THE ITO, Ward -4(3), v. SHRI JAY PRAKASH J. MANGTANI,

ITA 774/AHD/2003 | 1992-1993
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 77420514 RSA 2003
Bench Ahmedabad
Appeal Number ITA 774/AHD/2003
Duration Of Justice 8 year(s) 1 month(s)
Appellant THE ITO, Ward -4(3),
Respondent SHRI JAY PRAKASH J. MANGTANI,
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 23-04-2010
Date Of Final Hearing 18-01-2011
Next Hearing Date 18-01-2011
Assessment Year 1992-1993
Appeal Filed On 25-02-2003
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH JM AND D.C.AGRAWAL AM ITA NO. ASST. YEAR 1. 774/AHD/2003 1992-93 2. 474/AHD/2002 1992-03 3. 1357/AHD/2003 1992-03 4. 2043/AHD/2004 1992-03 5. 628/AHD/2006 1992093 6. 775/AHD/2003 1992-03 7. 1347/AHD/2003 1992-03 8. 1492/AHD/2005 1992-03 9. 2114/AHD/2007 1992-03 1.INCOME-TAX OFFICER WARD 4(3) AHMEDABAD. VS. JAYPRAKASH J. MANGTANI 1001 SAMPATI MITHAKHALI ELLISBRIDGE AHMEDABAD. 2. D.C.I.T. CEN.CIR.2(3) AHMEDABAD VS. SMT. VEENA M. PAI S-1 ANILA APTS BHAIKAKA NAGAR THALTEJ AHMEDABAD. 3. INCOME-TAX OFFICER WD-4(3) AHMEDABAD. VS. JAYPRAKASH J. MANGTANI 1001 SAMPATI MITHAKHALI ELLISBRIDGE AHMEDABAD. 4. A.C.I.T. CIR-4 AHMEDABAD. VS. JAYPRAKASH J. MA NGTANI 1001 SAMPATI MITHAKHALI ELLISBRIDGE AHMEDABAD. 5. D.C.I.T. CIRCLE-4 AHMEDABAD. VS. -DO- 6. INCOME-TAX OFFICER WD-4(3) AHMEDABAD. VS. HARSHAD B. VAGHELA 903 SAMPATI MITHAKHALI ELLISBRIDGE AHMEDABAD. 7. INCOME-TAX OFFICER WD-4(3) AHMEDABAD. VS. -DO- 8. INCOME-TAX OFFICER WD-4(3) AHMEDABAD. VS. -DO- 9.HARSHAD B. VAGHELA 903 SAMPATI MITHAKHALI ELLISBRIDGE AHMEDABAD. VS. INCOME-TAX OFFICER WD-4(3) AHMEDABAD. (APPELLANT) (RESPONDENT) APPELLANT BY :- SHRI K.K. VYAWAHARE CIT DR RESPONDENT BY:- SHRI SAKAR SHARMA AR ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 2 O R D E R PER BENCH THESE NINE APPEALS INVOLVE THREE ASSESSEES AND COM MON ISSUES AND HENCE THEY ARE TAKEN UP TOGETHER FOR THE SAKE OF CO NVENIENCE. ITA NO.774/AHD/2003 ASST. YEAR 1992-93 (REVENUES A PPEAL) 2. WE FIRST TAKE UP THE APPEAL IN THE CASE OF SHRI JAYPRAKASH J. MANGTANI. THE APPEAL FILED BY THE REVENUE CONTAINS FOLLOWING GROUND :- (1) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DIRECTING THE AO TO EXCLUDE THE ENTIRE SHARE PROFIT OF THE FI RM I.E. 20 02 496/- WHICH IS THE SHARE PROFIT OF THE FIRM F ROM THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) FAILED TO AP PRECIATE THAT THE SCHEME OF KVSS WAS FOR SETTLEMENT OF DISPUTED T AX ARREARS DETERMINED ON OR BEFORE 31.01.1998 AND WHICH WERE OUTSTANDING AT THE TIME OF FILING OF DECLARATION. I N THE CASE OF ASSESSEE THE DISPUTED TAX AS ON 31.01.1998 WAS RS.2 1 559/-. HENCE THE ASSESSEE COULD HAVE GONE FOR KVSS AGAINST THE DEMAND OF RS.21 559/-. 3. THE ISSUE INVOLVED IN THIS APPEAL IS WHETHER LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO EXCLUDE THE ENTIRE SALE PROCEEDS OF RS.20 02 496/- RECEIVED FROM M/S LABH ENTERPRISES I N WHICH ASSESSEE IS A PARTNER AND WHICH HAD FILED AN APPLICATION UNDER KV SS 1998 FOR SETTLEMENT OF TAX ARREARS. 4. THE FACTS OF THE CASE ARE THAT DURING THE ASST. YEAR 1992-93 ASSESSEE WAS A PARTNER IN REGISTERED FIRM M/S LABH ENTERPRISES AND HAD 40% SHARE OF PROFIT IN THAT FIRM. THE ASSESSEE PART NER FILED RETURN OF INCOME FOR ASST. YEAR 1992-93 DECLARING TOTAL INCOM E AT RS.2 74 750/-. IT WAS PROCESSED UNDER SECTION 143(1)(A) OF THE ACT AN D THEREAFTER IT WAS SELECTED FOR SCRUTINY. M/S LABH ENTERPRISES THE FI RM WAS SUBJECTED TO ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 3 SEARCH AND AS A RESULT ITS INCOME FOR ASST. YEAR 19 92-93 WAS DETERMINED AT RS.62 56 450/- AS AGAINST RETURNED INCOME OF RS. 4 32 070/- VIDE ORDER UNDER SECTION 143(3) COMPLETED ON 31.3.1995. AS A R ESULT OF ASSESSMENT OF THE FIRM ASSESSMENT ORDER UNDER SECTION 143(3) IN THE CASE OF ASSESSEE PARTNER WAS PASSED ON AN INCOME OF RS.22 78 470/- O N 31.3.1995. THE COMPUTATION OF INCOME IN THAT ORDER WAS AS UNDER :- GROSS SALARY RECEIVED FROM M/S LABH ESTATE DEVELOPERS (P) LTD. RS.54 000/- ADD: I) SHARE OF PROFIT FROM THE FIRM OF M/S LABH ENTERPRISE AS PER ORDER DT.31.3.1995 RS.20 02 496/- ADD: II) UNEXPLAINED CASH CREDITS AS DISCUSSED ABOVE RS.2 10 671 RS.22 22 187/- RS.22 76 187/- LESS: INTEREST PAID ON LOAN FOR HOUSE PROPERTY RS.3 700/- TOTAL INCOME RS.22 78 487/- I.E. RS.22 78 470/- AS PER THE SCHEME OF THE ACT IN 1992-93 THE FIRMS W ERE TAXED AT NOMINAL RATES VARYING BETWEEN 6 TO 24% WHEREAS PARTNERS WER E TAXED ON THE DETERMINED SHARE FROM THE REGISTERED FIRM AT THE NO RMAL RATE APPLICABLE TO INDIVIDUALS. AS A RESULT OF THE ORDER UNDER SECTION 143(3) IN THE CASE OF THE FIRM THE TAX WAS CALCULATED @ 20% AT RS.12 50 2 11/- AND INTEREST U/S 234A 234B & 234C WERE CHARGED AT RS.10 47 629/-. T HUS THE NET DEMAND OF RS.12 97 840/- WAS CREATED IN THE HANDS O F THE FIRM. THE AO STARTED RECOVERY PROCEEDINGS BOTH IN THE CASE OF FI RM AS WELL AS IN THE HANDS OF THE PARTNERS INCLUDING THIS ASSESSEE AND S UBSTANTIALLY RECOVERED THE TAXES BY VARIOUS MEANS. AS ON 31.3.1998 TAX DEM AND IN THE CASE OF THE FIRM WAS PENDING AT RS.72 329/- AND IN THE CASE OF THIS ASSESSEE TOTAL AREA OF RS.21 559/- INCLUDING INTEREST OF RS.10 919 /- WAS SHOWN PENDING FOR ASST. YEAR 1992-93 ON THE DATE OF DECLARATION I .E. 24.12.1998. THE AMOUNT OF TAX PAYABLE BY THE ASSESSEE UNDER KVSS WA S DETERMINED AT ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 4 RS.7049/- AS PER CERTIFICATE UNDER SECTION 90(2) OF THE KVSS 1988 WHICH WAS ALSO PAID BY THE ASSESSEE. WITH THE ISSUE OF CE RTIFICATE UNDER SECTION 90(2) ENTIRE LIABILITY OF THE ASSESSEE FOR ASST. YE AR 1992-93 GOT SETTLED AND NOTHING FURTHER WAS PAYABLE BY THE ASSESSEE. 5. THE AO HOWEVER WORKED OUT ON THE BASIS OF DISP UTED TAX IN THE CASE OF THE FIRM DISPUTED INCOME AT RS.3 58 775/- AND ASSESSEES SHARE THEREFROM WAS CALCULATED @ 40% AT RS.1 43 510/-. HE THEREAFTER PASSED AN ORDER GIVING EFFECT TO THE CERTIFICATE ISSUED UN DER SECTION 90(2) IN THE CASE OF THE FIRM AND CALCULATED TAXABLE INCOME IN T HE CASE OF THE ASSESSEE AS UNDER :- GROSS SALARY RECEIPT FROM M/S LABH DEVELOPERS P. LT D. AS PER ORIGINAL ORDER DATED 31.3.1995 RS.54 000 SHARE OF PROFIT FROM M/S LABH ENTERPRISES 40% OF SHARE AS DISPUTED IN THE APPLICATION OF KVSS IN THE CASE OF FIRM I.E. 40% OF RS.3 58 775/- RS.20 02 496/- RS.4 48 510/- RS.48 58 986/- UNEXPLAINED CASH CREDIT AS DISCUSSED RS.19 000/- LESS: UNDISPUTED INCOME DISCUSSED IN APPLICATION OF KVSS RS.19 000/- NIL RS.19 12 986/- LESS: INTEREST PAID ON LOAN FOR HOUSING PURPOSE RS.2 700/- TOTAL TAXABLE INCOME RS.19 10 286/- 6. THIS ORDER WAS PASSED BY THE AO ON 1.2.2000. THI S COMPUTATION AS PER ORDER DATED 1.2.2000 WAS COMPARED WITH THE COMP UTATION OF INCOME AS PER ORDER DATED 31.3.1995. AN AMOUNT OF RS.1 28 671/- BEING THE AMOUNT OF GIFT WAS TREATED AS UNEXPLAINED CASH CRED IT BY THE AO IN THE ORDER DATED 31.3.95 BUT ON APPEAL LD. CIT(A) HAD DI RECTED THE AO TO REDECIDE THE ISSUE AND IN THE ORDER PASSED UNDER SE CTION 250 GIVING APPEAL EFFECT THE AO HAD EXCLUDED THAT SUM BY ACCEPTING TH E GIFT. HENCE THIS SUM DID NOT FIGURE IN THE COMPUTATION DATED 1.2.200 0. ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 5 7. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ORD ER DATED 1.2.2000 BEFORE THE LD. CIT(A) WHO HELD THAT AS PER SCHEME O F THE KVSS IF CIT ISSUES CERTIFICATE U/S 90(2) THEN ENTIRE SHARE INC OME FROM THE FIRM WHICH HAD SETTLED THE TAX ARREARS HAS TO BE EXCLUDED. IN THIS REGARD WE REFERR FOLLOWING PART OF THE ORDER OF LD. CIT(A):- THE APPELLANT HAS COME IN APPEAL AGAINST THE METHO D OF COMPUTATION ADOPTED BY THE AO. THE APPELLANTS COUN SEL SHRI SHARMA HAS ARGUED THAT THE SHARE OF PROFIT FROM M/S LABH E NTERPRISES OF RS.20 02 496/- SHOULD HAVE BEEN EXCLUDED IN TOTALIT Y WHILE COMPUTING THE TAX LIABILITY OF THE PARTNERS AS PER THE PROVISIONS OF THE SAID SCHEME. ON THE OTHER HAND THE AO AS SEEN FROM THE ABOVE COMPUT ATION HAS REDUCED ONLY THE APPELLANTS SHARE IN RESPECT OF THE DISPUT ED AMOUNT OFFERED IN THE SAID APPLICATION WHICH AMOUNTED TO RS.1 43 510/-. I N THIS RESPECT MY ATTENTION IS BROUGHT TO THE PROVISIONS OF THE SAID SCHEME RELATING TO THE TAX LIABILITY OF THE PARTNERS AND THE FIRMS PARTICU LARLY FOR THE ASST. YEAR 1992-93 AND EARLIER YEARS ISSUED BY THE CBDT AS PER PRESS NOTES/RELEASES DATED 17.12.1998 REPORTED IN 235 ITR PAGE 23 WHICH READS AS UNDER :- UNDER THE PROVISIONS OF THE KAR VIVAD SAMADHAN SCH EME (KVSS) THE PARTNERS OF A REGISTERED FIRM ARE EXEMPTED FROM FUR THER TAX ON THEIR SHARE OF INCOME ONCE THE FIRM SETTLES THE DISPUTE PAYING 35 PER CENT OF THE DISPUTED INCOME. HOWEVER PRIOR TO THE ASSESSMENT YEAR 1993-94 THE FIRMS WERE PAYMENT TAXES AT CONCESSIONAL RATES VARYING FROM 4 TO 24 PE R CENT AND THE PARTNERS PAID TAXES ON THEIR SHARE OF INCOME AT THE RATES APPLICABLE. A S A RESULT FIRMS WHO WANT TO AVAIL TO KVSS FOR THE ASST. YEAR 1992-93 AND EARLIER WERE AT A DISADVANTAGE COMPARED TO OTHER ASSESSEES. A NUMBER OF REPRESENTATIONS HAVE B EEN RECEIVED POINTING OUT THE ANOMALOUS POSITION. TO ENABLE SUCH FIRMS TO AVAIL OF THE BENEFIT OF KV SS THE GOVERNMENT HAS CLARIFIED THAT WHERE A REGISTERED FIRM ALONG WITH A LL ITS PARTNERS FILES DECLARATIONS IN RESPECT OF ASSESSMENT YEARS UPTO 1992-93 THE ARREA RS OF THE FIRM AND THE PARTNERS WOULD BE CONSIDERED TOGETHER AND THEY MAY PAY TAXES AT THE CURRENT RATE OF 35% OF THE DISPUTED INCOME OF THE FIRM. THE PARTNERS WOULD NOT BE REQUIRED TO PAY ANY FURTHER TAX ON THEIR SHARE OF INCOME FROM THE FIRM. IT IS ALSO CLARIFIED THAT WHERE THE PARTNERS ARE O THERWISE ELIGIBLE UNDER THE SCHEME IN RESPECT OF ANY OTHER DISPUTED INCOME THE Y MAY FILE DECLARATION FOR SUCH INCOME ALSO ALONG WITH THAT OF THE FIRM. THEY HAVE TO PAY TAXES SEPARATELY AT THE CURRENT RATE OF 30% OF SUCH OTHER DISPUTED INCOME A S PROVIDED IN THE SCHEME. THOSE ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 6 PARTNERS WHO HAVE SEPARATELY FILED DECLARATIONS ALR EADY MAY NOW FILE REVISED DECLARATION ALONG WITH THAT OF THE FIRM. IT IS SUBMITTED THAT IN VIEW OF THE ABOVE CLARIFICA TION ISSUED IT IS ABUNDANTLY CLEAR THAT IN RESPECT OF THE ASST. YEAR 1992-93 ONCE THE KVSS APPLICATION IS ACCEPTED IN THE CASE OF THE FIRM AND OUTSTANDING TAXES PAID ON THE DATE OF APPLICATION NO FURTHER TAX IS CHARG EABLE IN RESPECT OF THE SHARE INCOME FROM THE FIRM IN THE HANDS OF THE PART NERS. MY ATTENTION IS ALSO INVITED TO THE DEFINITION OF DISPUTED INCOME A S WELL AS DISPUTED TAX DEFINED AS PER THE SAID SCHEME WHICH READS AS UNDER : (E) DISPUTED INCOME IN RELATION TO AN ASSESSMEN T YEAR MEANS THE WHOLE OR SO MUCH OF THE TOTAL INCOME AS IS RELATABLE TO T HE DISPUTED TAX FURTHER SECTION 87(F) OF THE FINANCE ACT DEFINES DISPUTED TAX AS UNDER : (F) DISPUTED TAX MEANS THE TOTAL TAX DETERMINED AND PAYABLE IN RESPECT OF AN ASSESSMENT YEAR UNDER ANY DIRECT TAX ENACTMEN T BUT WHICH REMAINS UNPAID AS ON THE DATE OF MAKING THE DECLARATION UNDER SECTION 88 . IT IS SUBMITTED THAT IN THE INSTANT CASE THE TOTAL TAX UNPAID ON THE DATE OF DECLARATION IN THE CASE OF FIRM WAS RS.72 3 29/- CORRESPONDING TO DISPUTED INCOME OF RS.3 58 775/- WHICH WAS ACCEPTED BY THE CIT(CENTRAL) IN HIS ORDER AS DISCUSSED EARLIER. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE I N THIS RESPECT AND ALSO THE PROVISIONS OF KVSS 1998 AND ALSO THE SAID CLARIFICATION ISSUED BY THE CBDT REFERRED BY THE APPELLANTS COUN SEL. AFTER GOING THROUGH THE SAME I AM INCLINED TO ACCEPT THE SUBMIS SIONS MADE AS PER THE SAID CLARIFICATION AND ALSO HAVING REGARD TO THE FA CT THAT EXCEPT FOR THE OUTSTANDING TAX LIABILITY OF RS.72 329/- ALL OTHER ARREARS OF TAX IN RESPECT OF THE FIRM HAD ALREADY BEEN RECOVERED BY THE DEPAR TMENT OR PAID BY THE APPELLANT VOLUNTARILY. THE SHARE FROM THE SAID FIRM IS NOT REQUIRED TO BE INCLUDED IN CONFORMITY WITH THE SAID SCHEME AND CLA RIFICATIONS ISSUED. KEEPING IN VIEW THE ABOVE FINDINGS THE AO IS DIRE CTED TO RECOMPUTED THE TAXABLE INCOME AFTER EXCLUDING THE E NTIRE SHARE PROFIT OF RS.20 02 496/- INSTEAD OF RS.1 43 510/- ONLY AND RE VISE THE TAX LIABILITY ACCORDINGLY. IN THE RESULT THE APPEAL IS ALLOWED. (EMPHASIS ABOVE IS OURS) ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 7 IT IS AGAINST THIS ORDER THAT REVENUE HAS COME UP I N APPEAL BEFORE THE TRIBUNAL RAISING THE GROUND AS ABOVE. 8. THE LD. DR SUBMITTED THAT KVSS 1998 WAS NOT FOR SETTLING ANY INCOME BUT WAS FOR SETTLING TAX ARREARS. TAX ARREAR WOULD MEAN THE ARREAR OF THE TAX PENDING AS ON 31.3.1998. TAX ARREARS INC LUDE TAX INTEREST AND PENALTY WHEREAS DISPUTED TAX AS PER SECTION 87(F) O F THE FINANCE ACT 1998 THE DISPUTED TAX WILL MEAN TOTAL TAX FOUND UN DER THE DIRECT TAX ACT IN RESPECT OF THE ASST. YEAR REMAINED UNPAID AS ON THE DATE OF MAKING THE DECLARATION. THUS ASSESSEE AS SUCH CAN GO FOR SETTL EMENT OF DISPUTED TAX WHICH REMAINS PENDING ON THE DATE OF DECLARATION. T HERE IS NO SCOPE FOR ANY REDUCTION OF INCOME EITHER IN THE CASE OF THE F IRM OR IN THE CASE OF THE PARTNERS. ACCORDING TO THE LD. DR IF THERE IS NO TA X PENDING FOR PAYMENT AS ON THE DATE OF DECLARATION THEN SUCH ASSESSEE WO ULD NOT BE ENTITLED TO ANY BENEFIT UNDER KVSS. HE SUBMITTED THAT IN FACT A O HAS COMMITTED A MISTAKE IN REDUCING A PART OF THE INCOME FROM THE S HARE OF PROFIT IN THE CASE OF THE PARTNER AS NO REDUCTION IS PERMISSIBLE BUT LD. CIT(A) WAS ENTIRELY WRONG IN DIRECTING TO EXCLUDE ENTIRE SHARE OF PROFIT OF THE ASSESSEE IN THE FIRM. HE SUBMITTED THAT RELIANCE OF LD. CIT( A) ON THE PRESS RELEASE BY CBDT WAS INCORRECT. HE HAS DRAWN AN INC ORRECT INTERPRETATION OF THAT PRESS RELEASE. IN FACT THE PRESS RELEASE ONLY MEANT THAT WHERE DISPUTED TAX HAS BEEN SETTLED BY THE FIR M THEN PARTNERS WILL NOT BE REQUIRED TO PAY FURTHER TAX ON THAT INCOME RECEI VED AS PROFIT FROM THE FIRM. THAT IS WHY THE AO HAS THOUGH INCORRECTLY R EDUCED THE EQUIVALENT SHARE FROM THE INCOME WHICH WAS WORKED OUT ON THE B ASIS OF DISPUTED TAX SETTLED BY THE FIRM UNDER KVSS. IN ANY CASE WHERE T HE FIRM HAS NOT SETTLED THE DISPUTED TAX IN RESPECT OF ITS ENTIRE I NCOME THE QUESTION OF EXCLUDING EQUIVALENT SHARE OF PROFIT FROM THE ENTIR E INCOME OF THE FIRM (AND FROM WHICH SHARE OF THE PARTNER IS WORKED AT R S.20 02 496/-) WOULD ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 8 NOT ARISE. THE FIRM HAS SETTLED THE TAX ARREARS ONL Y TO THE EXTENT OF RS.72 329/- WHICH IS CONVERTED INTO AN INCOME OF RS .3 58 775/- AS PER RATE OF TAX APPLICABLE TO THE FIRM AND WHICH IS CAL LED DISPUTED INCOME AND THEREFORE AT BEST ASSESSEE PARTNER COULD GET BENEFIT OF REDUCTION FROM THE SHARE INCOME TO THAT EXTENT ONLY AND NOT MORE. 9. AGAINST THIS THE LD. AR SUBMITTED THAT ORDER OF LD. CIT(A) IS CORRECT BECAUSE ONCE FIRM HAS SETTLED ITS TAX ARREA RS UNDER KVSS 1998 THEN ENTIRE SHARE PROFIT FROM THE FIRM IS TO BE EXC LUDED AS PER PRESS RELEASE ISSUED BY CBDT AND WHICH IS BINDING ON THE AUTHORITIES BELOW. