sections 234A, 234B and 234C by his order dated October 31, 1997. In or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sections 234A, 234B and 234C. It is further seen from the record that the appellate authority allowed the appeals on March 24, 1999, i.e., subsequent to the impugned order, directing the deletion of interest which was on the earlier occasion waived by the Director-General, Income-tax, Bangalore. In the declaration filed for the year 1989-90, the tax arrear on the date of filing the declaration was shown as Rs. 1,26,889 which is also the figure reflected in the fresh assessment order dated December 31, 1998, after excluding the interest under sections 234A, 234B and 234C. The disputed income relatable to the tax arrear was calculated at Rs. 2,41,693 on which the petitioner offered to pay a tax of Rs. 96,677 under the scheme. Coming to the declaration for the year 1992-93, the tax arrear was shown as Rs. 5,42,174 on the date of making the declaration and the corresponding disputed income was calculated at Rs. 9,68,168. On this, the petitioner offered to pay the tax of Rs. 3,87,267 under the scheme. On these facts, the question is whether the petitioner can avail of the benefit of the scheme and whether the reasons given by the first respondent while rejecting the declaration are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 95 is as under: "95. The provisions of this scheme shall not apply--- (i) in respect of tax arrear under any direct tax enactment,---... (c) to a case where no appeal or reference or writ petition is admitted and pending before any appellate authority or the High Court or the Supreme Court on the date of filing of declaration or no application for revision is pending before the Commissioner on the date of filing declaration." The main point put against the assessee by the respondent as well as counsel for the Revenue is that the declaration does not relate to any "tax arrear" within the meaning of section 87(m), We find force in the contention of learned counsel for the respondent. In our view, the 'arrear of tax" as on the date of declaration had arisen not on account of any determination made on or before March 31, 1998, but on account of determination made long thereafter. The event of determination or to put it more precisely, the redetermination of the tax pursuant to the appellate order remanding the matter for taking a fresh decision in so far as the unexplained investment in the shares for the two years and unexplained investment in acquisition of jewellery for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re especially a provision granting exemption or concession should not be stretched in favour of the assessee by means of analogy, inference and "a priori' notions. The fact that the Legislature itself was not in favour of takings, cognizance of the fresh assessments or reassessments made subsequent to the cut-off date-March 31, 1998, is manifested in the exception provided in section 87(m) itself. If there was a determination before April 1, 1998, by the appellate authority and as a sequel thereto the earlier assessment stood modified to give effect to that appellate order, such modification even though made subsequent to March 31, 1998, but before the date of declaration will answer the definition of "tax arrear" in section 87(m). In other words, a consequential order passed merely quantifying the tax on the basis of the appellate decision will be within the purview of the scheme although such consequential order was subsequent to March 31, 1998, provided the other ingredients are satisfied. To this limited extent, the proceedings subsequent to March 31, 1998, are taken note of under section 87(m), but the order of fresh assessment made pursuant to the direction issued under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xception is spelt out in clause (m) of section 87 by necessary implication rules out the application of "relation back" theory evisaged by learned counsel. In this context, learned counsel for the petitioner sought to draw support from the following observations made by the Division Bench of the Delhi High Court in All India Federation of Tax Practitioners v. Union of India [1999] 236 ITR 1: "It is true that 'tax arrears' has been defined as the amount of tax, penalty. or interest 'determined' on or before March 31, 1998, under clause (m) of section 87, Still it cannot be denied in the illustration given hereinabove that at one point of time the tax was determined though such determination was reversed in appeal by the Commissioner of Income-tax (Appeals). The determination is sought to be restored in the appeal preferred by the Department before the Tribunal. Once the appeal is allowed, the determination would relate back to the date of originating the same." These observations ought to be understood in the context of the issue the learned judges were discussing. The learned judges were meeting the argument of the Revenue that if an assessee succeeds in the first appeal, the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a host of economic factors play a role in moulding the policy of the State in bringing into force a scheme of this nature. By a process of judicial interpretation, the courts should refrain from making embellishments or refinements in the scheme in the name of promoting the objective better. The court in exercise of the whole hog to achieve the avowed purpose and it should be more comprehensive or more relief oriented. Various decisions of the Supreme Court from the 1960s eloquently convey the message that the courts should be slow and cautious in interfering with the classification made in fiscal legislation and the modalities evolved for charging and recovering the taxes. We cannot expect a scheme or provision intended to extend tax relief to be most comprehensive giving coverage to every possible situation. Logical deductions and analogies do not always hold good. Let us take the facts of the instant case. The submission made on behalf of the petitioner is that the appeal filed before the Tribunal questioning the addition of income on unexplained investment in shares and jewellery should be treated as the appeal pending on the plain language of section 95(i)(c) notwithstandin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt while dealing with the constitutionality of section 10 of the Central Sales Tax (Amendment) Act, 1969, which provided for exemption from Central sales tax if the dealer had not collected the tax between November 10, 1964, and June 9, 1969, repelled the argument that those who had not collected the tax on their sales prior to November 10, 1964, should also get the same benefit to conform to the norms of article 14. Their Lordships observed : "A concession is not a matter of right. Where the Legislature taking into consideration the hardships caused to a certain set of taxpayers gives them a certain concession, it does not mean that that action is bad as another set of taxpayers similarly situated may not have been given a similar concession. It would not be proper to strike down the provision of law giving concession to the former on the ground that the latter are not given such concession. Nor is it possible for this court to direct that the latter set should be given a similar concession. That would mean legislation by this court and this court has no legislative powers." The principle of construction of a provision in a tax statute providing for an exception or exemption ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh assessment proceedings, the assessee agreed for the additions on this account without raising any dispute and on such concession, the "set aside income" was once again added, resulting in increase of tax liability and the creation of "tax arrear". Thus, the appeals before the Tribunal have become infructuous not only with regard to the waiver of interest, but also with regard to other items of dispute. Whether an ineffective or infructuous appeal, not to speak of a sham or incompetent appeal, can be said to be an "appeal pending" within the meaning of section 95(i)(c) of the Act, is another question that could arise in the instant case. However, we consider it unnecessary to go into that question having regard to the conclusion reached on the first point. We therefore rest our conclusion on the ground that the fresh assessment order dated December 31, 1998, has not given rise to the "tax arrear" which could form the subject-matter of declaration under section 88 read with section 89 and, therefore, the benefit of concessional rate of tax cannot be availed of by the petitioner. In the result, the writ petitions are dismissed. In the circumstances of the case, we award no cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the order passed on December 20, 1998, which is entirely different from the arrear demand which was outstanding on March 31, 1998, and which was totally wiped out after the assessment was set aside in April, 1998, which is much before the date of declaration." In the declaration, the petitioner showed the disputed income as Rs. 8,57,560 and the tax arrear outstanding as on March 31, 1998, as well as on the date of the declaration as Rs. 3,84,187. Calculating the 30 per cent. of tax on Rs. 8,57,560 under the scheme, the petitioner offered to pay a sum of Rs. 2,57,268. The difference in facts between the previous cases (W. P. Nos. 14194 and 14195 of 1999), and the present case may be noticed. In this case, the order in appeal was passed after March 31, 1998, setting aside the original assessment and directing the fresh assessment. There was no appeal pending as regards the tax on the date of final declaration or even now. There was no second appeal to the Tribunal against the order dated April 20, 1998, remanding the assessment. There are two formidable obstacles which come in the way of the petitioner invoking the application of the scheme. Firstly, there was no tax arrear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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