COMMISSIONER OF INCOME TAX, RAJKOT versus SHATRUSAILYA DIGVIJAYSINGH JADEJA

Citation: [2005] SUPP. 2 S.C.R. 1119 · Decided: 01-09-2005 · Supreme Court of India · Bench: B.P. SINGH · Disposal: Dismissed

Judgment (excerpt)

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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! 
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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 orders passed under 
the Wealth Tax Act, 1957. The appeals filed by the assessee were dismissed F 
in the year 1992-93 as the respondent-assessee failed to pre-deposit the self 
assessed tax. 
The Finance (No. 2) Act introduced the Kar Vivad Samadhan Scheme, 
1998 which came into force w.e.f. 1.9.1998 in respect of tax arrears 
G 
outstanding as on 31.3.1998. On 28/29.12.1998 the assessee filed appeals/ 
revisions. The Designated Authority (DA) rejected the declarations filed 
by the assessee on the ground that the revisions filed by the assessee were 
time-barred and as such they were not 'pending' in terms of Section 
95(i)(c) of the Scheme. The High Court allowed the appeal filed by the 
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respondent-assessee. Hence the appeal. 
H 
I I 19 
1120 
SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R. 
c
A 
,...~ 
The following question arose before, the Court. 
Whether the department was right in rejecting the Kar Vivad 
Samadhan Scheme, 1998 declarations filed by the respondent-assessee on 
the ground that the assessments had become final in the 1992-93 (when 
B the assessee's appeals were dismissed for failure to predeposit the self 
assessed tax) and that the respondent had filed revisions under the Income 
Tax Act,1961 and Wealth Tax Ac.t, 1957 in November/December, 1998 
only to obtain the benefit of Kar Vivad Samadhan Scheme, 1998, which 
~ 
came into force w.e.f. 1.9.1998? Dismissing the appeal, the Court 
<:::i 
c 
HELD: 1. The Kar Vivad Samadhan Scheme, 1998, was in substance 
a recovery scheme and was a complete Code by itself. Section 95(i)(c) of 
the Scheme, was different from appeals under Section 246, revisions 
.. 
under Section 264; appeals under Section 260-A etc. of the Income Tax 
Act, 1961 and similar provisions under the Wealth Tax Act, 1957. The 
D 
differences between appeals, revisions and references were obliterated 
and they were put on par under Section 95(i)(c} of the Scheme. The object 
behind Section 95(i)(c) in putting on par appeals, references and revisions 
was to put an end to litigation in various forms and at various stages under 
r 
the IT Act/Wealth Tax Act. (1125-D-E-F-G] 
E 
2. The Designated Authority (DA) had to determine the tax arrears 
as well as the disputed amount ~s defined under Section 87(f) of the 
Scheme. The1·efore, till the completion of the aforesaid exercise, the 
respondent-assessee could not have paid the amount of tax and, therefore, 
the respondent was not liable to pay interest as his liability accrued only 
F 
after the ascertainment of the amount payable under Section 90 of the 
Scheme. (1126-B-C-D] 
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' 
4. If the appeal or revision is pending on the date of the filing of the 
declaration under Section 88 of the Scheme, it is not for the DA to hold 
G 
that the appeal/:-evision was "sham", "ineffective" or '~infructuous" and, 
therefore, not 'pending' in terms of Section 95(i)(c) of the said Scheme. 
(1126-E] 
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Dr. Mrs. Renuka Datta v. CIT, (2003) 259 ITR 258, Raja Kulkarni v. 
? 
State of Bombay, [1954] SCR 73 and Tirupati Balaji Developers (P) Ltd v. 
,. 
H State of Bihar & Ors., [2004) 5 SCC l, referred to. 
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COMMR OF LT., RAJKOT 1'. SHAillUSAILYA DIGVUAYSINGH JADEJA (KAPADIA, J.] 1121 
Computwel Systems P. ltd v. W. Hasan, (2003) 260 ITR 86, referred A 
to. 
5. Therefore, the

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