RAJINDER MOHAN SINGH vs. C I T AMRITSAR AND ORS.

Facts

The petitioner, Rajinder Mohan Singh, sought a writ of certiorari to quash an order rejecting his application under the Kar Vivad Samadhan Scheme, 1998 (the Scheme). The assessment year in question is 1994-95. A search in 1993 led to a disclosure of Rs. 6.00 lacs. The assessment for 1994-95, completed on March 19, 1997, added Rs. 6.00 lacs to the petitioner's income. The Commissioner of Income Tax (Appeals) set aside this order on September 26, 1997, remitting the matter to the Assessing Officer. An appeal against this remittance order was pending before the Income Tax Appellate Tribunal. The petitioner made a declaration under the Scheme on December 24, 1998, which was rejected on the grounds that no tax arrears were due on March 31, 1998, or at the time of declaration.

Held

The High Court held that the petitioner was not covered under the Kar Vivad Samadhan Scheme, 1998. The Court interpreted the conditions for the Scheme's applicability strictly. Condition 1 required tax arrears to be determined on or before March 31, 1998. Condition 2 required these arrears to be outstanding as payable on March 31, 1998, and on the date of declaration. The Court found that after the CIT(A) set aside the assessment order on September 26, 1997, there was no determination of tax liability or any outstanding tax arrears against the petitioner on March 31, 1998, or on the date of his declaration (December 24, 1998). The issuance of a refund further supported this. The Court disagreed with the petitioner's reliance on precedents that suggested a prior determination, even if set aside, could qualify, emphasizing that a 'determined' tax liability must be a concluded one. The pendency of an appeal alone was insufficient. The Court found no merit in the plea of discrimination, stating the Scheme was intended for cases with actual tax arrears and litigation. The impugned order rejecting the declaration was therefore upheld.

Key Issues

1. Whether the petitioner is covered under the Kar Vivad Samadhan Scheme, 1998, for assessment year 1994-95, considering the conditions for applicability of the Scheme, particularly regarding the determination and outstanding nature of tax arrears on or before March 31, 1998, and on the date of declaration. Assessee's arguments: The petitioner contended that despite the assessment order being set aside, he was liable to pay tax, and the pendency of his appeal before the Tribunal should be considered for the Scheme's applicability. He relied on *All India Federation of Tax Practitioners v. Union of India & Others* and *P.R. Thangavelu v. Commissioner of Income Tax* to argue that no sub-classification of litigating assessees in arrears should be made and that a prior determination of tax, even if subsequently set aside, should suffice. Revenue's arguments: The revenue argued that the petitioner was not covered under the Scheme as neither tax was determined nor were there any outstanding arrears on the relevant dates. They also noted that a refund had been issued pursuant to the CIT(A)'s order. The revenue relied on *Dr. Mrs. Renuka Datla v. Commissioner of Income Tax* for strict construction of the Scheme's provisions and *Narula Traders v. Commissioner of Income Tax* regarding the interpretation of tax arrears.