Lukkose John Thoppil v. Commissioner Of Income-Tax

The Judgment of the Court was delivered by

S. Sankarasubban, J.:— The question involved in both these cases is similar and they are disposed of by a common judgment. The petitioners in both these original petitions were partners of a firm called Thoppil Finance, which was an assessee under the Income-tax Act, 1961. By order dated September 25, 1997, of the Settlement Commission, the assessing authority, viz., the Assistant Commissioner of Income-tax, Investigation Circle-I, Division-1, Ernakulam, revised the assessment of the petitioners and passed orders under section 155 of the Income-tax Act (hereinafter referred to as “the Act”), redetermining the tax, surcharge and interest payable by the petitioners for the assessment year 1992-93. Exhibit P-1, in both these cases are the assessment orders. The revised assessment included interest under sections 234A, 234B and 234C of the Act. While the petitioner in O.P No. 4416 of 1999 was assessed to interest of Rs. 7,90,095, the petitioner in O.P No. 4347 of 1999 was levied interest of Rs. 3,71,348.

2. Aggrieved by the levy of interest, the petitioners filed revisions under section 264 of the Act before the respondent. Copies of the revision petitions are produced in both these cases as exhibit P-2. Thereafter, the petitioners filed before the respondent, who is the designated authority under the Kar Vivad Samadhan Scheme, 1998, applications in the prescribed form with necessary particulars seeking the benefits of the scheme. True copies of the applications are produced as exhibit P-3, in both these cases.

3. The petitioners thereafter received notices of hearing on the revision petitions on November 10, 1998. The petitioners brought to the notice of the respondent about the filing of the applications under the Kar Vivad Samadhan Scheme and requested to keep the revision petitions pending till decisions are taken on the declarations filed by the petitioners. But by letter dated December 14, 1998, the respondent held that the revision petitions filed by the petitioners were not maintainable and cannot be treated as valid revision petitions. Hence, it was held that the declarations filed by the petitioners under the Kar Vivad Samadhan Scheme will not be acted upon. Copies of the letters dated December 14, 1998, are produced in both these cases as exhibit P-5. The petitioners further filed petitions to reconsider exhibit P-5. But the same was dismissed by exhibit P-6. Exhibit P-7 is another communication by which it was held that since the revision petitions were not valid revision petitions on the date of filing of the declarations under the Kar Vivad Samadhan Scheme, the assessments had not been challenged and, hence, the petitioners are not entitled to the benefits of the Kar Vivad Samadhan Scheme.

4. The original petitions had been filed challenging exhibits P-5, P-6 and P-7, in both the cases and for a mandamus directing to dispose of exhibit P-3 declarations on the merits and in accordance with the provisions of the Kar Vivad Samadhan Scheme in Chapter IV of the Finance (No. 2) Act of 1998.

5. Shri P.G.K Wariyar contended that the entire procedure adopted by the respondent was irregular and against the provisions of the Scheme. According to him, in so far as a declaration has been made under the Scheme, the respondent ought to have considered that and passed appropriate orders. The disposal of the revision petitions before giving a decision on the declarations is illegal. Further it is submitted that the respondent was not correct in holding that the revisions are not maintainable. As a matter of fact, the revisions are maintainable. Even otherwise, the only question that has to be looked into is whether the revisions were pending at the time when the declarations were filed. The authority is not competent to go into the question whether the revision petitions are maintainable or any relief can be granted in the revision petitions. Shri Wariyar cited the decision of the Gujarat High Court in Gufic Pharma Ltd. v. J.G Arora, [1999] 238 ITR 835.

6. Shri Ravindranatha Menon, senior counsel appearing for the Department, submitted that levy of interest is part of assessment and an appeal was maintainable against the assessment. But the assessee did not file an appeal, they are only challenging the interest. According to him, the revisions are not maintainable, because the levy of interest is automatic. The further contention was that so far as levy of interest is concerned, that cannot be granted by filing a revision under section 264. But that can be granted by the Chief Commissioner of Income-tax. Hence, according to him, the revisions are not maintainable. Learned counsel further submitted that if the revision petitions are not maintainable, it should be treated as non est and so at the time when the declarations under the Scheme were filed, there were no appeals or revisions. Hence, the Scheme is not applicable.