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. THE PRESS RELEASE ON WHICH LD. CIT(A) HA S RELIED HAS ALREADY BEEN QUOTED ABOVE. WE HAVE EXAMINED THE KVSS 1998 A ND ALSO THE CLAIM OF THE ASSESSEE THAT ENTIRE SHARE OF PROFIT O F RS.20 02 496/- SHOULD BE EXCLUDED FROM THE COMPUTATION OF INCOME OF THE P ARTNER. KVSS 1998 IS FOR SETTLING DISPUTED TAX WHICH IS DEFINED AS TA X DETERMINED AND PAYABLE UNDER THE DIRECT TAX ENACTMENT IN RESPECT OF THE AS ST. YEAR AND WHICH REMAINS UNPAID AS ON THE DATE OF MAKING THE DECLARA TION U/S 88 OF THE SCHEME. AS PER SECTION 88A(1) OF THE SCHEME THE FI RM IS REQUIRED TO PAY TAX @ 35% OF THE DISPUTED INCOME. THE DISPUTED INCO ME IS CALCULATED FROM DISPUTED TAX. IT IS DEFINED IN SECTION 87(E) O F THE SCHEME. IN RELATION TO AN ASST. YEAR IT MEANS THE WHOLE OR SO MUCH OF T HE TOTAL INCOME AS IS RELATABLE TO THE DISPUTED TAX. THUS AS PER THE ABOV E SCHEME TAX RATE PREVALENT IN THAT ASST. YEAR IS APPLIED TO THE DISP UTED TAX AND DISPUTED INCOME IS WORKED OUT. THUS ON THIS BASIS DISPUTED INCOME IN THE CASE OF THE FIRM WAS CALCULATED AT RS.3 58 775/-. 11. FOR ASST. YEAR 1993-94 ONWARDS SCHEME OF TAXATI ON OF FIRMS AND PARTNERS HAD CHANGED AND ENTIRE TAX WAS TO BE LEVIE D ONLY ON THE FIRM AND ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 9 NO TAX WAS TO BE LEVIED IN THE HANDS OF THE PARTNER S ON THE SHARE OF PROFIT RECEIVED FROM THE FIRM. HOWEVER IN ASST. YEAR 1992 -93 AND EARLIER BOTH THE FIRM AS WELL AS THE PARTNER HAD TO PAY THE TAX ON THE INCOME EARNED BY THE FIRM AND SHARE OF PROFIT RECEIVED BY THE PARTNE RS. REPRESENTATIONS WERE MADE TO THE CBDT AND ACCORDINGLY THE CBDT ISSU ED THE ABOVE PRESS NOTE CLARIFYING THAT IF BOTH THE FIRM AND PAR TNER FILED PETITION UNDER THE SCHEME AND PAY TAXES @ 35% ON THE DISPUTED INCO ME OF THE FIRM THEN PARTNERS WOULD NOT BE REQUIRED TO PAY ANY FURT HER TAX ON THEIR SHARE OF INCOME FROM THE FIRM. THUS THE PARTNERS WERE ALS O EXEMPTED FROM PAYING TAX ON THEIR SHARE OF INCOME ON WHICH TAX @ 35% HAS BEEN PAID BY THE FIRM. THE PRESS RELEASE ON WHICH LD. CIT(A) AND LD. AR HAVE HEAVILY RELIED DOES NOT MEAN AND CANNOT BE INTERPRE TED TO MEAN THAT IF ASSESSEE HAS ONLY MEAGER DISPUTED TAX WHICH IS SETT LED UNDER KVSS THEN ENTIRE INCOME OF THE FIRM OR SHARE OF PROFIT OF THE PARTNER FROM THAT FIRM WOULD BE EXCLUDED AND WILL NOT BE SUBJECTED TO TAX. ENTIRE PRESS RELEASE HAS TO BE READ HARMONIOUSLY AND CANNOT BE READ TO G IVE ABSURD RESULTS. IN THE PRESENT CASE THE DISPUTED INCOME WAS WORKED OUT AT RS.3 58 775/- AND TAX THEREON WAS PAID BY THE FIRM @ 35% THEN SHARE O F PROFIT OF THE ASSESSEE ONLY IN SUCH DISPUTED INCOME WILL NOT BE F URTHER SUBJECTED TO TAX IN HIS OWN CASE. THAT IS EXACTLY WHAT THE AO HAS D ONE VIDE HIS ORDER DATED 1.2.2000. IF WE EXTEND THE ARGUMENT AND LOGIC OF LD. CIT(A) FURTHER IF DISPUTED TAX ON THE DATE OF DECLARATION IS RS.100/- WHEREAS ADDITION IN THE HANDS OF THE FIRM WAS DONE OF RS.1 0 00 000/- AND SHARE OF THE PARTNER WAS SAY RS.4 LACS THEN BY PAYING TAX ON DISPUTED INCOME WHICH WOULD BE ABOUT RS.200/- AND TAX PAYABLE UNDER KVSS WOULD COME TO ONLY RS.70/- THEN BY PAYING RUPEES SEVENTY AS TA X ENTIRE SUM OF RS.4 LACS IN THE HANDS OF THE PARTNER SHOULD BE EXCLUDED . THIS INTERPRETATION IS APPARENTLY RIDICULOUS AND IS NOT ACCEPTABLE. ONLY S HARE FROM THE DISPUTED INCOME ON WHICH DISPUTED TAX HAS BEEN PAID BY THE A SSESSEE UNDER KVSS ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 10 1998 CAN BE EXCLUDED FROM THE COMPUTATION OF INCOME OF THE PARTNER FOR WORKING OUT HIS TAX LIABILITY. 12. WE HAD ASKED THE ASSESSEE TO WORK OUT THE TAX L IABILITY BEFORE FILING APPLICATION UNDER KVSS 1998 AND TAX LIABILITY AFTER THE FIRM FILED APPLICATION UNDER KVSS 1998. WORKING IS DONE AS PER THE INTERPRETATION GIVEN BY LD. CIT(A) TO EXCLUDE ENTIRE SHARE FROM TH E FIRM. WE ARE INFORMED THAT TAX LIABILITY INCLUDING INTEREST ON I NCOME OF RS.19 10 286/- WAS WORKED OUT AT RS.21 49 754/-. PRE-PAID CREDIT/A DJUSTMENT WAS DONE AT RS.15 86 163/-. AS PER THE INTERPRETATION OF THE PR ESS RELEASE MADE BY LD. AR THE INCOME OF THE PARTNER WILL BE REDUCED TO RS. 51 300/- AND TOTAL TAX LIABILITY WOULD COME TO RS.8 920/-. IT WOULD RESULT IN REFUND OF ENTIRE PRE- PAID TAXES AND ADJUSTMENTS. THUS BY PAYING A MEAGER SUM BY THE FIRM UNDER KVSS 1998 HUGE REFUND WOULD RESULT IN THE HAN DS OF THE PARTNERS. 13. THE LD. DR HAS REFERRED TO THE DECISION OF HON. GUJARAT HIGH COURT IN THE CASE OF SHANKARLAL NEBHUMAL UTTAMCHANDANI VS . CIT (2001) 251 ITR 876 (GUJ). IN THAT CASE ALSO ASSESSEE HAD DEMAN DED A REFUND IN HIS CASE. THE HEAD NOTES FROM THAT JUDGMENT IS AS UNDER :- SECTION 88 OF THE. FINANCE (NO.2) ACT. 1998 CLEAR LY PROVIDES THAT WHEN A PERSON MAKES A DECLARATION IN REJECT OF TAX ARREARS THEN THE AMOUNT PAYABLE UNDER THE SCHEME BY THE DECLARANT SHAFT BE DETERMINED AT THE RATES SPECIFIED I.E. 35 PER CENT !N THE CASE OF THE DECLARANT BEING A FIRM. SECTION 87(M} DEFINES ' TAX ARREARS' TO MEAN THE AM OUNT OF TAX PENALTY OR INTEREST DETERMINED ON OR BEFORE MAN3) 3L T 1598 BUT REMAINING UNPAID ON THE DATE OF DECLARATION. THE SCHEME WAS ENACTED TO RECOVER TAN ARREARS BY GIVING OPPORTUNITY TO THE ASSESSES BY OR AGAINST WHOM DISPUTES FOR TAX LIABILITY WERE PENDING BEFORE THE CONCERNED TAXING AUTHORITY OR THE TRIBUNAL OR THE COURT. AS TAR AS THE CIRCULAR DATED DECEMBER 17 1998 IT CONCERNED THE RATIONALE FOR GIVING CONCESSION TO THE FIRM IS MADE DEAR. IT IS ONLY WHERE TAX ARREARS OF A FIRM AS WELL AS OF ITS PARTNER HAD REMAINED UNPAID ON MARCH 3L F 1998 THAT THE CLARIFICATION WOULD COME INTO PLAY THAT IS THE TAX IS REQUIRED ID BE PAID ONLY BY THE FIRM AT THE RATE OF 35% AND IN THAT CASE THE ARREARS OF TAX PAYABLE BY THE PARTNERS ON THEIR SHARE IN THE INCOME OF THE FIRM FOR THE RELEVANT YEAR ARE NOT REQUIRED TO BE SEPARATELY PAID ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 11 THE FIRM OF WHICH THE PETITIONER WAS A PARTNER FI LED A DECLARATION UNDER THE KAR VIVAD SARNADHAN SCHEME AND WAS GRANTED THE BENE FIT UNDER THE SCHEME AND THE FIRM ACCORDINGLY PAID INCOME-TAX AT THE RATE OF 35 PERCENT OF THE DISPUTED INCOME WHICH WORKED OUT TO RS.73 10 7/-. THE PETITIONER THEREAFTER MADE AN APPLICATION DATED APRIL 8 1998 CLAIMING A REFUND TO THE TUNE OF RS.11 64 249/- ON THE GROUND THAT THE PETIT IONER HAD ALREADY EARLIER PAID THE TAX ON THE INCOME DERIVED BY THE PETITIONE R AS A PARTNER OF THE SAID FIRM IN RESPECT OF THE ASSESSMENT YEAR 1987-88 FO R WHICH THE DECLARATION UNDER THE KAR VLVAD SAMADHAN SCHEME WAS FILED BY TH E FIRM. THE CLAIM FOR REFUND WAS SUBSEQUENTLY REVISED TO RS.13 28 207 /-. THE CLAIM WAS REJECTED. ON A WRIT PETITION AGAINST THE ORDER. HELD DISMISSING &E WRIT PETITION THAT THERE WAS NO DISPUTE ABOUT THE FACT THAT THE DECLARATION WAS TILED ONLY TRY THE FIRM IN RESPECT OF ITS TAN A RREARS TO THE TUNA OF RS.1 36 341/- AND NOT BY ITS PARTNERS.THERE WAS ALSO NO DISPUTE ABOUT THE FACT THAT THE PETITIONER HIMSELF HAD PAID HIS TAX DUES AND THAT IN RESPECT OF THE ASSESSMENT YEARS I N QUESTION THERE WERE NO ARREARS OF TAX AS FAR AS THE PETITIONER WAS CONCERNED IN HIS CAPACITY AS A PARTNER OF THE FIRM. ADMITTEDLY NO PROCEEDINGS WERE PENDING BETWEEN THE PETITIONER AND THE DEPARTMENT IN RESPECT OF INN ASSESSMENT YEARS I N QUESTION ON THE DATE ON THE DATE OF THE DECLARATION. HENCE THE PETITIONER WAS NOT ENTITLED TO A REFUND.