PUNJAB CROCKERY HOUSE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS writ petition has been filed by the petitioner aggrieved by the orders passed by the designated authority under section 90 of the Kar Vivad Samadhan Scheme (in short "the KVSS or the Scheme") in adding interest under section 220(2) of the Income -tax Act, 1961 (in short "the Act") for the purpose of settlement of the dispute. The orders passed by the designated authority is questioned on the ground though initially he had filed the declaration under the Scheme for the assessment years 1986 -87, 1987 -88, 1988 -89, 1989 -90 and 1991 -92, the demands with respect to the assessment years 1986 -87, 1987 -88 were already paid and in that view of the mater, there were no tax arrears and the assessee had requested the designated authority to ignore the application for the assessment years 1986 -87 and 1987 -88. As a matter of fact, the assessee has specifically pleaded the same in paragraph 5 of the writ petition. The counter -affidavit filed on behalf of the respondents did not specifically deny the said averment. The petitioner also prays that the relief in the writ petition is specifically confined to the adding -up of the interest for the assessment years 1988 -89, 1989 -90, 1991 -92 under section 220(2) of the Act. The principal contention urged on behalf of the petitioner is that there was no determination of interest payable and in that view of the matter, the interest which has been added under section 220(2) of the Act now while processing the declaration filed by the petitioner under the Scheme is not in order. He would further submit that in the absence of a demand being there in terms of section 156 read with section 220 of the Act, the addition of interest for the first time while processing the KVSS is unjust and arbitrary.

(2.) ON the other hand, the learned counsel for the Department would point out the orders of the penalties for the assessment years 1988 -89, 1989 -90 and 1991 -92 dated August 26, 1991, September 29, 1992 and September 2, 1994, respectively, and would submit that the very order imposing penalty has enclosed a demand notice along with challan. The issuance of a demand notice with challan satisfies the requirement under section 156 read with section 220 of the Act. In that view of the matter, the addition of interest at the time of processing the KVSS, declaration is in order.

(3.) IN the light of the respective submissions, we see no reason to interfere with the demands which have been issued and interest being the natural corollary in terms of the provisions as existing then, we find no infirmity in the orders of the designated authority in including the interest for the period 1988 -89, 1989 -90 and 1991 -92 while processing the declaration under the Scheme. We make it clear the order passed by the designated authority on February 25, 1999, shall be treated as confining to for the three years and so far as the inclusion of the demands for the assessment years 1986 -1987 and 1987 -88 shall be treated at non est or shall be treated as not having been considered. However, it is open for the authorities to take appropriate proceedings for the assessment years 1986 -87, 1987 -88 subject to limitations and in accordance with the provisions of the Act. With the above observations, the writ petition is disposed of. No order as to costs.