Coverage and Consultants Limited vs Union of India and Another

A.M. Sapre, J.—By filing this writ under Articles 226 and 227 of the Constitution of India, the petitioner--an assessee under the Income Tax Act--seeks a writ of mandamus for acceptance of his figure of tax payable under the Kar Vivad Samadhan Scheme, 1998 (for short "the KVSS"). The facts of the case lie in a narrow compass.

Consequent upon the introduction of the Kar Vivad Samadhan Scheme, the petitioner made an application (annexure A) to the designated authority (Commissioner of Income Tax, Indore) in the prescribed Form No. 1A. According to the petitioner, they were only liable to pay a total tax outstanding to the tune of Rs. 4,66,324. In other words, the petitioner''s case was that out of the total liability of tax due from the petitioner of Rs. 1,31,46,459 out of which they have already paid a sum of Rs. 1,26,04,352. On this basis, the petitioner offered to pay a balance sum of Rs. 4,66,324 and settled the matter by filing the application under the Kar Vivad Samadhan Scheme, i.e., annexure A.

By annexure C, dated February 23, 1999, the Income Tax Department has informed the petitioner that they have to pay a sum of Rs. 29,65,513. It is this order which is impugned in this petition by the petitioner.

Heard Shri Bagadia, learned counsel for the petitioner, and Shri Arun P. Patankar, learned counsel for the respondents.

Having heard learned counsel for the parties and having perused the entire record of the case, I am inclined to remand the case to the Commissioner of Income Tax, Indore, being the designated authority under the Kar Vivad Samadhan Scheme to decide as to how much tax, the petitioner has to deposit or is liable to deposit under the Kar Vivad Samadhan Scheme. In my opinion, when it was the case of the petitioner that they have to pay a total sum of Rs. 4,66,324 but the Department was not prepared to accept this figure of the petitioner, it was necessary for the Department to have at least justified as to how and on what basis, the Department has worked out the figure of Rs. 29,65,513. The petitioner (assessee) is entitled to know and challenge the Department if it is arbitrary or has no rational basis or if it is not according to the mode provided in the Kar Vivad Samadhan Scheme. This court, cannot embark upon this inquiry to work out and determine the actual tax liability that is payable by the petitioner. It has to be worked out on the basis of cases pending in various courts, Tribunals.

Under the scheme of the Kar Vivad Samadhan Scheme, the Commissioner of Income Tax is empowered to determine such issue as designated authority. I, accordingly, allow this petition, set aside the impugned determination made by the Department by its order dated February 23, 1999 (annexure C) and direct the Commissioner of Income Tax, Indore (designated authority) under the Kar Vivad Samadhan Scheme to decide the actual tax payable by the petitioner as per their application made in the Kar Vivad Samadhan Scheme (annexure A). The Commissioner will give due opportunity to the petitioner to satisfy as to how and on what basis, the petitioner is contending that they have to pay only Rs. 4,66,324. The Commissioner will decide the total tax payable by the petitioner under the Kar Vivad Samadhan Scheme keeping in view the provisions of the Kar Vivad Samadhan Scheme and its guidelines issued (annexure G) and will then pass a reasoned order so that one may know as to the basis of determination.

Let these proceedings be completed by the Commissioner of Income Tax, Indore, within three months from the date of the order.

No costs.