* 14. AS PER SECTION 99 OF KVSS 1998 NO REFUND IS REQ UIRED TO BE ISSUED IN PURSUANCE TO DECLARATION MADE U/S 88 OF KVSS. IN THE PRESENT CASE THE REFUND IS CLAIMED BY THE PARTNERS AS A RESULT OF DE CLARATION IN THE HANDS OF THE FIRM WHICH IS NOT PERMISSIBLE IN VIEW OF SECTIO N 93 OF THAT SCHEME. THE LD. DR HAS REFERRED TO THE FOLLOWING NOTE FROM THE TAXMANNS GUIDE TO KVSS IN SUPPORT OF HIS ARGUMENT ON THIS POINT:- THE AMOUNT PAID BY THE DECLARANT IN PURSUANCE OF A DECLARATION MADE UNDER SECTION 88 WILL NOT BE REFUNDED UNDER ANY CIRCUMSTANCES (SE CTION 93 OF THE FINANCE ACT). THE EXPRESSION IN PURSUANCE OF A DECLARATION HAS BEEN USED JUST TO EMPHASISE THE FACT THAT THE DECLARATION IS THE STARTING POINT FOR DETE RMINATION OF THE AMOUNT PAYABLE UNDER THE SCHEME. IN EFFECT ANY AMOUNT PAID IN RES PONSE TO THE PRELIMINARY CERTIFICATE ISSUED BY THE DESIGNATED AUTHORITY WILL NOT BE REFU NDED UNDER ANY CIRCUMSTANCES. IF THE AMOUNT PAID IS LESS THAN THE AMOUNT DEMANDED T HE DESIGNATED AUTHORITY MAY REFUSE TO ISSUE THE FINAL CERTIFICATE OR MAY PERHAP S BRING THE ERROR TO THE NOTICE OF THE DECLARANT AND DIRECT HIM TO MAKE GOOD THE SHORTFALL . THIS DEPENDS ON ANY ADMINISTRATIVE INSTRUCTIONS THAT MAY BE ISSUED TO T HE DESIGNATED AUTHORITY IN THIS REGARD. WHERE THE AMOUNT PAID IS MORE THAN THE AMOU NT DEMANDED AGAIN NO REFUND WILL BE GRANTED IN VIEW OF THE FACT THAT THE SCHEM E DOES NOT CONFER ANY RIGHT OF REPRESENTATION OR APPEAL ON THE DECLARANT. IT IS TH EREFORE ESSENTIAL THAT THE DECLARANT ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 12 ENSURES THAT ONLY THE AMOUNT SPECIFIED IN THE PRELI MINARY CERTIFICATE (NOTHING MORE OR NOTHING LESS) IS PAID BY HIM. (SEE ALSO PARA 9.6). WE FULLY AGREE WITH THE ABOVE VIEW SUBJECT TO THE R IDER THAT WHERE THE FIRM HAS NOT PAID ANY TAX ON THE INCOME ASSESSED BU T THE TAX LIABILITY HAS BEEN SETTLED UNDER KVSS 1998 AND THE PARTNER HAS P AID THE TAX AS ON THE SHARE OF PROFIT ON SUCH INCOME BEFORE AVAILING BENE FIT UNDER KVSS SCHEME THEN TO THE EXTENT OF SHARE IN DISPUTED INC OME PARTNER WOULD NOT BE LIABLE TO MAKE THE PAYMENT OF TAX. IF IT RESULTS INTO REFUND THE REVENUE SHOULD GRANT THE SAME. 15. FURTHER WE AGREE WITH THE LD. DR THAT ASSESSEE IS TRYING TO GET ENRICH UNJUSTIFIABLY. THEREFORE DOCTRINE OF UNJUS T ENRICHMENT SHOULD BE INVOKED. THE FIRM HAS TO PAY 35% TAX OF DISPUTED IN COME OF RS.3 58 775/- WHICH IS RS.1 25 571/- WITH NO INTERE ST UNDER SECTION 234A 234B OR 234C WHEREAS PARTNERS WANT TO GET BACK REFU ND OF TAX PAID ON SHARE OF INCOME ON THE TOTAL ADDITION OF RS.62 56 4 50/- PLUS HUGE INTEREST UNDER SECTION 244A FOR MORE THAN 10 YEARS BY PAYING ONLY A PELTRY SUM OF RS.1 25 571/-. AS STATED ABOVE IF THIS LOGIC ADVAN CED BY THE ASSESSEE AND THE LD. AR IS ALLOWED TO SUCCEED THEN BY PAYING MER E PELTY SUM OF RS.70/- IN THE EXAMPLE GIVEN ABOVE THE PARTNERS WO ULD CLAIM HUGE REFUND ON SHARE OF INCOME FROM THE FIRM ON WHICH THEY MIGH T HAVE PAID TAXES OR WILL NOT BE LIABLE TO PAY TAXES IF NOT PAID. THIS I S NOT THE INTENTION UNDER THE SCHEME WHICH WAS ONLY TO RECOVER TAX ARREARS PE NDING AND NOT TO GRANT REFUND THROUGH THIS CIRCUITOUS BUT UNJUSTIFIE D ROUTE. AS A RESULT WE ALLOW THE DEPARTMENTAL APPEAL SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THE ORDER OF THE AO DATED 1.2.2000. THE DEP ARTMENTAL APPEAL IS THEREFORE ALLOWED. ITA NO.2043/AHD/2004 ASST. YEAR 1992-93 (REVENUES APPEAL) ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 13 16. THE REVENUE HAS RAISED THE FOLLOWING GROUND :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND AS ON FACTS OF THE CASE IN CANCELING THE ORDER U/S 154 DATED 25.09.2002 HOLDIN G THAT THE AO WAS NOT WITHIN THE JURISDICTION IN CANCELING THE ORDER DATED 1.2.2000. 17. AFTER PASSING THE ORDER ON 1.2.2002 THE AO REAL IZED THAT KVSS WAS ONLY A SCHEME FOR SETTLEMENT OF TAX ARREARS AND NOT FOR ANY REDUCTION OF INCOME. HE THEREFORE PASSED AN ORDER U/S 154 O N 25.9.2002 RECALLING HIS ORDER DATED 1.2.2000 AND DETERMINING ONLY THE T AX LIABILITY OF THE ASSESSEE PURSUANT TO DECLARATION ACCEPTED BY THE CI T IN RESPECT OF OUTSTANDING ARREARS OF THE ASSESSEE AT RS.25 559/-. THIS WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHO VIDE HIS ORD ER DATED 19.3.2004 ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT ISS UE IS DEBATABLE AND ORDER OF AO HAS MERGED IN THE ORDER OF LD. CIT(A) D ATED 18.10.2001. IN THIS REGARD WE REFER FOLLOWING PARAS FROM THE ORDER OF LD. CIT(A):- 7. THE CONTENTIONS RAISED HAVE BEEN CONSIDERED. IN THE GROUNDS OF APPEAL IT WAS STATED THAT THE ORDER U/S 154 CANCELLING THE ORDER DATED 1.2.2000 WAS WITHOUT ANY AUTHORITY OR JURISDICTION AND SHOULD BE CANCELLED A ND THE AO BE DIRECTED TO GIVE EFFECT TO THE ORDER OF THE CIT(A) DATED 18.10.2001. THE MA IN REASON WHY THE AO HAS CANCELLED THE ORDER DATED 1.2.2002 IS THAT ACCORDIN G TO HIM IT WAS NOT IN CONSONANCE WITH THE PROVISIONS OF KVSS. HOWEVER THIS ISSUE HA D ALREADY BEEN CONSIDERED BY THE CIT(A) IN THE ORDER DATED 18.10.2001. CONSEQUENTLY AS PER PROVISIONS OF SECTION 154(1A) THE AO LOOSES JURISDICTION TO CONSIDER THIS ISSUE IN PROCEEDING U/S 154. MOREOVER ON THIS ISSUE THE ORDER OF THE AO HAD ME RGED WITH THE ORDER OF THE CIT(A) AND ON THIS GROUND ALSO THE AO COULD NOT HAVE RECTI FIED THE ORDER DATED 1.2.2000. AS INFORMED BY THE LD. COUNSEL APPLICATION U/S 154 MO VED BY THE AO HAS BEEN REJECTED BY THE CIT(A) BY HIS ORDER DATED 1.1.2003. THEREAFT ER IT APPEARS THAT THE AO HAS RESORTED TO THE ACTION U/S 154 TO CANCEL THE ORDER DATED 1.2.2000. IN VIEW OF THE ABOVE POSITION THE AO HAD NO JURISDICTION TO PASS THE OR DER U/S 154 AGAINST THE ORDER DATED 1.2.2000. 8. MOREOVER IN THE ORDER U/S 154 THE AO HAS CANCE LLED THE ORDER DATED 1.2.2000 AND SUBSTITUTED IT BY A FRESH ORDER. THE ACT OF SUB STITUTING AN ORDER BY A FRESH ORDER BY ITSELF CANNOT BE SAID TO BE AN ACT PERMISSIBLE U/S 154. THE PASSING OF A FRESH ORDER WOULD BE BASED UPON AN EXAMINATION OF RELEVANT FACT S AND POSITION IN LAW WHICH IS NOT PERMISSIBLE U/S 154. ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 14 9. IN VIEW OF THE ABOVE DISCUSSION I HOLD THAT THE AO WAS NOT WITHIN HIS JURISDICTION IN CANCELING THE ORDER DATED 1.2.2000 BY PASSING ORDER U/S 154. THE ORDER U/S 154 IS THEREFORE CANCELED. THE ORDER DATED 1.2. 2000 IS RESTORED BACK AND THE AO IS DIRECTED TO GIVE EFFECT TO THE ORDER OF THE CIT(A) DATED 18.10.2001. 10. IN THE RESULT THE APPEAL IS ALLOWED. 18. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VI EW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF LD. CIT(A). THE RE ASONS ARE THAT THE ISSUE WHETHER ANY REDUCTION IN INCOME SHOULD BE DONE WHIL E COMPUTING SHARE INCOME OF THE PARTNER IN RESPECT OF DISPUTED INCOME ON WHICH THE FIRM HAS PAID DISPUTED TAX OR TO WHAT EXTENT SUCH REDUCTION SHOULD BE DONE OR NO REDUCTION SHOULD BE DONE AT ALL IS DEBATABLE AND IS ENTIRELY BASED ON THE INTERPRETATION OF THE PRESS RELEASE. SECONDLY THE ISSUE IS MERGED WITH THE ORDER OF LD. CIT(A) AND THEREFORE THE AO IS NOT C OMPETENT TO RECTIFY HIS ORDER. FURTHER WE NOTICE THAT IT IS NOT THE RECTIFI CATION OF THE ORDER DATED 1.2.2000 BUT IT IS IN FACT RECALLING THE ORDER AND REPLACING WITH A DIFFERENT ORDER. THIS ACTION IS NOT PERMISSIBLE. IN ANY CASE WE HAVE UPHELD THE ORDER OF AO IN THIS ORDER OF A.O. DATED 1.2.2000 IN ITA NO.774/AHD/2003 FOR ASST. YEAR 1992-93 ABOVE. THERE FORE THERE IS NO QUESTION OF RECTIFICATION THEREIN RECALLING THEREOF WOULD ARISE. AS A RESULT DEPARTMENTAL APPEAL IS DISMISSED. ITA NO.1357/AHD/2003 ASST. YEAR 1992-93 (REVENUES APPEAL) 19. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUND :- (1) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THE ORDER PASSED WAS U/S 154. THE LD. CIT(A) F AILED TO APPRECIATE THAT THE RECTIFICATION APPLICATION MADE WAS IN CONTEXT OF ORDER U/S 154 R.W.S. 250 OF THE IT ACT 1961. TH E LD. CIT(A) OUGHT TO HAVE DECIDED AS TO WHETHER THE AO HAD THE POWER TO MODIFY THE TOTAL INCOME COMPUTED AS A RESULT OF KVS S ORDER. ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 15 20. THE AO HAD REALIZED THAT HE COULD NOT HAVE DIST URBED THE INCOME OF THE PARTNERS EVEN THOUGH FIRM MIGHT HAVE PAID TH E DISPUTED TAX AS THERE IS NO PROVISION FOR ANY REDUCTION OF INCOME UNDER K VSS 1998. HE ALSO MOVED AN APPLICATION BEFORE THE LD. CIT(A) ASKING H IM TO RECALL HIS ORDER DATED 18.10.2001. THE LD. CIT(A) REJECTED THE APPLI CATION BY OBSERVING AS UNDER :- 2.2 THE ISSUE WHETHER THE AO HAD THE JURISDICTION TO GIVE EFFECT TO THE ORDER PASSED U/S 90(1) OF THE KVSS BY THE CIT WAS N OT BEFORE THE CIT(A). BEFORE THE CIT(A) THE ISSUE OF THE VALIDITY OF THE ORDER PASSED BY THE AO WAS NOT THERE. WHETHER AN ORDER PASSED BY THE DEPAR TMENT AFFECTING THE INCOME AND THE TAX LIABILITY IS AN APPELLABLE ORDER OR NOT IS A DEBATABLE ISSUE FOR THE REASONS MENTIONED BY THE AR IN HIS S UBMISSIONS. THE AR CONTENDED THAT THE ORDER OF THE AO COULD BE READ TO BE AN ORDER PASSED U/S 154 AND THEREFORE THE CIT(A) HAD THE JURISDICT ION AGAINST THE ORDER PASSED. IT MAY BE PERTINENT TO NOTE THAT THE ORDER S PASSED UNDER VARIOUS SECTIONS LIKE 220(2) CHARGING OF INTEREST U/S 234A 234B AND 234C ETC. ARE NOT APPELLABLE ORDER U/S 246A YET THE COURTS H AVE HELD THE ORDERS PASSED UNDER THESE SECTIONS TO BE APPELLABLE ORDER PARTICULARLY WHEN THE APPELLANT DENIES THE APPLICABILITY OF THE SECTION I TSELF TO THE FACTS OF HIS CASE. I AM OF THE OPINION THAT THE REQUEST THAT TH E APPELLATE ORDER BE RECTIFIED HOLDING THAT THE APPELLATE ORDER WAS WITH OUT JURISDICTION CANNOT BE ACCEDED. IN ANY CASE THE DEPARTMENT HAD THE REM EDY TO FILE SECOND APPEAL IN CASE IT WAS OF THE OPINION THAT THE ASSU MPTION OF THE JURISDICTION BY THE CIT(A) WAS WRONG OR THE DEPARTM ENT CONSIDERED THAT THE DIRECTIONS ISSUED THEREIN WERE CONTRARY TO THE PROVISIONS OF SCHEME OF KVSS AND THE CLARIFICATIONS ISSUED BY THE CBDT IN T HIS REGARD. 2.3 FURTHER THE REQUEST OF THE AO TO CANCEL THE APP ELLATE ORDER AS THE ORDER OF THE DY. CIT HAS BEEN VACATED BY RECTIFYING THE ORDER U/S 154 ALSO CANNOT BE ACCEDED TO SINCE AT THE TIME OF PASSING T HE APPELLATE ORDER THE ORDER OF THE DY. CIT WAS IN EXISTENCE. THE SUBSEQUE NT HAPPENING OF CANCELLATION OF THE ORDER DOES NOT MAKE IT A MISTAK E APPARENT FROM RECORDS AT THE TIME OF PASSING OF THE APPELLATE OR DER. 3. CONSIDERING ALL THE FACTORS I AM OF THE OPINION THAT THE REQUEST OF THE AO TO MODIFY THE APPELLATE ORDER OR TO CANCEL T HE ORDER IS A DEBATABLE ISSUE AND THEREFORE THE SAME CANNOT BE RECTIFIED I NVOKING THE PROVISIONS OF SECTION 154. THE REQUESTS MADE IN THIS REGARD AR E REJECTED. ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 16 21. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFEREN CE IN THE ORDER OF LD. CIT(A). THE REASONS ARE THAT THE LD. CIT(A) HAS DIS POSED OF THE APPEAL ON THE GROUND RAISED BEFORE HIM AND AT THAT TIME THERE WAS NOTHING ON HIS RECORD AS TO WHETHER ORDER PASSED BY THE AO ON 1.2. 2000 WAS A NULLITY. EVEN SUBSEQUENTLY IT HAS NOT BEEN HELD THAT THE ORD ER PASSED BY THE AO ON 1.2.2000 IS IN NULLITY. ON THE OTHER HAND WHILE DISPOSING THE APPEAL IN ITA NO.774/AHD/2003 ASST. YEAR 1992-93 WE HAVE UPHE LD HIS ORDER DATED 1.2.2000. ONCE THE ORDER OF THE AO IS UPHELD THEN APPEAL AGAINST SUCH ORDER TO THE LD. CIT(A)S WOULD BE VALID AND S O HIS ORDER. THERE IS NO QUESTION OF WITHDRAWING OR CANCELING THE APPEAL AGAINST ORDER DATED 1.2.2000. AS A RESULT THIS CHANNEL ADOPTED BY THE REVENUE IS INFRUCTUOUS AND IS ACCORDINGLY REJECTED. THE APPEAL FILED BY TH E REVENUE IS DISMISSED. ITA NO.628/AHD/2006 ASST. YEAR 1992-93 (REVENUES A PPEAL) 22. THE AO FURTHER FILED AN APPLICATION BEFORE THE LD. CIT(A) ON 2 ND JUNE 2005 FOR RECONSIDERATION AND REVIEW OF THE DI RECTION GIVEN BY THE LD. CIT(A) IN HIS APPELLATE ORDER NO.CIT(A)-VI(NOW III) /CENTRAL CIRCLE- 293)/28/00-01 DATED 18.10.2001 ON THE FOLLOWING POI NTS:- A) THE DECISION OF CIT(A) IS IN DIRECT CONTRADICTION T O THE JURISDICTION HIGH COURT DECISION IN CASE OF SHONKER LAL NEBHUMAL UTTAMCHANDANI 251 ITR 876(GUJ) WHEREIN ON IDENTICAL FACTS THE HONBLE GUJARAT HIGH COURT HAS HELD THAT NO REFUND IS ADMISSIBLE TO THE PARTNER AS A RE SULT OF KVSS BEING ACCEPTED IN THE HANDS OF THE FIRM. B) THE KVSS IN THE HANDS OF THE FIRM DID NOT CHANGE TH E ASSESSED INCOME OF THE FIRM. THE KVSS ONLY SETTLED THE DISPUTED TAX ARREARS OF THE FIRM AND DID NOT ALTER THE ASSESSED INCOME. THE SHARE OF PROFIT OF THE PARTNER IS TO BE RE-DETERMINED ONLY U/S 155(1) OF IT ACT. IF THER E WAS NO CHANGE IN THE INCOME OF THE FIRM AS A RESULT OF KVSS ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 17 THERE WAS NO QUESTION OF ANY RE-DETERMINATION OF IN COME OF THE PARTNER U/S 155(1). HENCE THE INCOME OF THE PARTNER WAS NOT TO BE REDUCED AS A RESULT OF KVSS BEING DON E IN THE HANDS OF THE FIRM. AFTER HEARING THE ASSESSEE AND THE AO THE LD. CIT(A ) REJECTED THIS APPLICATION BY OBSERVING AS UNDER :- 3. I HAVE CONSIDERED ARGUMENTS OF AO AND THE SUBMI SSION OF THE APPELLANT CAREFULLY. I HAVE ALSO PERUSED THE ORDER OF CIT(A)-III AHMEDABAD DATED 18.10.2001 AND THE ORDER OF MY PRED ECESSOR DATED 14.03.2005. THE WHOLE ISSUE IN THE APPELLATE ORDER DATED 14.03.2005 WAS REGARDING NON-GRANTING OF APPEAL EFFECT TO THE APPE LLATE ORDER DATED 18.10.2001 PASSED BY CIT(A)-III AHMEDABAD. MY PRED ECESSOR HAS GIVEN FINDING IN PARA 3 OF THE ORDER NO.CIT(A)-VIII/AC-4/ 96/04-05 DATED 14.03.2005 WHICH READS AS UNDER :- THE ONLY GROUND OF APPEAL TAKEN UP RELATES TO THE ACTION OF THE AO IN REDUCING RS.18 58 986/- BEING SHARE OF PROFIT FROM M/S LABH ENTERPRISES INSTEAD OF RS.20 02 496/- AS PER ORDERS OF CIT(A) III AHMEDAB AD DATED 18.10.2001. A COPY OF THE SAME HAS ALSO BEEN FURNISHED AND THE CONTENTION OF THE APPELLANTS REPRESENTATIVE IN THIS RESPECT IS FOUND TO BE CORRECT. THE AO IS D IRECTED TO MODIFY THE SHARE OF PROFIT FROM M/S LABH ENTERPRISES FROM EXCLUDING FROM THE T OTAL INCOME AS PER THE SAID ORDER DATED 18.10.2001. 