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Mangilal S. Jain v. Commissioner Of Income-Tax And Another
Factual and Procedural Background
The petitioner is an assessee under the Income-tax Act, 1961 who invoked the Kar Vivad Samadhan Scheme, 1998 ("the Scheme"). The designated authority determined the amount payable under section 88 of the Scheme and communicated that determination to the assessee. The assessee paid the amount six days after the thirty-day period specified under sub-section (2) of section 90 of the Scheme. The Commissioner of Income-tax, Hubli (the designated authority), noting the six-day delay, declined to issue the certificate contemplated under sub-section (2) of section 90 by an order dated February 10, 2003 (annexure B). The petitioner filed the present writ petition challenging that order and sought quashing of the refusal and directions to the designated authority to accept the payment and issue the certificate.
Legal Issues Presented
- Whether the word "shall" in sub-section (2) of section 90 of the Kar Vivad Samadhan Scheme, 1998 must be interpreted as mandatory (precluding condonation of delay) or can be treated as directory/relaxed so as to permit acceptance of payment made after thirty days.
- Whether a six-day delay beyond the thirty-day period for payment under section 90(2) could be condoned by the designated authority or by the court in furtherance of the Scheme's objects.
- Whether the court may issue writs (certiorari or mandamus) to direct the designated authority to accept late payment and issue the certificate contrary to the strict terms of the statutory scheme.
Arguments of the Parties
Petitioner's Arguments
- The word "shall" in section 90(2) of the Scheme should be interpreted more permissively — effectively as "may" — to allow a measure of leeway in the payment period.
- The six-day delay was a justifiable and explainable delay; given the object of the Scheme to provide succour to assessees and expedite revenue collection, the court should allow the late payment and direct the designated authority to accept it and issue the certificate.
- Reliance was placed on several decisions (including the Division Bench decision in Vijay Omprakash Bansal v. Commissioner of Income-Tax and other authorities) to support a liberal interpretation permitting condonation of short delays under similar schemes.
Respondent's Arguments
- The designated authority correctly refused to issue the certificate because the payment was made beyond the thirty-day period prescribed under section 90(2) of the Scheme.
- The respondent relied on decisions that require strict compliance with the time stipulations in such schemes, specifically Ranganatha Associates v. Union of India (our High Court) and Hemalatha Gargya v. CIT (Supreme Court), to resist any liberal construction that would relax the statutory time limit.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Vijay Omprakash Bansal v. Commissioner Of Income-Tax, [2002] 257 ITR 649 (Bom) | Division Bench of Bombay High Court took a liberal view on the interpretation of "shall" in scheme provisions (permitting condonation in similar contexts). | The court noted this decision is directly on the point but observed it was not followed uniformly by other High Courts; the court did not accept it as the correct approach in the present matter, preferring the Supreme Court's later pronouncement. |
| Hemalatha Gargya v. CIT, [2003] 259 ITR 1 (SC) | Supreme Court held that provisions of the analogous scheme require strict compliance and that the word "shall" is mandatory in nature (no scope for liberal relaxation to avail benefit of scheme). | The court regarded this decision as directly on point and controlling; it applied the principle that "shall" is mandatory and strict compliance is inevitable to section 90(2) of the Kar Vivad Samadhan Scheme. |
| Banwarilal Agarwalla v. State of Bihar, [1961-62] 20 FJR 300 : AIR 1961 SC 849 | Cited by petitioner in support of a more liberal interpretative approach (as relied upon by petitioner). | The court concluded that Banwarilal Agarwalla's ratio did not apply to the present case in light of Hemalatha Gargya; the court did not adopt the petitioner's reliance on it. |
| Smt. Laxmi Mittal v. CIT, [1999] 238 ITR 97 (P&H) | Punjab & Haryana High Court held that the time stipulation under a voluntary disclosure scheme should not be treated as mandatory and condoned a three-day delay. | The court described this as the liberal view which influenced other benches but noted it was not uniformly followed; it observed that other courts have taken a different, stricter approach. |
| E. Prahalatha Babu v. CIT, [2000] 241 ITR 457 (Madras) | Followed the Punjab & Haryana High Court's liberal approach to time limits in scheme provisions. | Referred to as one of the authorities that followed the permissive approach; contrasted with courts taking a strict view. |
