Commissioner of Income Tax vs Goel Lottery Centre

Rajes Kumar, J.—This is an appeal u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act") filed by the Commissioner of Income Tax, Kanpur, against the order of the Tribunal dated February 25, 2005, for the assessment year 1993-94.

The brief facts of the case are that the assessee is a partnership firm and was carrying on lottery business. There was a search and seizure operation on October 17, 1994, the assessee filed a return of income disclosing the income of Rs. 18,17,420. Initially the assessment was made u/s 143(1)(a) and thereafter a fresh assessment order was passed on December 27/30, 1996, on an income of Rs. 1,43,56,729 in addition to income of Rs. 45,737 from winnings from lottery u/s 115BB of the Act.

The assessee filed appeal before the first appellate authority disputing the quantum of assessment and also the liability of interest under Sections 234B and 234C of the Act. The Commissioner of Income Tax (Appeals) dismissed the appeal. Against the said order, the assessee filed appeal before the Tribunal.

During the pendency of the appeal before the Tribunal, by the Finance (No. 2) Act, 1998, the Kar Vivad Samadhan Scheme, 1998, has been introduced and the assessee filed a declaration u/s 88 of the said Act in respect of the arrears of the tax and interest before the designated authority. The designated authority accepted the declaration and issued a certificate as contemplated u/s 90(1) of the Act in Form No. 2A.

It appears that after issue of this certificate by the designated officer the Deputy Commissioner of Income Tax I, Kanpur, passed an order dated March 31, 2000, u/s 154 of the Act. By the aforesaid order he has raised the additional demand of interest u/s 234B. According to him, the demand of interest has been less calculated earlier. Against the order passed u/s 154 the assessee filed an appeal before the Commissioner of Income Tax, Kanpur (Appeals). The said appeal was allowed and the order passed u/s 154 has been set aside. Against the said order, the Deputy Commissioner filed an appeal before the Tribunal. The Tribunal by the impugned order rejected the appeal. The Tribunal has held that Sub-section (3) of Section 90 of the Kar Vivad Samadhan Scheme provided that every order passed under Sub-section (1) of Section 90 determining the sum payable under the scheme shall be conclusive in respect of the matter stated therein and no matter covered by such order should be reopened in any proceedings under the direct tax enactment or indirect tax enactment or under any other law for the time being in force. Sub-section (4) of Section 90 further provides that an appeal or reference for the said assessment year shall be deemed to have been withdrawn on the day on which the order referred to in Sub-section (2) is passed, i.e., the day on which designated authority under the Kar Vivad Samadhan Scheme issued certificate.

It further provides that the certificate can be withdrawn if it is found to be false by designated authority at any stage and in that case it shall be presumed that the declaration was never made and all the consequences will be deemed to have been revived. On the basis of the aforesaid provision it has been held that the notice issued by the assessing authority u/s 154 of the Act was outside the ambit. The Tribunal further held that whether in such a situation the proceedings u/s 154 the assessing authority can raise further demand after issue of the certificate is a debatable issue where two opinions are possible. Therefore, the provision of Section 154 of the Act cannot be invoked. The Tribunal further observed that once the designated authority has issued the certificate, the officer lower to the designated authority cannot pass any order u/s 154.

We have heard Sri A.N. Mahajan learned standing counsel and Sri Ashish Bansal appearing on behalf of the respondents. We have perused the impugned orders. We do not find any error in the order. In view of the provisions of the Finance Act (No. 2) of 1998, which provides the Kar Vivad Samadhan Scheme, it is apparent that the order passed under Sub-section (1) of Section 90 determining the sum payable under the scheme shall be conclusive in respect of all the matters stated therein and no matter covered by such order shall be reopened in any other proceeding under the direct tax enactment or indirect tax enactment or under any other law for the time being in force.

It further contemplates that only in a case where the certificate is found to be false the designated authority at any stage can withdraw the same. Therefore, we are of the view that after issue of the certificate in the Kar Vivad Samachan Scheme u/s 90 of the Finance Act the assessing authority had no authority to sit over the certificate issued by the designated authority.

We are also of the view that whether after the issue of the certificate by the designated authority u/s 90 of the Finance (No. 2) Act, 1998, the assessing authority had power to raise fresh demand of interest, is debatable issue where two opinions are possible therefore, it cannot be said to be a mistake apparent on the face of the record and is outside the purview of Section 154. The apex court in the case of T.S. Balaram, Income Tax Officer, Company Circle IV, Bombay Vs. Volkart Brothers, Bombay, has held that where two opinions are possible and the issue involved is debatable, it cannot be said to be a mistake apparent on the face of the record.

In view of the above, we do not find any error in the order of the Tribunal.

In the result the appeal fails and is dismissed.