4. FROM THE ORDER OF CIT(A) I FIND THAT THERE IS N O ERROR WHICH IS APPARENT ON RECORD AS HE HAS DECIDED THE WHOLE ISSU E AFTER PROPERLY DISCUSSING THE LEGAL POSITION AND CBDTS CIRCULAR. EVEN WHEN THE APPEAL EFFECT WAS NOT GIVEN BY THE AO THE CIT(A) AGAIN DI RECTED AS PER ORDER DATED 14.03.2005 TO EXCLUDE THE SHARE INCOME. AS PE R PROVISIONS OF SECTION 154 A MISTAKE APPARENT ON THE RECORD MUST B E AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTAB LISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LA W IS NOT A MISTAKE APPARENT FROM THE RECORD. EVEN IF A STATUTORY PROVI SION IS CAPABLE OF TWO INTERPRETATIONS TAKING ONE SUCH INTERPRETATION CANN OT GIVE RISE TO AN ERROR APPARENT FROM THE RECORD EVEN IF ONE OF THE VIEWS T HAT THE OTHER INTERPRETATION WAS MORE CORRECT IN THE CONTEXT. THU S RECTIFICATION PROCEEDINGS CANNOT BE RESORTED TO IN ORDER TO MAKE A REVISION IN A MATTER ON WHICH THERE COULD BE TWO POSSIBLE INTERPRETATION S. CIT VS. JEEVANLAL (P) LTD. 183 ITR 128 (CAL) AND CIT VS. LAGAN JUTE M ACHINERY CO. (P) LTD. 184 ITR 525 (CAL). THEREFORE CONSIDERING THE TOTAL FACTS AND THE LEGAL DECISIONS IN THIS REGARD I DO NOT FIND ANY M ISTAKE APPARENT FROM THE ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 18 RECORD IN THE ORDER OF THE CIT(A) AND ACCORDINGLY T HE APPLICATION FILED BY THE AO IS HEREBY REJECTED. 23. AGAINST THIS ORDER THE REVENUE HAS FILED AN APP EAL RAISING FOLLOWING GROUND:- (1) THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN HOLDING THAT ORDER PASSED WAS U/S 154. THE LD. CIT(A) FAILE D TO APPRECIATE THAT THE RECTIFICATION APPLICATION MADE WAS IN CONT EXT OF ORDER U/S 154 R.W.S. 250 OR THE IT ACT 1961. THE LD. CIT(A) OUGHT TO HAVE DECIDED THE ISSUE OF COMPUTATION OF TOTAL INCOME UN DER THE KVSS SCHEME BEING MISTAKE APPARENT FROM THE RECORDS. 24. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FO R INTERFERENCE IN THE ORDER OF LD. CIT(A). CLEARLY THERE IS NO MISTAKE AP PARENT FROM THE RECORD WHICH COULD BE RECTIFIED BY THE LD. CIT(A). IN ANY CASE THE APPEAL IS ONLY ACADEMIC AND RATHER INFRUCTUOUS BECAUSE WE HAVE IN ITA NO.774/AHD/2003 ASST. YEAR 1992-93 HAVE SET ASIDE T HE ORDER OF LD. CIT(A) AND RESTORED THE ORDER OF AO DATED 1.2.2000. SINCE THE ORDER OF LD. CIT(A) DOES NOT SURVIVE QUESTION OF ITS RECTIFI CATION WOULD ALSO BE INFRUCTUOUS. AS A RESULT APPEAL FILED BY THE REVEN UE IS DISMISSED. ITA NO.775/AHD/2003 ASST. YEAR 1992-93 (NAME OF THE ASSESSEE HARSHAD B. VAGHELA) (REVENUES APPEAL) 25. THIS APPEAL HAS BEEN FILED BY THE REVENUE RAISI NG FOLLOWING GROUND :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND AS WELL AS ON F ACTS IN DIRECTING THE AO TO EXCLUDE ENTIRE SHARE PROFIT OF THE FIRM I.E. RS.20 02 496/- WHICH IS THE SHARE PROFIT OF THE FIR M FROM THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE SCHEME OF KVSS WAS FOR SETTLEMENT OF DISPU TED TAX ARREARS DETERMINED ON OR BEFORE 31.03.1998 AND WHIC H WERE ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 19 OUTSTANDING AT THE TIME OF FILING OF DECLARATION IN THE CASE OF ASSESSEE THE DISPUTED TAX AS ON 31.3.1998 WAS NIL. HENCE THE BENEFIT OF KVSS WAS NOT AVAILABLE TO THE ASSESSEE. 26. THE FACTS OF THE CASE ARE AND IN THE CASE OF OT HER PARTNER SHRI JAYPRAKASH J. MANGTANI ARE IDENTICAL EXCEPT THAT IN THE CASE OF SHRI JAYPRAKASH J. MANGTANI THERE WAS TAX ARREARS WHICH WAS PAID UNDER KVSS 1998 WHEREAS IN THE CASE OF THIS ASSESSEE THER E IS NO DISPUTED CASE AND HENCE NO TAX UNDER KVSS IS PAID BY THE ASSESSEE . THE FIRM M/S LABH ENTERPRISES WHERE THE ASSESSEE IS A PARTNER OF 40% SHARE HAD HAD AVAILED OF BENEFIT UNDER KVSS ON TAX ARREARS OF RS.72 329/- ON THE BASIS OF WHICH DISPUTED INCOME WAS WORKED OUT AT RS.3 58 775/-. THE AO GAVE EFFECT TO CERTIFICATE UNDER SECTION 90(2) ISSUED BY THE CI T UNDER KVSS 1998 AND COMPUTED INCOME OF THE ASSESSEE PARTNER AS MENTIONE D BY US WHILE DISPOSING THE APPEAL IN ITA NO.1492/AHD/2005 FOR AS ST. YEAR 1992-93. THUS AS AGAINST ORIGINAL ASSESSED INCOME OF THE PAR TNER AT RS.23 74 176/- THE AO WORKED OUT THE INCOME OF THE PARTNER AT RS.2 1 30 109/- AS PER HIS ORDER DATED 24.3.2000. AGAINST THIS ORDER THE ASSES SEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO VIDE HIS ORDER DATED 18.10.2 001 DIRECTED THE AO TO EXCLUDE THE ENTIRE SHARE PROFIT OF THE FIRM AT R S.20 02 496/-. HE HAD FOLLOWED HIS ORDER OF EVEN DATE IN THE CASE OF JAYP RAKASH J. MANGTANI ANOTHER PARTNER IN THE FIRM. AGAINST THIS THE REVE NUE HAS PREFERRED THIS APPEAL RAISING THE GROUND. 27. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. THE FACTS IN THIS CASE AND THE CASE OF SHRI JAYPRAKASH J. MANGTANI ARE SIMILAR. WE HAVE HELD THEREIN THAT ONLY TO THE EXTENT OF SHARE IN DISPUTED INCOME THE PARTNER WILL GET REDUCTION IN T HE TOTAL SHARE OF PROFIT FROM THE FIRM AND ENTIRE SHARE PROFIT FROM THE FIRM CANNOT BE EXCLUDED AS DONE BY LD. CIT(A). FOLLOWING ABOVE ORDER IN THE CA SE OF SHRI JAYPRAKASH ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 20 J. MANGTANI WE ALLOW THE APPEAL OF REVENUE AND REST ORE THE ORDER OF AO DATED 24.3.2000 AND SET ASIDE THE ORDER OF LD. CIT( A) DATED 18.10.2001. AS A RESULT THE APPEAL FILED BY THE REVENUE IS ALL OWED. ITA NO.1492/AHD/2005 ASST. YEAR 1992-93 (REVENUES APPEAL) 28. THIS APPEAL HAS BEEN FILED BY THE REVENUE RAISI NG FOLLOWING GROUND:- (1) THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING TO EXCLUDE THE ENTIRE SHARE PROFIT OF RS. 20 02 496/- FROM THE TOTAL INCOME AS A RESULT OF THE ACCEPTANCE OF THE DECLARATION FILED BY THE PARTNERSHIP FIRM UNDER KVS S. THE MATTER IS COVERED IN FAVOUR OF THE REVENUE BY T HE DIRECT DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE O F SHANKERLAL NEBHUMAL UTTAMCHANDANI 251 ITR 876. 