R.V Raveendran, J.:—
Sri M.V Seshachala, learned Counsel for the Income-Tax, Department, is directed to take notice for the respondents.
2. In regard to the return of income submitted by the petitioner firm for the assessment year 1995-1996, the Assistant Commissioner of Income Tax, Circle 5(1) Bangalore, determined the total income tax and interest payable thereon under Section 143(1)(a) of the Income-Tax Act, 1961 (‘the Act’ for short) as Rs. 18,33,470/-, Rs. 7,36,698/-, and 2,15,796/- respectively, as per order dated 29.3.1996 (Annexure-A). Petitioner appears to have paid in all Rs. 9,52,494/- between 28.2.1997 and 12.10.1998 The Recovery officer, Range-5, Bangalore, informed the petitioner by letter dated 15.10.1998 that a sum of Rs. 3,60,000/- is still due in regard to assessment year 1995-1996, made up of Rs. 3,34,771/- towards interest under Section 220(2) and Rs. 18,500/- towards penalty Rs. 3581/- as interest there on and Rs. 3,148/- towards costs and charges.
3. Kar Vivad Samadhan Scheme, 1998 (the Scheme, for short) was introduced with effect from 1.9.1998, by the Finance (No. 2) Act, 1998, for setting tax arrears, locked in litigation, at a substantial discount. Section 88 enables any person to make a declaration to the designated authority in respect of any tax arrear as on 31.3.1998 to avail the benefit of the discounts/concessions provided under the scheme. Such declaration is required to be made after 1.9.1998 and before 31.12.1998 (later extended to 31.1.1999). Section 95 of the Scheme provides that the Scheme will not apply in certain cases. Section 95(i)(c) makes it clear that the Scheme shall not apply in respect of any tax arrear under any direct tax enactment to a case where no appeal or reference or Writ Petition is admitted and pending before any Appellate Authority or High Court or the Supreme Court on the date of filing of declaration or no application for revision is pending before the Commissioner on the date of filing the declaration.
4. When the Scheme came into force on 1.9.1998, no litigation was pending before any Authority or Court in regard to any tax arrears of petitioner relating to the assessment year 1995-1996. The petitioner, however, filed an application for revision on 5.1.1999 (Annexure-C), under Section 264 of the Act before the third respondent challenging the order dated 29.3.1996 passed under Section 143(1)(a) of the Act. As the application was filed beyond the limitation period of one year, the petitioner sought condonation of delay on the following ground:
“The petitioner firm prays before your Honour to kindly condone the delay in filing of the Revision Petition in as much as the appellants Counsel Sri Shivagangappa was sick for a prolonged period and subsequently expired on 7.8.1996 and thereby could not attend to the affairs of the Petitioners which was plunged in pelmel & confusion and as no other person was aware of the state of affairs and true position.”
5. Immediately after filing the said revision petition on 5.1.1999, petitioner also filed a declaration under Section 88 of Finance (No. 2) Act, 1998, on 6.1.1999 claiming the benefit under the scheme, by alleging that a revision petition filed on 5.1.1999 was pending on the date of declaration.
6. The third respondent dismissed the Revision Petition on 12.1.1999 by the following order (Anpexure-E):
“The assessee has filed revision petition under Section 264 on 5.1.1999 for assessment year 1995-1996 against the order under. Section 143(1)(a) dated 29.3.1996 The petition made under Section 264 is beyond the due date prescribed under the Income Tax Act, 1961. Since, the Revision Petition made is out of time, the petition is dismissed as not maintainable.”
7. Thereafter third respondent sent a communication dated 29.1.1999 (Annexure-F) rejecting the declaration dated 6.1.1999 filed by the petitioner under the scheme relating to Assessment year 1995-1996, on the following ground:
“The Kar Vivad Samadhan Scheme, 1998 prescribes two conditions and they are as under:—
i) There should be arrears as on 31.3.1998:
ii) There should be an appeal revision admitted by the appellate authority/CIT:
Both the above conditions are mandatory and if any one of the condition is not satisfied, then the declaration filed under K.V.S.S will be treated as never to have been made.
