COMMISSIONER OF INCOME TAX, RAJKOT vs. SHATRUSAILYA DIGVIJAYSINGH JADEJA

CIVIL APPEAL No. 4411/2003Supreme Court2005 INSC 39601 September 2005Bench: 2 JudgesAuthor: B.P. SINGH, S.H. KAPADIA COMMISSIONER OF9 pages
AI SummaryDismissed

What were the facts?

The assessee, Shatrusailya Digvijay Singh Jadeja, faced tax liabilities for assessment years 1984-85 to 1991-92 under the Income Tax Act, 1961, and the Wealth Tax Act, 1957. Appeals filed by the assessee were dismissed in 1992-93 due to failure to pre-deposit self-assessed tax. Subsequently, the assessee filed declarations under the Kar Vivad Samadhan Scheme, 1998 (KVSS) on December 28/29, 1998. The Designated Authority (DA) rejected these declarations, holding that the revisions filed by the assessee were time-barred and therefore not 'pending' as required by Section 95(i)(c) of the KVSS. The High Court allowed the assessee's appeal, leading to the present appeal by the Commissioner of Income Tax, Rajkot.

What did the Supreme Court hold?

The Supreme Court held that the Kar Vivad Samadhan Scheme, 1998, was fundamentally a recovery scheme and a complete code in itself. Section 95(i)(c) of the Scheme aimed to put an end to litigation in various forms by treating appeals, revisions, and references on par, irrespective of their specific nature under the Income Tax Act or Wealth Tax Act. The Court ruled that if an appeal or revision was pending on the date of filing the declaration under Section 88 of the KVSS, it was not within the DA's purview to determine if it was 'sham', 'ineffective', or 'infructuous'. The DA's role was to determine the tax arrears and disputed amounts, and the assessee's liability to pay interest accrued only after this determination under Section 90. The Court quashed the orders of the Designated Authority rejecting the assessee's declarations, upholding the High Court's decision. The principle established is that the pendency of an appeal or revision, even if later found to be irregular or incompetent (e.g., time-barred), is sufficient for the KVSS to apply, as per the rulings in Dr. Mrs. Renuka Datta, Raja Kulkarni, and Tirupati Balaji Developers.

What were the issues?

1. Whether the Designated Authority (DA) was correct in rejecting the Kar Vivad Samadhan Scheme, 1998 (KVSS) declarations filed by the respondent-assessee on the ground that the assessments had become final in 1992-93 (when the assessee's appeals were dismissed for failure to pre-deposit self-assessed tax) and that the respondent filed revisions under the Income Tax Act, 1961 and Wealth Tax Act, 1957 in November/December, 1998, solely to obtain the benefit of the KVSS, which came into force on September 1, 1998? (Question of law and fact, concerning Section 95(i)(c) of the KVSS). Assessee's Contention: The assessee argued that if an appeal or revision was pending on the date of filing the declaration under Section 88 of the KVSS, it was not for the DA to deem it 'sham', 'ineffective', or 'infructuous' and thus not 'pending'. Reliance was placed on Dr. Mrs. Renuka Datta v. CIT. Revenue's Contention: The revenue contended that the revisions filed by the assessee were time-barred and therefore not 'pending' in terms of Section 95(i)(c) of the KVSS, implying that the assessee's intent was merely to avail the scheme's benefits.

Which sections of the Income-tax Act were involved?

Section 95(i)(c),Section 88,Section 90,Section 87(f),Section 143(3),Section 246,Section 264,Section 260-A

AI-generated summary — verify with the full judgment below

·- COMMISSIONER OF INCOME TAX, RAJKOT A v. SHATRUSAIL YA DIGVIJA YSINGH JADEJA SEPTEMBER I, 2005 B [B.P. SINGH AND S.H. KAPADIA, JJ.] Incorn,e Tax: ' '· Kar Vivad Samadhan Scheme, 1998 [as introduced by Finance (2) Act, 1988} : c Section 95(ij(c)-AYs 1984-85to1991-92-Declarationsfiled byassessee ... were rejected by Designated Authority (DA) on the ground that 'he appeals! - revisions filed by the assessee \Vere time-barred and that the assessee filed revisions only to obtain the benefit of the Scheme and, therefore, such D revisions were not 'pending' under S. 95(i)(c)-Validity of-Held: If the appeal or revision is pending on the date of filing of the declarations under Section 88 of the Scheme, it is not for the DA to hold that the appeal revision was "'sham", "ineffective" or "infructuous" and, therefore, they were not 'pending'-Further, assessee liable to pay interest only after determination E of tax payable by the DA-Hence, order of Designated Authority quashed.

The respondent-assessee was liable to pay tax for the Assessment years 1984-85 to 1991-92 under orders passed vide Section 143(3) of the Income Tax Act, 1961 and also under the assessment or

The order continues below.

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