29. THE FACTS OF THE CASE ARE THAT THIS ASSESSEE IS ALSO A PARTNER IN M/S LABH ENTERPRISES HAVING 40% SHARES FROM THE PROFIT FROM THAT FIRM. THE ASSESSEE HAD FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS.4 86 840/- INCLUDING 40% OF SHARE OF PROFIT FRO M THE FIRM WHICH AMOUNTED TO RS.1 47 156/-. SUBSEQUENTLY ASSESSMENT OF THE FIRM WAS COMPLETED ON AN INCOME OF RS.62 56 450/- WHEREIN AN ADDITION OF AROUND RS.58 LACS WAS MADE. TOTAL INCOME OF THE ASSESSEE P ARTNER WAS DETERMINED AT RS.23 74 176/- WHICH INCLUDED SHARE O F PROFIT FROM THE FIRM AMOUNTING TO RS.20 02 496/-. ON 31.3.1995 THE COMPU TATION OF INCOME IN THAT ORDER WAS MADE AS UNDER :- I) NET SALARY INCOME RS.98 001/- II) ADD: SHARE OF PROFIT FROM THE FIRM M/S SHILP CONSTRUCTION RS.68 557/- III) ADD: SHARE OF PROFIT FROM THE R.F.M/S LABH ENTERPRISES RS.20 02 496/- IV) INCOME FROM OTHER SOURCES RS.1 73 122/- ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 21 V) UNEXPLAINED CASH CREDIT U/S 68 RS.32 000/- TOTAL RS.23 74 176/- THEREAFTER THE FIRM M/S LABH ENTERPRISES TOOK THE B ENEFIT OF KVSS 1998. IT HAD FILED APPLICATION FOR SETTLEMENT OF TAX ARRE ARS OF RS.72 329/- BEING TAX DEMAND PENDING ON THE DATE OF FILING APPLICATIO N UNDER KVSS 1998 WHEREAS IN THE CASE OF THIS PARTNER TAX DEMAND PEND ING WAS RS.NIL. THE FIRM APPLIED TO THE COMMISSIONER FOR SETTLING TAX A RREARS. ON THE DISPUTED TAX INCOME AT RS.3 58 775/- WAS WORKED OUT. THE TA X PAID BY THE FIRM ON SUCH DISPUTED INCOME WAS CALCULATED AT RS.1 25 571/ - WHICH WAS APPARENTLY PAID BY THE FIRM AND CERTIFICATE UNDER S ECTION 90(2) READ WITH SECTION 91 OF THE FINANCE ACT 1998 WAS ISSUED TO TH E FIRM. IN PURSUANCE TO THE SAID CERTIFICATE ISSUED BY THE CIT CENTRAL AHMEDABAD THE AO PASSED AN ORDER ON 24.3.2000 DETERMINING TOTAL INCO ME OF THE ASSESSEE PARTNER AT RS.21 30 109/- AS UNDER :- GROSS SALARY RECEIPT FROM M/S CONSTRUCTIONS P. LTD. AS PER ORIGINAL ORDER DATED 31.3.1995 RS.98 001/- SHARE OF PROFIT FROM M/S LABH ENT. RS.20 02 496/- LESS: 40% OF SHARE AS DISPUTED IN THE APPLICATION OF KVSS IN THE CASE OF FIRM I.E. 40% OF 3 58 775/- RS.1 43 510/- RS.18 58 986/- INCOME FROM OTHER SOURCES AS PER ORDER DATED 31.3.95 RS.1 73 122/- TOTAL TAXABLE INCOME RS.21 30 109/- 30. THE ABOVE ORDER DATED 24.3.00 WAS CHALLENGED CH ALLENGED BY THE ASSESSEE IN APPEAL BEFORE LD. CIT(A) WHICH VIDE ORD ER DATED 18.10.01 DIRECTED TO EXCLUDE ENTIRE SHARE OF THE ASSESSEE PA RTNER AT RS.20 02 496/- FROM THE COMPUTATION OF INCOME OF THE PARTNER IN PL ACE OF RS.1 43 510/- DONE BY THE AO. ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 22 31. THE AO REALIZED THAT KVSS 1998 WAS NOT A SCHEME OF REDUCTION OF ANY INCOME BUT WAS FOR SETTLING TAX DISPUTE. HE ACC ORDINGLY CANCELLED THE ORDER DATED 24.3.2000 AND SUBSTITUTED IT BY A FRESH ORDER AS MENTIONED BY HIM IN PARA 6 OF HIS ORDER AS UNDER :- 6. THE SAID ORDER DATED 24.3.2000 WILL BE SUBSTITU TED BY THE FOLLOWING ORDER: THE ASSESSEE SHRI HARSHAD B. VAGHELA FOR THE ASST . YEAR 1992-93 HAD FILED A DECLARATION U/S KVSS 1998 SHOWING OUTS TANDING DISPUTED TAX ARREARS AS ON 31.3.1998 AT RS.NIL. SINCE THE NECESS ARY CONDITION FOR SUCH A DECLARATION WERE NOT SATISFIED IN THIS CASE IN AS MUCH AS THERE WERE NO DISPUTED TAX ARREARS FOR ASST. YEAR 1992-93 ON THE DATE OF DECLARATION NEITHER ANY CERTIFICATE U/S 90(1) NOR U/S 90(2) OF KVSS 1998 WAS ISSUED IN HIS INDIVIDUAL CASE. IN VIEW OF THE ABOVE THE ORDE R OF THE DCIT CENTRAL CIRCLE 2(3) AHMEDABAD PASSED VIDE ORDER DATED 24.3 .2000 WAS UNAUTHORIZED AND THE SAME IS HEREBY CANCELLED. ANY DEMAND RAISED OR PENDING AS A RESULT OF THE SAID ORDER DATED 24.3.20 00 ALSO GETS CANCELLED. SINCE THE DISPUTED TAX ARREARS AGAINST SHRI HARSHA D B. VAGHELA FOR ASST. YEAR 1992-93 WAS NIL EVEN AT THE TIME OF HIS FILING THE DECLARATION UNDER KVSS 1998 HIS FILING OF DECLARATION UNDER KVS S 1998 (WHICH IN MANY CASES WAS INVALID) HAS MADE NO DIFFERENCE TO T HE POSITION OF HIS TAX ARREARS AS FAR AS ASST. YEAR 1992-93 IS CONCERNED. HIS TAX ARREARS FOR ASST. YEAR 1992-93 CONTINUES TO BE NIL. 32. THE ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A). THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE ORDER OF THE AO DTD.24.3.2000 MERGED IN THE ORDER OF CIT(A) DATED 1 8.10.2001. IN THIS REGARD HE OBSERVED AS UNDER :- 2. THIS ORDER U/S 154 DATED 31.10.2002 IS STATED T O BE ORDER GIVING EFFECT TO CIT(A)S ORDER DATED 18.10.2001 AGAINST WHICH THE A PPELLANT HAS COME IN APPEAL FILED ON 19.8.2004. BEFORE ME THE APPELLANTS REPRESENTA TIVE SHRI SAKAR SHARMA CA ATTENDED. WRITTEN SUBMISSIONS ARE FILED. IT IS SUBM ITTED BY THE APPELLANTS REPRESENTATIVE SHRI SHARMA THAT THE ACTION OF THE A O IN PASSING ANOTHER ORDER U/S 154 DATED 31.10.2002 IS BEYOND HER JURISDICTION AS PER SECTION 154(1A) OF THE INCOME-TAX ACT 1961. REFERENCE IS MADE TO THE DECISION OF SUP REME COURT IN THE CASE OF T.S.BALARAM ITO VS. VOLKART BROS.82 ITR 50. IT IS F URTHER SUBMITTED THAT THE ORIGINAL ORDER DATED 24.3.2000 GETS MERGED WITH ORDER OF CIT (A) DATED 18.10.2001 AND ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 23 THEREFORE ON THIS ACCOUNT ALSO THE ACTION OF THE AO IS NOT WARRANTED. RELIANCE IS PLACED ON THE FOLLOWING CASE LAWS:- (I) GOGER BROTHERS (P) LTD. RATANLAL SINGH AIR 1974 SC 1880 (II) KOTHARI INDUSTRIAL CORPORATION LTD. VS. AGRI ITO (1 998) 230 ITR 806 (III) ROHTAK & HISSAR DISTRICTS ELECTRIC SUPPLY CO. (P) L TD. VS. CIT (1981) 128 ITR 52 (DEL) AND APPROVED IN (1992) 1994 ITR 294 (S C) 3. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND ALSO THE CASE LAWS REFERRED AND FIND THAT THE AO HAS NOT GIVEN EFFECT TO THE AP PELLATE ORDER DATED 18.10.2001 PASSED BY CIT(A) III AHMEDABAD. THE PLEA OF THE A PPELLANT THAT THE SAID ORIGINAL ORDER DATED 24.3.2000 GETS MERGED WITH THE SAID ORD ER ON THE ISSUES INVOLVED IS VALID. IN ANY CASE EVEN OTHERWISE THE ISSUE WOULD BE OUTSI DE THE PURVIEW OF SECTION 154. THE AO IS THEREFORE DIRECTED TO GIVE EFFECT TO THE SAID APPELLATE ORDER DATED 18.10.2001 WITHIN 7 DAYS OF RECEIPT OF THIS ORDER AND HER ACTI ON OF SUBSTITUTING THE ORIGINAL ORDER DATED 24.3.2000 AS PER PARA 6 OF HER ORDER U/S 154 DATED 31.10.2002 CANNOT BE JUSTIFIED. THE AO IS AT LIBERTY TO TAKE ANY OTHER R EMEDIAL MEASURE UNDER THE INCOME- TAX ACT 1961 WITH RESPECT TO HIS ORDER DATED 24.03 .2000 AS APPROPRIATE TO THE FACTS OF THE CASE. THE REVENUE IS IN APPEAL BEFORE US. 33. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. THERE IS NO CASE FOR INTERFERENCE IN THE OR DER OF LD. CIT(A). IN A SIMILAR CASE OF THE PARTNER SHRI JAYPRAKASH J. MAN GTANI WE HAVE HELD THAT THE AO COULD NOT CANCEL HIS ORDER AS IT HAD MERGED IN THE ORDER OF LD. CIT(A) AND FURTHER VIDE OUR ORDER IN ITA NO.775/AHD/2003 ASST. YEAR 1992-93 WE HAVE RESTORE D THE ORDER OF AO DATED 24.3.2000 AND SET ASIDE THE ORDER OF LD. CIT( A) DATED 18.10.2001. AS A RESULT THE APPEAL FILED BY THE REVENUE BECOMES ACADEMIC AND INFRUCTUOUS AND ACCORDINGLY DISMISSED. ITA NO.1347/AHD/2003 ASST. YEAR 1992-93 (REVENUES APPEAL) 34. THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOLLOWING GROUND :- (1) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THE ORDER PASSED WAS U/S 154. THE LD. CIT(A) F AILED TO APPRECIATE THAT THE RECTIFICATION APPLICATION MADE WAS IN CONTEXT OF ORDER U/S 154 R.W.S. 250 OF THE IT ACT 1961. TH E CIT(A) ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 24 OUGHT TO HAVE DECIDED AS TO WHETHER THE AO HAD THE POWER TO MODIFY THE TOTAL INCOME COMPUTED AS A RESULT OF KVS S ORDER. 