In your case condition No. (ii) mentioned above is not satisfied. Hence, the declaration filed is treated as never to have been made. This is for your information.”
8. Petitioner is aggrieved. According to the petitioner, the revision filed under Section 264 of the Act could not have been dismissed on the ground of delay without hearing him on the question of delay. He, therefore, submits that the rejection of the revision is opposed to the principles of natural justice. In regard to the rejection of the declaration under the Scheme the petitioner contends that the requirement of the scheme is that an appeal or reference or Writ Petition should be admitted and pending on the date of filing declaration or an application for revision should be pending before the Commissioner on the date of declaration. The petitioner contends that the word ‘admitted’ Section 95 of the Finance (No. 2) Act, 1998 applied only to appeals reference and Writ Petitions; and in so far as revisions are concerned, mere filing of the revision and pendency thereof is sufficient to become eligible to file a declaration under the scheme and there is no requirement that the Revision application should be “Admitted” as there is no provision for admission of a revision under Section 264. He, therefore, contends that the rejection of the declaration by the third respondent is erroneous.
9. Hence, the petitioner has filed this petition for the following reliefs:—
(a) For quashing the order dated 12.1.1999 (Annexure-E) passed by the third respondent rejecting its revision petition filed by petitioner on 5.1.1999 under Section 264 of the Act:
(b) For quashing the order dated 29.1.1999 (Annexure-F) passed by the third respondent rejecting the declaration filed by the petitioner on 6.1.1999 under KVS Scheme:
(c) For quashing the consequential notice 2.2.1999 (Annexure-G) issued by second respondent in form NO. ITCP.25:
(d) For a direction to third respondent to accept the declaration dated 6.1.1999 filed by it under KVS Scheme;
(e) For a declaration that the declaration dated 6.1.1999 filed by the petitioner under Section 89 of Finance (No. 2) Act, 1998 is valid, maintainable and in accordance with law.
10. Therefore, two questions arise for consideration: (1) Whether the rejection of the revision filed under Section 264 of the Act on the ground of limitation without hearing the petitioner requires interference. (2) Whether the third respondent was justified in rejecting the declaration dated 6.1.1999 filed by the petitioner under KVS Scheme, by treating it as never to have been made.
Re:— Point (i)
11. Section 264 of the Act provides for Revision by the Commissioner, either suo moto or on an application by the Assesee. Sub-section (3) of Section 264 provides that the period of limitation for making an application for revision by the Assessee, under Section 264 of the Act is one year from the date on which the order was communicated to the assessee or the date on which he otherwise come to know of it, whichever is earlier. The proviso to sub-section (3) enables the Commissioner to admit an application for Revision, after the expiry of that period, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period.
11.1 Where the revision is filed out of time, with a request for condonation of delay, the Commissioner should apply his mind to find out whether there was sufficient cause for not filing the Revision within the prescribed time and exercise his discretion in furtherance of justice. The words ‘sufficient cause’ should be liberally construed, where there is no negligence or want of bonafides on the part of the assessee and the Revisional Authority will have to condone the delay, if he is satisfied that there was sufficient cause for the delay in filing the Revision. Though there are divergent views as to whether the Revisional Authority should give a hearing to the party concerned before rejecting the request for condonation of delay, the prevalent later view is that an oral hearing should be given, when sought by the applicant. In this case, the petitioner did not seek an oral hearing. Therefore the petitioner cannot have a grievance in regard to absence of an oral hearing before rejection of the revision on the ground of limitation.
11.2 Even assuming that an oral hearing ought to have been given, the question that arises is whether the rejection of the revision petition on the ground of delay without giving a hearing to the petitioner, should be interfered in exercise of the power under Article 226 of the Constitution. The Supreme Court in S.L Kapoor v. Jagmohan, while observing that non-observance of natural justice is itself prejudice and independent proof of prejudice is not necessary, further held that where on the admitted facts or indisputable facts only one conclusion is possible or permissible, the Court may not issue its writ to compel the observance of natural justice, not because it is not necessary to observe natural justice but because Courts do not issue futile writs. Applying the said principle, let me examine the facts of this case.
