Milind N. Jadhav, J. -
(1.) By this petition filed under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs :-
"(a) This Hon'ble Court be pleased to declare the appropriation of Rs.3,11,206/- made by the T.R.O. towards the Tax demand of the A. Y. 1987-88 out of sum of Rs.6,00,000/- deposited with the Respondent by the Petitioner under the said High Court order dated 13/8/91 as illegal;
(b) This Hon'ble court be pleased to declare that the Petitioners are entitled for the benefit of the Kar Vivad Samadhan Scheme so far as they relate to the Tax dispute / Tax arrears of A.Y.1987-88.
(c) This Hon'ble court be pleased to set aside and or quash the Certificate of Intimation issued under Section 90 (1) of the Finance (No.2) Act, 1998 under Kar Vivad Samadhan Scheme Rules 1998, dated 26/2/99.
(d) This Hon'ble Court be pleased to issue Writ of Mandamus or any other writ or order in the nature of Mandamus against the Respondents directing them to consider the Petitioners' case for Kar Vivad Samadhan Scheme and accord the benefit there under as may be applicable to the Petitioners.
(e) This Hon'ble court be pleased to direct the Respondents to adjust the illegally appropriated sum of Rs.3,11,206/- towards the tax liability if any fixed under the Kar Samadhan Scheme for the tax dispute / arrears of the A.Y. 1987-88.
(f) Pending the hearing and final disposal of the Petition the Respondents, their officers and their employees be restrained from recovering any amount from the Petitioners by way of tax, interest or penalty under the Income Tax Act, 1961 in respect of A.Y. 1987-88 pursuant to the letter dated 19-7-91 at Exhibit 'A' to the Petition or under any further order.
(g) Ad-interim order in terms of prayer (f) may be granted.
(h) Such other and further relief as the nature and circumstances of this case may require may be granted."
(2.) This Court after hearing the matter on 17.10.2001 had passed the following interim order :-
"1. Heard. In the matter of Writ Petition No.2490 of 1991, this court issued the following order :
1. The Petitioners do pay to the Respondents a sum of Rs.6,00,000/- (Rupees Six Lakhs) in pursuance of the letter dated 19 th July, 1991 being Exhibit 'Q' to the Writ Petition No.2492/91 and Exhibit 'H' to the Writ Petition No.2493/91 in the manner following :-
a) Rs.50,000/- by a cheque, dt.15.8.1991.
b) Rs.5,50,000/- within 8 weeks from today.
2. The Respondents and / or Officers shall not take any proceedings for the recovery of the amounts mentioned in the letter, dated 19.7.1991 for a period of eight weeks;
3. If the said amount of Rs.6,00,000/- is paid within the period stipulated above, the demand notices in respect of the amounts mentioned in the letter dated 19 th July, 1991 are stayed till the hearing and final disposal of the quantum Appeal for the assessment year 1985 -86;
4. In default, the Respondents are at liberty to enforce the demand;
5. Petition to stand disposed off accordingly."
2. Mr. Kothari today submitted that these quantum appeals have been dismissed by the Tribunal on 28 th February 2001. As per submissions advanced by Mr. Kothari, the Respondents and their officers are recovering the said amount of assessment tax from the Petitioner and therefore Petitioner is making a prayer for a rule as well as rule nisi.
3. Mr. Chatterjee is also heard on behalf of the Respondents.
4. We issue the rule, returnable on 6 th November, 2001 with the intimation to the litigating parties that on that date this Writ Petition would be finally decided. The Respondents are permitted to file the affidavit in the meanwhile.
5. Rule issued in terms of prayer clauses (a) and (b). Interim relief in terms of prayer clause (f).
6. All concerned to act on the ordinary copy of this order, duly authenticated by the Court Associate."
(3.) At the outset, it may be necessary to advert to the relevant facts in the present case to decide the petition.
3.1 The petitioner is a registered partnership firm and is an assessee. The petitioner filed its income tax return for the assessment year 1987 - 1988 showing total loss of Rs.28,890.00. The Assistant Commissioner of Income Tax in assessment under Section 143 (3) of the Income Tax Act, 1961 (hereinafter for brevity referred to as "the Act") disallowed the aforesaid loss shown by the petitioner and determined income of the petitioner at Rs.7,83,760.00 and fixed the tax liability at Rs.3,11,206.00 for the assessment year 1987 - 88. The petitioner filed appeal before the Commissioner of Income Tax (Appeals) ("CIT (Appeals)" in short and hereinafter referred to as the "first Appellate authority") which was partly allowed. Being aggrieved the petitioner filed further appeal before the Income Tax Appellate Tribunal (hereinafter referred to as the "Tribunal"). This second appeal before the Tribunal came to be dismissed subsequently on 28.02.2001 (as stated in the petition). Hence, the tax liability of the petitioner for the assessment year 1987-88 of Rs. 3,11,206.00 became final.
3.2. However during the pendency of the above second appeal before the Tribunal, the petitioner received a demand notice dated 19.07.1991 from the Tax Recovery Officer - 29 calling upon the petitioner to make payment of composite tax demand for two years, viz. Rs.3,11,206.00 in respect of assessment year 1987 - 88 and Rs.9,33,020.00 in respect of assessment year 1985 - 86.
3.3. The petitioner filed two separate writ petitions viz; writ petition No.2492 of 1991 (against tax demand for assessment year 1987 - 88) and writ petition No.2493 of 1991 (against tax demand for assessment year 1985 - 86), inter alia, challenging the composite demand notice for the respective assessment years in this Court.
3.4. By common order dated 13.08.1991 this Court stayed the demand notice dated 19.07.1991 during the pendency of the respective quantum appeals, subject to the petitioner making a payment of Rs.6,00,000.00 towards the aggregate demand of Rs.12,44,126.00 as stated in the demand notice as condition precedent for staying the recovery proceedings. The petitioner deposited the amount of Rs.6,00,000.00 with the Income Tax Department pursuant to the above order on or about October, 1991. The demand notice dated 19.7.1991 was, therefore, stayed.
3.5. In 1998 the Government of India introduced a scheme known as Kar Vivad Samadhan Scheme, 1998 (hereinafter referred to as "the KVSS scheme, 1998") for settlement of disputes relating to income tax or any other direct tax, which was unpaid or under litigation. The feature of the said scheme was that all arrears of income tax could be settled at current rate and interest and penalty could be wholly / 50% waived.
3.6. The petitioner considered itself eligible and entitled under the KVSS scheme, 1998 and therefore filed its declaration in form 1A under the Kar Vivad Samadhan Rules, 1998 before the designated authority for settlement of its liability for assessment year 1987 - 88 only. The designated authority after considering the petitioner's application issued a Certificate of Intimation dated 26.02.1999 to the petitioner, inter alia, determining the 50% amount of Rs.6,16,838.00 payable under the KVSS scheme, 1998 for assessment year 1987 -88. This amount computed under the Certificate of Intimation was only in respect of penalty and interest payable under Section 220(2) r/w Sections 271(1)(a), 271(1)(b) and 271(1)(c) of the Act for the assessment year 1987-88.;