35. THE AO HAVING THOUGHT THAT HIS ORDER DATED 24.3 .2000 WAS LEGALLY NOT TENABLE NOT ONLY RECTIFIED THE SAME BUT ALSO MO VED AN APPLICATION BEFORE THE LD. CIT(A) REQUESTING HIM TO RECTIFY HIS ORDER DATED 18.10.2001. THE FACTS OF APPLICATION AND ARGUMENTS OF THE AO IN THIS CASE ARE IDENTICAL AS RAISED BY HIM IN THE CASE OF SHRI JAYPRAKASH J. MANGTANI. SIMILAR APPLICATION WAS FILED BY THE AO BEFORE LD. CIT(A) IN THAT CASE ALSO AND ON SIMILAR REASONING THE LD. CIT(A) HAS DI SMISSED THIS APPLICATION OF THE AO. 36. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. FOLLOWING OUR ORDER IN THE CASE OF SHRI JAYPRAKASH J. MANGTANI IN ITA NO.1357/AHD/2003 ASST. YEAR 1992-93 WE DISMISS THE APPEAL FILED BY THE REVENUE. ITA NO.2114/AHD/2007 ASST. YEAR 1992-93 (ASSESSEES APPEAL) 37. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) DATED 28.2.2007 RAISING FOLLOWING GROUNDS:- (1) THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN AD JUDICATING APPEAL EX-PARTE LD. CIT (A) FAILED TO APPRECIATE THAT DUE TO RE-ALLOCAT ION OF VARIOUS APPEAL FILED WITH THE OFFICE OF CIT (A)-VIII AMONG OTHER CLT(A)S THOUGH NOTICES WERE ISSUED MANY TIMES BUT APPEAL COULD RIOT BE HEARD DU E TO NON AVAILABILITY OF THE CIT(A)S ON THE RESPECTIVE DATES OF HEARING. EVEN ON THE LAST DALE OF HEARING LD CIT {A) WAS BUSY IN ATTENDING SOME MEETING WITH HIGHER OFFICIALS AND AS SUCH APPELLANT HAD NO OCCASION TO PRESENT CASE BEFO RE HIM. (2) TFIB LD CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER WITHHOLDING REFUND OF RS 29 00 99 2/- COMPUTED IN THE ORDER SO PASSED. (3) THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN CO NFIRMING THE ACTION OF THE ASSESSING OFFICER M CHARGING INTEREST U/S 234A 234 B AND 234C THOUGH NO SUCH INTEREST IS LEVIABLE ON THE FACTS AND CIRCUMST ANCES OF THE CASE ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 25 (4) THE LD CIT (A) ERRED ON FACTS AND IN LAW IN CON FIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT GRANTING CREDIT OF TAXES P AID BY WAY OF ADJUSTMENT OF REFUNDS AMOUNTING TO RS 15 80.414/-- AND IN NOT GRA NTING INTEREST U / S 244A OF THE ACT. 38. THE AO PASSED ORDER U/S 250 ON 13.5.2005 WHEREB Y WHILE GIVING EFFECT TO ORDER OF LD. CIT(A) DATED 30.3.2005 WITHH ELD THE REFUND FOR THE REASONS MENTIONED BY HIM IN PARA 4.1 OF HIS ORDER. THE LD. CIT(A) CONFIRMED HIS ORDER ON THE FOLLOWING GROUNDS:- (1) AS PER SECTION 93 OF KVSS NO REFUND CAN BE ISSUED P URSUANT TO DECLARATION UNDER SECTION 88. (2) THE LD. CIT(A) INVOKED THE DOCTRINE OF UNJUST ENRIC HMENT HOLDING THAT BY SEEKING REFUND WHICH IS NOT LEGALLY DUE TO THE ASSESSEE HE IS TRYING TO GET UNJUSTIFIABLY RICH. BY PAYING SMALL TAX BY THE FIRM ASSESSEE PARTNER SEEKS TO OBTAIN HU GE REFUND IN RESPECT OF TAXES LEVIED ON SHARE OF PROFIT FROM THE FIRM. (3) THE ASSESSEE DID NOT AVAIL OPPORTUNITIES GIVEN FOR HEARING. (4) WHEN ASSESSEE PARTNER HAS NO TAX IN ARREARS NO SETT LEMENT CAN BE DONE UNDER KVSS. NO QUESTION OF REDUCTION IN THE RE ASSESSMENT IN THE HANDS OF THE FIRM WOULD NOT ARISE. (5) ANY RECTIFICATION IN THE INCOME OF THE PARTNER COUL D BE DONE ONLY UNDER SECTION 151. JURISDICTIONAL HIGH COURT I N THE CASE OF SHANKERLAL NEBHUMAL UTTAMCHANDANI (SUPRA) HAS HELD THAT A PARTNER IS NOT ENTITLED TO ANY REFUND IF HE HAS NOT SETTLED ANY TAX ARREARS UNDER KVSS 1998. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFOR E US. 39. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. IN OUR CONSIDERED VIEW THIS DISPUTE HAS ORIGINATED FRO M THE ORDER DATED 24.3.2000 PASSED BY THE AO WHEREIN HE HAS REDUCED S HARE INCOME OF THE FIRM PROPORTIONATE TO HIS SHARE IN THE DISPUTED INC OME OF THE FIRM CALCULATED AT RS.3 58 775/-. THE REFUND IS ARISING BECAUSE OF APPEAL EFFECT AS PER ORDER DATED 30.3.2005 READ WITH ORDER DATED 18.10.2001 PASSED BY ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 26 LD. CIT(A). WE HAVE AS DISCUSSED ABOVE RESTORED THE ORDER OF AO DATED 24.3.2000 WHICH HAS RESULT INTO TAX DEMAND THE QUES TION OF GIVING ANY REFUND AT THIS STAGE WOULD NOT ARISE. IN ANY CASE T HE AO WILL WORK OUT THE TAX LIABILITY AS PER ORDER DATED 24.3.2000 AND REFU ND IF ANY DUE TO HIM THEREAFTER WILL BE GRANTED. WITH THE ABOVE OBSERVA TION APPEAL FILED BY THE ASSESSEE IS ACADEMIC AND IS ACCORDINGLY DISMISS ED. ITA NO.474/AHD/2002 ASST. YEAR 1992-93 (NAME OF ASS ESSEE SMT. VEENA M. PAI) ((REVENUES APPEAL) 40. THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOLLOWING GROUND :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.9 29 485/- MADE BY THE AO ON ACCOUNT OF ADDITION MADE U/S 90(1) OF KVSS R..W.S. 143(3) OF T HE IT ACT. 41. THIS ASSESSEE IS ALSO A PARTNER IN THE FIRM M/S LABH ENTERPRISE HAVING 20% SHARE. THE FACTS IN THIS CASE AND IN THE CASE OF SHRI JAYPRAKASH J. MANGTANI ARE IDENTICAL AS DISCUSSED B Y US IN ITA NO.774/AHD/2003 AND THAT OF SHRI HARSHAD B. VAGHELA IN ITA NO.775/AHD/2003 ASST. YEAR 1992-93. ORIGINALLY THE INCOME OF THE ASSESSEE WAS WORKED OUT AT RS.10 01 240/- BEING SHA RE FROM M/S LABH ENTERPRISES. SUBSEQUENTLY WHEN THE FIRM SETTLED THE DISPUTED TAX UNDER KVSS 1998 THE AO RE-WORKED OUT THE INCOME OF THE AS SESSEE AS UNDER :- SHARE OF PROFIT FROM M/S LABH ENT. RS.10 01 240/- LESS: 20% OF SHARE AS DISPUTED IN THE APPLICATION OF KVSS IN THE CASE OF FIRM I.E. 20% OF 3 58 775/- RS.71 755/- RS.9 29 485/- REVISED TOTAL INCOME RS.9 29 485/- THE ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) WHO F OLLOWING HIS ORDER IN THE CASES OF JAYPRAKASH J. MANGTANI AND HARSHAD B. VAGHELA DIRECTED TO ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 27 EXCLUDE ENTIRE SHARE OF PROFIT OF RS.10 01 240/-. T HE REVENUE IS IN APPEAL BEFORE US RAISING THE ABOVE GROUND. 42. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. THE FACTS IN THIS CASE AND IN THE CASE OTHE R TWO PARTNERS NAMELY S/SHRI JAYPRAKASH J. MANGTANI AND HARSHAD B. VAGHEL A ARE SIMILAR. FOLLOWING OUR REASONING GIVEN IN THESE TWO CASES AS ABOVE WE RESTORE THE ORDER OF AO DATED 19.2.2001 AND SET ASIDE THE ORDER OF LD. CIT(A) DATED 6.12.2001. AS A RESULT APPEAL OF THE REVENUE IS ALL OWED. 43. IN THE RESULT- ITA NO.774/AHD/2003 (REVENUES APPEAL) IS ALLOWED. ITA NO.2043/AHD/2004(REVENUES APPEAL) IS DISMISSED . ITA NO.1357/AHD/2003 (REVENUES APPEAL) IS DISMISSE D. ITA NO.628/AHD/2006 (REVENUES APPEAL) IS DISMISSED . ITA NO.775/AHD/2003 (REVENUES APPEAL) IS ALLOWED. ITA NO.1492/AHD/2005 (REVENUES APPEAL) IS DISMISSE D. ITA NO.1347/AHD/2003 (REVENUES APPEAL) IS DISMISSE D. ITA NO.2114/AHD/2007 (ASSESSEES APPEAL) IS DISMISS ED. ITA NO.474/AHD/2002 (REVENUES APPEAL) IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 25/3/11. SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD DATED :25/3/11 MAHATA/- ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (D.C.A.) (B.S.) A.M. J.M. ITA NOS.774 474 1357 & SIX OTHERS ASST. YEAR: 1992-03 & OTHERS 28 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 16/3/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 17/3/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..