11.3 The revision was filed on 5.1.1999 against the order dated 29.3.1996 (served on 25.4.1996). The only reason given by the petitioner for seeking condonation of delay is that its Counsel died on 7.8.1996 Even assuming that the petitioner's Counsel died on 7.8.1996, and that some time is required for making alternative arrangements, no cause is made out for the enormous delay. There was still more than 8 months time to file a revision, when petitioner's counsel died. There is absolutely no explanation for the delay beyond the period of limitation, that is from 25.4.1997 to 5.1.1999 It should be remembered that the petitioner went to making payment towards the amount due under the order dated 29.3.1996, on 28.2.1997, 7.7.1997, 8.8.1997, 10.8.1998, 18.9.1998 and 12.10.1998 The period from 25.4.1997 to 5.1.1999 which is nearly Twenty months remains unexplained. Whenever a party wants delay to be condoned, he should show sufficient cause. If no cause is shown at all, the only conclusion that can be reached is that the delay cannot be condoned; particularly when lack of bona fides is evident. Where only one conclusion can be reached, there is no need to send back the matter on the ground that principles of natural justice have been violated by failure to give an oral hearing. Therefore even if an oral hearing was required to be given, the order passed without such oral hearing does not call for interference as I am satisfied that even if an opportunity had been granted, the only conclusion that could have been reached by the Commissioner is that there was no sufficient cause for condoning the delay in filing the application for revision. The petitioner has not made out any ground to interfere with Annexure-E dated 12.1.1999
Re: Point (2)
12. The contention of the petitioner is that mere pendency of the revision petition on 6.1.1999 was sufficient to enable the petitioner to file a declaration under Section 88 of Finance (No. 2) Act, 1988 and there is no need for its admission to hold that the Revision Petition was pending.
12.1 The contention of the petition that ‘admission’ is not condition precedent to hold that revision petition is ‘pending’ for purposes of Section 95 of Finance (No. 2) Act, 1998, may be correct in so far as revisions initiated by the Commissioner on his own motion and revision proceedings initiated on an application made by the assessee within the period of limitation of one year provided under Sub-section (3) of Section 264. But, where a revision is filed beyond time, unless the delay is condoned, it cannot be said that the revision is pending. In such a case only when it is admitted by condoning the delay, the revision proceedings can be said to be pending; and on condonation of delay by the Commissioner and admission, the pendency would relate back to the date of filing of the revision petition. The proviso to Sub-section (3) of Section 264 of the Act, in terms provides that where there is delay in filing a revision petition, the Commissioner should admit the revision by condoning the delay, on sufficient cause being shown. In this case, there is a long unexplained delay and there is no condonation of such delay. Therefore, it cannot be said that a revision was pending on 6.1.1999 Hence, mere filing of belated application seeking revision, on 5.1.1999, will not entitle to petitioner to contend that a litigation was pending in regard to Assessment year 1995-1996 and that therefore a declaration could be made under Section 88.
12.2 The object of the KVS Scheme is to realise the revenue locked up in litigations pending at different levels, by giving incentive to honest tax payers. Having regard to the provisions of KVS Scheme, pendency of a proceedings either by way of appeal or revision or reference or Writ petition should be a bona fide pendency. When a matter has attained finality and when no litigation is pending, creation of an artificial pendency, after the announcement of the scheme, merely to obtain the benefit of the scheme is impermissible. Any attempt to create such artificial pendency merely for availing the benefit of KVS Scheme, would defeat and dilute the scheme. Hence, rejection of petitioner's declaration is proper as no revision or other litigation was ‘pending’ on 6.1.1999 when the declaration was filed.
13. Hence, the challenge to Annexures E, F and G is rejected. The petition is rejected with costs of Rs. 2,000/- payable to the respondents.
14. Sri M.V Seshachala, is permitted to file his Memo of Appearance in six weeks.