| Sardar Machhi Singh v. CIT, [2000] 245 ITR 58 (Madhya Pradesh) | A single judge followed the Punjab & Haryana approach in a case under the Kar Vivad Samadhan Scheme; special leave petition was dismissed by the Supreme Court. | The court observed that the dismissal of special leave in that matter weighed with the Bombay Division Bench, but it emphasized that rejection of special leave does not amount to affirmation by the Supreme Court. |
| Kamal Sood v. Union of India, [2000] 241 ITR 567 (P&H) | Division Bench of the Punjab & Haryana High Court took a different view from Laxmi Mittal (i.e., not uniformly following the liberal approach). | Noted by the court to show divergence of views within the same High Court and the lack of uniformity among High Courts. |
| Vyshnavi Appliances Pvt. Ltd. v. CBDT, [2000] 243 ITR 101 (A.P.) | Andhra Pradesh High Court refused to follow the liberal approach of the Punjab & Haryana High Court. | Used to demonstrate that several High Courts preferred a strict construction of scheme time-limits. |
| Dilip Kumar v. Asst. Commissioner Of Income Tax, [2001] 247 ITR 16 (Kerala) | Kerala High Court adopted a strict view and differed from the liberal approach. | Referred to as further support for the strict interpretation line of authorities. |
| Smt. Atamjit Singh v. Commissioner Of Income-Tax, [2001] 247 ITR 356; affirmed [2001] 252 ITR 233 | Our High Court took a strict view regarding compliance with scheme time stipulations. | Identified as another High Court decision favouring strict compliance. |
| Ranganatha Associates v. Union of India, [2003] 261 ITR 646 (our High Court) | Single judge followed the ratio in Hemalatha Gargya and held that provisions of the Scheme must be strictly construed with no scope for liberal extension of time-limits. | The respondent relied on this decision; the court treated it as supportive of strict compliance and consistent with the Supreme Court's approach. |
Court's Reasoning and Analysis
The court undertook a comparative analysis of the competing judicial approaches to time stipulations in statutory schemes of the kind represented by the Kar Vivad Samadhan Scheme, 1998. The pivotal legal question was the interpretation of the word "shall" in section 90(2) of the Scheme and whether that term permits any judicially-created leeway for short delays in payment.
The court observed a divergence of High Court decisions: some benches (notably Punjab & Haryana in Laxmi Mittal and Division Bench of Bombay in Vijay Omprakash Bansal) had adopted a liberal approach permitting short condonations of delay, whereas other High Courts (including decisions of the same and other High Courts cited in the opinion) had insisted on strict compliance.
The court emphasized the legal principle that rejection of a special leave petition (SLP) by the Supreme Court does not amount to affirmation of the High Court's view nor does it lay down law. Consequently, those instances where SLPs were dismissed could not be treated as controlling precedents for liberal construction.
Crucially, the court found the Supreme Court decision in Hemalatha Gargya v. CIT to be directly on point: that decision held that the word "shall" in a similar statutory scheme is mandatory and required strict compliance with time stipulations, rejecting a liberal approach to extend benefit to assessees who fail to comply. The court applied that ratio to section 90(2) of the Kar Vivad Samadhan Scheme and concluded that "shall" is mandatory and strict adherence to the thirty-day payment requirement is inevitable.
The court further explained that the Scheme is a special, time-limited parliamentary enactment that confers specific concessions; interpreting its provisions to permit relaxation of explicit requirements would amount to rewriting the Scheme — an impermissible judicial function. Therefore, neither certiorari (to quash the designated authority's order) nor mandamus (to compel acceptance of the late payment and issuance of the certificate) could properly be granted because the designated authority acted in conformity with the statutory provisions and the court cannot direct a statutory functionary to act beyond the statute.
Holding and Implications
Holding: The writ petition is dismissed.
Implications:
- The court held that strict compliance with section 90(2) of the Kar Vivad Samadhan Scheme is mandatory; a six-day delay beyond the thirty-day period could not be condoned by the court.
- The designated authority's refusal to issue the certificate because of the delayed payment was upheld as being in conformity with the statutory scheme.
- The court declined to issue writs (certiorari or mandamus) to direct the statutory authority to accept late payment or to issue the certificate, on the basis that such directions would require action beyond the statute.
- No new interpretive precedent was laid down by the court; the court applied existing authority (in particular Hemalatha Gargya v. CIT) to the facts and declined the relief sought by the petitioner.
The Judgment of the Court was delivered by
D.V Shylendra Kumar, J.:— The petitioner, an assessee under the Income-tax Act, 1961 (“the Act” for short), sought to avail of the benefits of the Kar Vivad Samadhan Scheme, 1998 (“the Scheme” for short), as formulated by the Finance (No. 2) Act of 1998.
