TaxTMI 
TaxTMI 
2017 (3) TMI 1241
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....as filed only in 2014 - to be more precise, was presented in this Court on 10.04.2014. 1.2. Given the aforesaid facts, the immediate instigation, for moving this Court via the captioned Writ Petition appears to be, the communication/order dated 21.12.2012, whereby, the refund, in the sum of Rs. 50,78,928/-, granted to the petitioner vide order dated 22.10.2012, passed under Section 154 of the 1961 Act, as indicated above, was sought to be adjusted towards penalty and interest, by respondent No.2. Prefatory facts: 2. In order to adjudicate upon this Writ Petition and, in a sense, to untangle the web of circumstances obtaining in the case as well as the prayers made in the Writ Petition, the following brief facts are required to be noticed. 2.1. The petitioner, who, evidently, at the relevant point in time, was an employee of Arignar Anna Sugar Mills, a unit of Tamil Nadu Sugar Corporation Limited, was assessed to tax, on a protective basis, vide order dated 10.03.1997. 2.2. Upon search being conducted under Section 132 of the 1961 Act, in respect of a person, by the name, Sri.A.N.Dyaneswaran, Fixed Deposit Receipts (in short FDRs) of a cumulative value of Rs. 17.97 la....
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....the respondents/Revenue in favour of the petitioner, on 01.06.1999. Pertinently, the certificate issued to the petitioner carried the following endorsement: ".... It has already been made clear to you that your declaration was entertained at your risk. However, this Form No.3 is issued without prejudice to the department's findings in Shri.A.N.Dyaneswaran's case and the acceptance of the declaration in your case does not vest any right in you to advance your case vis-a-vis "substantive assessment". In other words, this cannot be cited before the Hon'ble ITAT in the pending appeal against the assessment made in the case of Shri A.N.Dyaneswaran." 3.1. The record shows that Sri.A.N.Dyaneswaran challenged the substantive assessment made in his hands, which was sustained, right till the Supreme Court. Consequently, necessary deletion was made qua the FDRs and the interest accrued thereon, in the hands of A.N.Dyaneswaran. This order was passed, evidently, on 29.12.2007. 4. Resultantly, on an application being made by the petitioner to respondent No.2 with regard to refund of fixed deposit amount and the interest accrued thereon, as indicated above, the order da....
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....ed by Mr.T.Pramod Kumar Chopda. 7. Broadly, Mr.J.Naresh Kumar, submitted as follows : i) Once, the petitioner, had availed of the Scheme and paid the requisite tax, then, the respondents/Revenue could not have sought to recover penalty, vis-a-vis, a transaction, which was, subject matter of the Scheme. ii)The penalty order dated 25.06.1998, which was stated to have been delivered on 30.06.1998, was not received by the petitioner. Furthermore, no document has been filed by the respondents /Revenue, except for a bare assertion in the affidavit, that the order, was sent by a recorded delivery and served on the petitioner. iii) The adjustment of the amounts, which were to be refunded to the petitioner, was made without any opportunity being given to the petitioner to articulate his stand in the matter. In sum, the adjustment carried out was not in accordance with law. iv) The communication/order dated 21.12.2012, was only an intimation of the factum of adjustment, which did not provide an opportunity to the petitioner to object to the adjustment of refund granted by the very same respondent (i.e., respondent No.2), albeit, by a separate order of e....
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.....2, the return of the petitioner was processed, and after the petitioner had been given due opportunity, his total income was assessed at Rs. 19,07,241/-, albeit, on protective basis, in respect of AY 1994-95 on 10.03.1997. 8.3. According to the learned counsel, while passing the said order on 10.03.1997, it was specifically noted, that penalty action under Section 271(1)(c) of the 1961 Act should be initiated separately. Therefore, it was the submission of the learned counsel for the respondents/Revenue that upon notice being issued and reply being received, the order dated 25.06.1998 came to be passed, whereby, penalty in the sum of Rs. 16,51,046/- was levied on the petitioner. 8.4. Learned counsel further submitted that as against the protective assessment order dated 10.03.1997, the petitioner had preferred an appeal to the Commissioner of Income Tax (Appeals) [in short CIT (A)] and that, while the appeal was pending, the petitioner applied under the Scheme, which was floated by GOI, in 1998. 8.5. It was, thus, the contention of the learned counsel that the Scheme was available to the assessee, only in respect of arrears of tax, which had accrued, or/were due, as on 31....