7. First, I shall consider the question whether the order, exhibit P-5, passed by the Commissioner is correct. In exhibit P-5, the Commissioner states as follows:

“The revision petition filed by you is against the levy of interest under sections 234A, 234B and 234C. The levy of interest under these sections is mandatory under the Income-tax Act. The same can be waived only by the Chief Commissioner of Income-tax in certain circumstances. Therefore, the Commissioner of Income-tax cannot statutorily interfere in the order levying interest under sections 234A, 234B and 234C. Therefore, your revision petition is not maintainable and cannot be treated as a valid revision petition.”

8. It was further held that since the revision petitions were not maintainable, the declarations filed under the Kar Vivad Samadhan Scheme cannot be acted upon. Exhibit P-2 is the revision petition, which states as follows:

“I am in receipt of the assessment order for the assessment year 1992-93 under section 155. The balance payable as per the assessment order is Rs. 11,15,586 out of which interest under section 234A is Rs. 3,73,650 and under section 234B is Rs. 4,15,950. The interest levied is exorbitant and I am unable to pay the same. The interest calculation is also not correct in law and I may request that suitable relief may be granted by either cancelling the interest or reducing the same.”

9. A perusal of the revision petitions will show that the petitioners have taken the contention that calculation of the interest is not correct. The request is not merely to waive the interest. Hence, it cannot be said that the revision petitions are not maintainable. The decision cited by learned counsel for the Department, viz., the decision in Central Provinces Manganese Ore Co. Ltd. v. CIT, [1986] 160 ITR 961, does not, according to me, apply to the facts of this case. There, the Supreme Court held that the assessee did not apply for reduction of interest before the Assessing Officer and, hence, the revision was not maintainable. The facts of this case stand on a different footing. It cannot be said that any errors in the calculation of interest are outside the jurisdiction of section 264 of the Income-tax Act. Hence, the dismissal of the revision petitions, according to me, is not proper.

10. Even otherwise, I am of the view that for the disposal of the declarations under the Kar Vivad Samadhan Scheme what is necessary is to find out whether there is a revision or appeal pending. Section 95(c) of Chapter IV of the Kar Vivad Samadhan Scheme states that the provisions of this scheme shall not apply to a case where no appeal or reference or writ petition is admitted and pending before any appellate authority or the High Court or the Supreme Court on the date of filing of the declaration or no application for revision is pending before the Commissioner on the date of filing of the declaration. In this case, the revision petitions were filed on October 28, 1998. The declarations were filed on November 2, 1998. Thus, it cannot be said that the revision petitions were not pending on the date of filing of the declarations. The further question whether the revision petitions filed were maintainable or any reliefs could be granted in the revision petitions, according to me, is not relevant. The object of the scheme appears to be to put an end to litigation and also to see that the tax is collected from the assessee. According to me, to read the word “revision” in section 95(c) of the Scheme as a revision which is maintainable or in which relief could be granted will be amounting to re-writing the section. It is one of the cardinal principles of interpretation of statutes that unless there is an intention to the contrary, the words in a statute should be given their ordinary meaning. I derive support for this conclusion from the decision of the Gujarat High Court in Gufic Pharma Ltd. v. J.G Arora, [1999] 238 ITR 835. There, the Gujarat High Court held as follows (page 841):

“The mere fact that the revising authority also happens to be the designated authority, he cannot merge the two distinct jurisdictions and obligations into one and reflect one order into another. As a designated authority, he has jurisdiction to see only the existence of the conditions which make the Kar Vivad Samadhan Scheme operative in the case whether the revision has merit or will be successful, is not his domain. That is the domain of the revising authority. That jurisdiction he may not be called upon to exercise if on determining the amount payable under the scheme the assessee deposits the same within the time prescribed. Because in such event the revision is deemed to be withdrawn under section 90(4) of the Finance (No. 2) Act of 1998.”

11. In the above view of the matter, I quash exhibits P-5, P-6 and P-7 and direct the respondent to consider and pass orders on exhibit P-3 declarations, according to law. Depending upon the result of exhibit P-3 declarations, exhibit P-2 revision petitions shall be disposed of. The original petitions are allowed.