2. The brief facts leading to the filing of the above petition which are not in dispute are that the assessee had invoked the provisions of the Scheme; that determination of the amount payable under section 88 of the Scheme had been made and communicated to the assessee and that the assessee paid the amount six days beyond the permitted period of thirty days as is required under sub-section (2) of section 90 of the Scheme. The Commissioner of Income-tax, Hubli, the designated authority to pass orders and issue certificates as contemplated under sub-section (2) of section 90 of the Scheme having noticed that the payment had been made six days beyond the permitted time of thirty days, having declined to issue the certificate contemplated under sub-section (2) of section 90 of the Scheme as per his order dated February 10, 2003 (copy at annexure B), the petitioner is before this court questioning the legality of this communication at annexure B. Sri M.V Javali, learned counsel appearing for the petitioner, has put forth several contentions urging that the impugned order is not one valid in the eye of law and requires to be quashed and that a direction is to be issued to the designated authority to accept the amount of tax that the petitioner has paid and for issuing a certificate contemplated under sub-section (2) of section 90 of the Scheme.
3. In this regard, learned counsel for the petitioner has submitted that the provisions of sub-section (2) of section 90 of the Scheme are required to be interpreted in this case, particularly the meaning attributed to the word “shall” used in sub-section (2) of section 90 of the Scheme. Section 90(2) of the Scheme reads as under:
“90. (2) The declarant shall pay the sum determined by the designated authority within thirty days of the passing of an order by the designated authority and intimate the fact of such payment to the designated authority along with proof thereof and the designated authority shall thereupon issue the certificate to the declarant.” It is the submission of Sri Javali, learned counsel for petitioner, that the word “shall” should be interpreted as “may” and a little leeway should be required to be allowed to the provisions in the matter of payment of the sum determined by the designated authority within thirty days and the delay of six days in making that payment was a justifiable delay according to the petitioner; that the petitioner had a valid and convincing explanation for the delay and having regard to the objects of the Scheme that it is meant to provide succour to the assessees and expedite the collection of revenue to the State, such an interpretation should be given to the provisions of the Scheme so as to accept payment even after a delay of six days beyond the thirty days, to further the objects of the Scheme and, therefore, the impugned order of the designated authority requires to be quashed and necessary directions issued to the respondents. In this regard, learned counsel for the petitioner has placed reliance on the following decisions:
(1) Vijay Omprakash Bansal v. Commissioner Of Income-Tax, [2002] 257 ITR 649 (Bom);
(2) Hemalatha Gargya v. CIT, [2003] 259 ITR 1 (SC); and
(3) Banwarilal Agarwalla v. State of Bihar, [1961-62] 20 FJR 300 : AIR 1961 SC 849.
4. Though no doubt the decision of the Division Bench of the Bombay High Court is directly on the point and on the interpretation sought to be placed on the word “shall” occurring in the very provision, this view of the Bombay High Court has not been followed by other High Courts including our High Court. The Division Bench of the Bombay High Court was mainly persuaded by the fact that a Division Bench of the Punjab and Haryana High Court in the case of Smt. Laxmi Mittal v. CIT, [1999] 238 ITR 97, while interpreting the provisions of the Voluntary Disclosure of Income Scheme, 1997, has taken the view that the stipulation of time required under that scheme should not be held mandatory and a delay of three days could be condoned and this view of the Punjab and Haryana High Court had been followed by a learned single judge of the Madras High Court in E. Prahalatha Babu v. Cit, [2000] 241 ITR 457. The very decision of the Punjab and Haryana High Court was again followed by another learned single judge of the Madhya Pradesh High Court in Sardar Machhi Singh v. CIT, [2000] 245 ITR 58 in a case arising under the very Kar Vivad Samadhan Scheme, 1998. That decision of the learned single judge of the Madhya Pradesh High Court having been rendered in favour of the assessee, and the Revenue having carried the matter to the Supreme Court by way of a special leave petition and having failed in securing special leave, was a matter which weighed heavily with the learned judges constituting the Division Bench of the Bombay High Court who rendered decision in Vijay Omprakash Bansal's case, [2002] 257 ITR 649 and learned counsel for the petitioner submits that in view of the rejection of the special leave as against this decision of the Bombay High Court also, this court should follow the view taken by the Bombay High Court interpreting the very provision of the Scheme.
