SUSHILA RANI Vs. COMMISSIONER OF INCOME TAX
SUPREME COURT OF INDIA (FROM: ALLAHABAD)
COMMISSIONER OF INCOME TAX
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Rajendra Babu, J. -
(2.)The appellant before us is the widow of the original assessee under the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). For the assessment year 1988-89, an appeal was pending before the Commissioner of Income-tax (Appeals) while for assessment years 1989-90 and 1991-92, appeals were pending before the Income-tax Appellate Tribunal. On 23-1-1999, the appellant set out the details of the matters in dispute in the said appeals requesting the Department to indicate or compute the tax arrears as per the Kar Vivad Samadhan Scheme, 1998 (for short 'KVSS') so that all disputes in relation to these three assessment years can be resolved. As there was no response from the Department till January 30, 1999, the appellant submitted three separate declarations under Sections 88 and 89 of the KVSS. The appellant had also pointed out the mandatory nature of Section 245 of the Act and the decision of the Allahabad High Court in the case of U. P. State Mineral Development Corporation Ltd. vs. Additional CIT, which held that refunds adjusted without notice to assessee is not valid. In the declaration for the assessment year 1989-90, the attention of the Department was also invited to adjustments of Rs. 3,94,503/- and Rs. 18,02,409/- by invoking a bank guarantee which according to the appellant was involuntary and coercive. Similarly, in the declaration for the assessment year 1991-92, the attention of the Department was invited to involuntary set off of a refund of Rs. 81,869/- in view of the non-compliance and non-observance of the mandatory provision of Section 245 of the Act.
(3.)Respondent No. 1 on receipt of the declarations for the three assessment years evaluated and verified the same in accordance with the provisions of the KVSS and on being satisfied with the correctness of the declaration in every respect, issued on 26-2-1999, a statutory certificate prescribed in Form 2A and Rule 4(a) under the provisions of Section 90(1) of the KVSS. The appellant in all the three declarations computed that the amount required to be deposited under the KVSS for these three assessment years would be Rs. 13,55,018/- and respondent No. 1 by the certificate issued on 26-2-1999 assessed the amount of tax payable by the appellant to be Rs. 14,40, 189/- in place of Rs. 13,55,018/- as claimed by the appellant. On receipt of the said certificate under Section 90(1) of the KVSS from respondent No. 1, the appellant deposited the said sum of Rs. 14,40, 189/- under separate challans. On deposit of the entire amount demanded by respondent No. 1 as per the KVSS for these assessment years a communication was addressed on behalf of the appellant dated 22-3-1999 for issue of certificate under Section 90(2) of the KVSS and for the deemed withdrawal of the appeals filed on behalf of the appellant for these three years which were pending adjudication. Respondent No. 1 issued a certificate in Form 3 as required under Rule 5(a) and Section 90(2) of the KVSS on 31-3-1999 in favour of the appellant certifying the receipt of payments from the appellant towards full and final settlement of the tax arrears determined in the order dated 26-2-1999 and granting immunity from instituting any proceeding for prosecution of any offence under the Act or from imposing any penalty under the said Act. Thereafter on 11-8-1999 certificate was issued by the Department to the effect that no arrears or demand of any kind is outstanding against the appellant as per the records of the respondents. On 26-10-1999, the appellant submitted a representation requesting the respondents to refund all the amounts along with interest as per the provisions of the Act upon the finalisation of the declarations made by the appellant under the provisions of the KVSS. This claim resulted in the issue of a notice on 23-6-2000 under Section 90(1) of the KVSS calling upon the appellant to explain as to why, the notice issued under Section 90(1) of the KVSS earlier be not amended, on the ground that the determination made by the Department for the three assessment years in question was on the Department's wrong understanding of the judgment of the Allahabad High Court.
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