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....ill the Supreme Court. Consequent thereto, the income from FDRs and interest accrued thereon, was deleted in the hands of Sri.A.N.Dyaneswaran. 9.4. The petitioner, had also raised a challenge to the assessment order dated 10.03.1997, passed under Section 143(3) read with Section 147 of the 1961 Act, before the CIT(A). The appeal, was disposed by CIT(A) vide order dated 28.11.1997. While disposing of the appeal, CIT(A), indicated that the amount was being assessed in the hands of the petitioner, albeit, on a protective basis. A specific observation was made by CIT(A) that, if, substantive addition was made in the hands of Sri.A.N.Dyneswaran, then, the addition, made, in the hands of the petitioner, would stand vacated. 9.5. The petitioner carried the matter in appeal to the Income Tax Appellate Tribunal (in short ITAT). While the appeal was pending with the ITAT, the petitioner attempted to avail of the benefit of the Scheme, by filing the requisite Form, on 30.11.1998. Under the Scheme, the petitioner obtained a waiver equivalent to a sum of Rs. 12,09,016/- and, thus, paid tax, amounting to Rs. 5,58,792/-. 9.6. As a matter of fact, on that particular date, the petitioner w....
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....nce with the provisions of Section 89 of the Scheme, after 01.09.1998, but before 31.12.1998. The declaration had to be made to a designated authority and, once, a declaration was made, tax qua arrears was payable by the declarant, depending on which clause of Section 88(a) of the Scheme, the declarant's case, fell in. 13.2. Furthermore, within sixty (60) days of receipt of such declaration, the designated authority, under Section 90 of the Scheme, was required to determine the amount, payable by the declarant, in accordance with the provisions of the Scheme and, thereafter, issue a certificate, in the form prescribed, to the said declarant, setting forth therein, the particulars of arrears of tax and sum payable, after such determination, towards full and final settlement of tax arrears. 13.3. The first proviso to Section 90 (1) indicates that, the only instance, in which a proceeding could be reopened was, where the declaration submitted was found to be false. The first proviso creates a deeming fiction, to the effect, that, if, a declaration is found to be false, then, it would be presumed, as if, a declaration was never made and the declarant would thereafter, be visi....
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....s required to be ascertained is: whether the declaration made, under Section 88 of the Scheme by the petitioner, covered the penalty amount and the interest levied thereon by the respondents/Revenue. 15.1. The respondents/Revenue, in rebuttal to the stand taken by the petitioner, have relied upon the definition of term "tax arrear", as obtaining in Section 2(m)(1) of the Scheme. For the sake of convenience, the said provision is extracted hereafter: " (m) "tax arrear" means.- (i) in relation to direct tax enactment, the amount of tax, penalty or interest determined on or before the 31st day of March, 1998 under that enactment in respect of an assessment year as modified in consequence of giving effect to an appellate order but remaining unpaid on the date of declaration; ....." 16. A careful perusal of the definition of "tax arrear" would show that it relates to the amount of tax, penalty or interest determined on or before 31.03.1998 under 1961 Act in respect an Assessment Year, which, as modified in consequence of giving effect to an appellate order, remains unpaid on the date of declaration. 17. In the instant case, the assessment made (under ....
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....), 215,216,217,158BFA 220(2) or penalties under section 271(1)(c), 221, 158BFA, 273 etc. But where the interest or penalty is not directly related to assessed income/arrears of tax, waiver of only 50 per cent thereof is available, e.g., interest under section 201(1A), penalties under section 271(1)(b), 271B, 271BB, 271C, 271D, 271E, 271F, 272A, 272AA, 272BB etc. .... Question No.9: Whether the Scheme covers cases where taxes are outstanding on 31st March, 1998 but the appeal is filed after 31st March, 1998? Answer: Yes, the pendency of appeal etc., should be on the date of declaration. ....." (Emphasis is mine) 19. I tend to agree with the submissions made in this behalf by the learned counsel for the petitioner. A perusal of Answers to Question No.5 and 7, to my mind, would clearly establish that under Section 91 of the Scheme, a designated authority is empowered to grant waiver from imposition of penalty and interest in respect of income, which is subject matter of the declaration. Since, penalty and interest was levied in the instant qua tax, which was in arrears, as on 31.3.1998, the declaration issued by the designated authority,....