5. It is now a well settled and clear law that rejection of a special leave petition does not amount to affirmation of a view taken by a High Court nor does it amount to laying down of law by the Supreme Court. The view taken by the Punjab and Haryana High Court in Laxmi Mittal's case, [1999] 238 ITR 97, in fact has not been uniformly followed by other High Courts. Another Division Bench of the very High Court has taken a different view in the case of Kamal Sood v. Union of India, [2000] 241 ITR 567 (P&H). A Division Bench of the Andhra Pradesh High Court also, in the case of Vyshnavi Appliances Pvt. Ltd. v. CBDT, [2000] 243 ITR 101, refused to toe the line of the Punjab and Haryana High Court as indicated in Laxmi Mittal's case, [1999] 238 ITR 97. The Kerala High Court, in the case of Dilip Kumar v. Asst. Commissioner Of Income Tax, [2001] 247 ITR 16, also preferred to take a strict view of the matter and differed from the liberal view that was propounded by the Punjab and Haryana High Court in Laxmi Mittal's case, [1999] 238 ITR 97. So also our High Court in two decided cases, namely, Smt. Atamjit Singh v. Commissioner Of Income-Tax, [2001] 247 ITR 356, which came to be affirmed by the Division Bench in the case of Smt. Atamjit Singh v. Commissioner Of Income-Tax, [2001] 252 ITR 233.
6. Another learned single judge of our High Court in Ranganatha Associates v. Union of India, [2003] 261 ITR 646, following the ratio laid down by the Supreme Court in Hemalatha Gargya v. CIT, [2003] 259 ITR 1 has taken the view that the provisions of the Scheme have to be strictly viewed and there is no scope for any liberal interpretation of the scheme for extending the time-limit stipulated under the Scheme itself.
7. The decision of the Supreme Court in Hemalatha Gargya v. CIT, [2003] 259 ITR 1 is directly on the point and the Supreme Court has positively held that there should be strict compliance with the provisions of the Scheme and there cannot be any relaxation by the courts for the purpose of availing of the benefit of the Scheme in favour of the assessee. The word “shall” also has been noticed and it has been categorically held that it is mandatory in nature and strict compliance is inevitable. The same principle equally applies while understanding and interpreting the word “shall” occurring in section 90(2) of the present scheme. Though Sri Javali, learned counsel for petitioner, has placed reliance on another decision of the Supreme Court reported in Banwa-rilal Agarwalla v. State of Bihar, [1961-62] 20 FJR 300 : AIR 1961 SC 849, I am of the view that in the light of the decision in Hemalatha Gargya's case, [2003] 259 ITR 1 (SC), the interpretation as placed in Hemalatha Gargya's case, [2003] 259 ITR 1 (SC) is more apt as that is a decision involving the interpretation of the word “shall” occurring in a similar scheme as involved in the Kar Vivadh Samadhan Scheme and is apt and relevant for the present purpose and the ratio laid down by the Supreme Court in Banwarilal Agarwalla's case, AIR 1961 SC 849 does not apply to the present case.
8. Sri M.V Seshachala, learned Central Government standing counsel for Income-tax Department appearing for the respondent, has made the submissions supporting the order of the designated authority and has also placed reliance on the decision of our High Court in Ranganatha Associates case, [2003] 261 ITR 646, and the decision of Hemalatha Gargya's case, [2003] 259 ITR 1 (SC) referred to above. I am of the view that while these two decisions fully support the submissions of learned counsel for the Revenue, in fact the submission of Sri Javali, learned counsel for the petitioner, falls to the ground when the ratio of these decisions is applied to the facts of the present case and in the light of such ratio.
9. The Kar Vivad Samadhan Scheme is a special scheme enacted by Parliament. It seeks to give some special concessions. Time stipulations are provided for in the Scheme itself. In fact there is no ambiguity in the language and the words used in the provisions of section 90 and relaxing any of the requirements purporting to be by way of interpretation, only amounts to rewriting the provisions of the Scheme. It is to be noticed that these are all various schemes promulgated for short periods and will be in operation for that duration only. Such Schemes should be strictly interpreted in terms of the Scheme itself and I am of the view that there is no scope for interpreting any of the provisions of the Scheme either to dilute the requirements of the Scheme or to enlarge the provisions so as to enlarge the benefits of the Scheme to the assessee. A writ of certiorari as sought for cannot be issued for quashing the impugned order passed by the designated authority as the designated authority has acted in conformity with the statutory provisions. Nor a writ of mandamus can be issued to direct the designated authority either to relax the requirement of payment within thirty days stipulated under the scheme or to direct the authority to issue a certificate under section 90(2) of the scheme for condonation of delay, as that will be clearly in contravention of the very statutory provisions. No mandamus can be issued to any statutory functionary beyond the provisions of law. A writ of mandamus does not lie for directing a statutory authority to function even beyond the provisions of a statute. In this view of the matter, the writs as prayed for cannot be issued.
10. Accordingly this writ petition is dismissed.
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