The Commissioner of Income TaxTamil Nadu III, Chennai v. Shasenan M.Parpia

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 17.4.2007CORAMTHE HON'BLE MR.JUSTICE P.D.DINAKARANANDTHE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJAWrit Appeal No.2275 of 1999The Commissioner of Income TaxTamil Nadu III, Chennai. .. AppellantVs.Shasenan M.Parpia ..RespondentAppeal under Clause 15 of the Letters Patent against the order of thelearned Single Judge dated 30.04.1999 made in W.P.No.5017 of 1999.WP.No.5017 of 1999 :Petition presented under Article 226 of the Constitution of India toissue a Writ of Certiorarified Mandamus, calling for the records relatingto the issue of Certificate under section 90(1) of the Finance (No.2) Act1998 in respect of Kar Vivad Samadhan Scheme C.No.KVSS/249/TN III/1998-99/249 dated 22.09.99 arising out of the application of declaration madeunder section 88 of the Act made by the petitioner on 31st December 1998and quash the certificate dated 22.02.1999 and direct the respondent toascertain disputed income inrelation to assessment order 1995-96 as isrelated to disputed tax arrers under section 87(e)(f) according to law.For Appellant : Mrs.Pushya Sitaraman, Sr.S.C.For Respondent :No appearanceJ U D G M E N T(Delivered by P.D.DINAKARAN,J.)The above appeal is directed against the order of the learned singleJudge dated 30.4.1999 made in W.P.No.5017 of 1999.2. For the purpose of convenience, the parties are arrayed as pertheir rank in the writ petition. https://hcservices.ecourts.gov.in/hcservices/

3.1. The writ petitioner is an assessee before the AssistantCommissioner of Income Tax, City Circle VII (3), Chennai. She filed thereturn of income for the assessment year 1995-96 under the provisions ofthe Income Tax Act. The assessment was completed on 23.3.1998 determiningthe total income at Rs.29,26,025/-. The tax payable in respect of theincome other than capital gain was determined at Rs.75,516/-, of courseafter granting necessary rebate under Section 88 of the Act, viz. theamount of tax payable on income other than capital gain was determined atRs.70,276/- and the capital gain tax was arrived at Rs.5,34,948/-. As perthe said assessment order dated 23.3.1998, the tax payable was determinedat Rs.8,45,175/-, after making certain addition towards the interest underSections 234A, 234B, 234C of the Act, which was later on rectified toRs.6,10,464/-. 3.2. Aspiring benefit under Kar Vivad Samadhan Scheme, 1998, (inshort "Samadhan Scheme"), the petitioner made applications under Section89 of the Samadhan Scheme on 30.12.1998 and 22.2.1999. By order underSection 90(1) of the Finance Act, 1998 dated 22.2.1999, the petitioner wasdirected to pay a sum of Rs.6,08,987/-, as the amount payable by hertowards the full and final settlement of tax arrears covered by thedeclaration under the Samadhan Scheme. 3.3. Aggrieved by said order, the petitioner preferred W.P.No.5017 of1999 for a writ of Certiorarified Mandamus calling for the recordsrelating to the issue of the above said Certificate, to quash the same anddirect the respondent to ascertain disputed income in relation to theassessment order 1995-96 as was related to disputed tax arrears undersection 87(e) of the Act.3.4. According to the petitioner, her total income for the assessmentyear 1995-96 consists two segments of income. One is capital gain and theother is income other than capital gain. The income by way of capitalgain is taxed at a fixed rate of 20% of an amount of capital gain underSection 112 of the Act and in respect of other income, i.e. income otherthan capital gain, it is taxed at a progressive rates prescribed underrelevant provisions of the Finance Act and the maximum marginal rate oftax was 40% during the relevant assessment year in question. But the samewas resisted by the Revenue on the ground that once the petitioner choosesthe benefit of Samadhan Scheme, its rights and liabilities would bedetermined only within the purview of the Samadhan Scheme and nototherwise. 3.5. The learned single Judge, by order dated 30.4.1999, holdingthat there would be two unintended injuries that might be suffered by thepetitioner, one in determining the amount of disputed income and anotherin payment of higher rate under the Samadhan Scheme and that suchcontingency was not contemplated nor intended by the legislature under theSamadhan Scheme and that the determination of disputed income at https://hcservices.ecourts.gov.in/hcservices/ Rs.20,29,257/- and the amount payable under the Samadhan Scheme at 20%thereof, viz. Rs.6,08,987/- by applying maximum marginal income rate onthe income from capital gain was not in accordance with the Samadhanscheme, set aside the impugned order with the following directions to therespondent:(i) to set off the refund amount granted for the assessment year 1996-97against the tax demand for the assessment year 1995-96 against the taxdemand for the assessment year 1995-96 in accordance with the noticeof demand by the Assistant Commissioner of Income tax dated 29.9.1998for the assessment year 1996-97; and(ii) to determine the disputed income in accordance with the directionsearlier given and determine the tax payable under the Samadhan Schemeand pass appropriate orders.4. The learned senior Standing Counsel contends that when theSamadhan Scheme confer certain benefits on those who had not disclosedtheir income earlier by affording protection against the possible legalconsequences of such non disclosure under the Income Tax Act and if thepetitioner seeks to claim benefit under such statutory Scheme, her rightsand liabilities are to be determined strictly only in accordance with theSamadhan Scheme.5. Unfortunately, there is no representation on behalf of thepetitioner.6. It is a settled law that in a matter of Samadhan Scheme or anysuch statutory scheme as the case may be, the Courts have no power to actbeyond the terms of the statutory scheme under which the benefits havebeen granted to the assessee vide Hemalatha Gargya v. Commissioner ofIncome Tax (259 ITR 1). 7. If that be so, assuming the petitioner would be facing twounintended injuries as observed by the learned single Judge in his orderreferred supra, it may not be proper for this Court to issue such adirection to work out her tax liability beyond the expressed terms ofstatutory schemes. Therefore, suffice it to set aside the impugned orderdated 22.2.1999 and modify the order of the learned single judge and toremit the matter to the appropriate authority under the Samadhan Scheme todetermine the benefits and liabilities of the assessee under the SamadhanScheme strictly in accordance with the terms of the Samadhan Scheme andpass orders, without reference to any of the observations made by thelearned single Judge. While passing such order, the appropriate authorityshall also consider the application made by the petitioner on 1.3.1999, asthe appropriate authority had already indicated in their proceedings dated10.3.1999 that they would consider the said application of the petitionerprovided she makes payment as demanded under the impugned order. https://hcservices.ecourts.gov.in/hcservices/ The writ appeal is disposed of accordingly. No costs. Consequently,CMP No.19079 of 1999 is closed.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarkplTo1. The Commissioner of Income Tax,Tamil Nadu III, Chennai.1 cc To Mr.V.S.Ramakrishnan , Advocate, SR.25034.1 cc To Mr.Pushya Sitaraman, Standing Counsel for I.T.Cases, SR.25369.W.A.No.2275 of 1999. BK(CO)RVL 27.04.2007