SWARG HOTELS PVT.LTD THR.DIRECTOR AHMEDNAGAR vs. UNION OF INDIA AND ORS

1 WP5616.1999 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD. WRIT PETITION NO. 5616 OF 1999 Swarg Hotels Private Limited, through its Director – Satishkumar s/o Babanrao Landge, Age – 48 years, Occu: Business, R/o. 618, Chitale Road, Ahmednagar. ...Petitioner.. Versus 1. The Union of India, (copy to be served on Additional Standing Counsel, Bombay High Court, Bench at Aurangabad). 2. The Commissioner of Income Tax, Nasik. 3. The Income Tax Officer, Ahmednagar. 4. Central Board of Direct Taxes, New Delhi, through its Secretary/Manager, (copy to be served on Additional Standing Counsel, Bombay high Court, Bench at Aurangabad). ...Respondents.. -------------------- Mr Sandeep S. Deshmukh, Advocate for petitioner Mr Alok Sharma, ASG for respondents -------------------- CORAM : S. V. GANGAPURWALA & N. W. SAMBRE, JJ. DATE : MARCH 11TH, 2014. ORAL JUDGMENT (PER S. V. GANGAPURWALA, J.):- 1. Heard learned Counsel appearing on behalf of respective parties.

2 WP5616.1999 2. The respondent No. 3 issued notice of demand of direct tax and interest under Section 156 of the Income Tax Act, 1956 to the petitioner, thereby claiming an amount of Rs. 8,70,758/-. The petitioner assailed the said notice by filing an appeal. The petitioner deposited an amount of Rs. 4,50,000/- towards the tax arrears as per the order of the respondent dated 26 th April, 1996

. The respondent No. 1 introduced “Kar Vivad Samadhan Scheme, 1998” in November 1998. The petitioner availed the benefit of the said scheme. The petitioner pursuant to the said scheme filed a declaration on 26th December, 1998. On 12th January, 1999, the Commissioner of Income Tax, Nashik, determined the amount payable by the petitioner towards the full and final settlement of his tax arrears along with interest. The petitioner was directed to pay Rs. 4,20,758/- towards the tax arrears and interest amount of Rs. 2,10,379/-. The petitioner deposited the said amount. Thereafter, the respondent-Commissioner of Income Tax issued amended certificate of intimation under Section 90(1) of the Finance (No. 2) Act, 1998 asking the petitioner to pay an additional amount of Rs. 1,25,675/-, terming the same as an amended order. The same is assailed by the petitioner. 3. Mr Sandeep S. Deshmukh, learned Counsel for the petitioner, states that the notice under Section 156 issued by the respondent demanding payment of Rs. 8,70,758/-, included arrears of

3 WP5616.1999 direct tax and interest under Section 234(a) and (b). The declaration was accepted and the certificate was issued towards the full and final settlement. Once the said certificate is issued, the respondent cannot reopen the same. He relies on the judgment of the Hon’ble Apex Court in the case of Smt. Sushila Rani V. CIT & Anr. reported in (2002) 172 CTR (SC) 665. 4. Mr Alok Sharma, learned Assistant Solicitor General, states that, there are no fetters on the powers of the Commissioner to amend the certificate or the order passed. No final certificate has been issued. The circular dated 5th January, 1999 allowing the respondent to charge interest under Section 220(2) of the Income Tax Act, is permissible and the petitioner is required to pay 50% of the said amount as per the said scheme. As interest under Section 220(2) of the Income Tax Act, was not considered while passing the earlier order dated 12th January, 1999, the same is considered subsequently. No error has been committed in that regard. The language of the said circular is explicitly clear. The said amended order is as per the scheme in vogue at the relevant time. 5. We have gone through the certificates, declaration and the order. It is not disputed that no notice under Section 156 of the Income tax Act, 1956, is issued for claiming any interest under Section 220(2) of the Income Tax Act. The notice under Section 156 was restricted to

4 WP5616.1999 the direct tax arrears and interest under Section 234(a) and (b). The appeal was filed, which was pending. During pendency of the said appeal, the scheme was introduced namely; “Kar Vivad Samadhan Scheme, 1998. The declaration was made under Section 88, on 26th December, 1998 by the petitioner. Pursuant to the said declaration, the Commissioner of Income Tax determined the liability under the said scheme which included tax arrears and the interest. The bifurcation of the same is as under. Tax arrears – Rs. 4,20,758/- Interest – Rs. 2,10,379/-

5 WP5616.1999 The declaration was made on 26th December, 1998 . The circular on which the respondents seek to rely is dated 5th January, 1999. Once the declaration has been made final and the certificate is issued, it will not be open for the respondents to reopen the same proceedings on the ground other than arithmetical error or omission as has been held by the Hon'ble Apex Court in the case of Smt. Sushila Rani (cited supra). 9. In light of the above, the amended certificate directing petitioner to pay an additional amount of Rs. 1,25,675/- deserves to be quashed and set aside and is hereby set aside. 10. Rule is accordingly made absolute in terms of prayer clause ‘C’ of the petition. The respondents shall refund the amount of Rs. 1,25,675/- deposited by the petitioner within a period of eight weeks from today. No costs. (N. W. SAMBRE, J.) (S. V. GANGAPURWALA, J.) Punde