Sat Kartar Trading Co. Vs. Commissioner of Income Tax - Court Judgment

Excerpt:
counsels: a k. mittal with akshay bhan, for the assessee r.p. sawhney, vuth rajesh bindal, for the revenue head note: income tax finance (no. 2) act, 1998 kar vivad samadhan scheme--maintainability of declarationrejection of reference application by the tribunal catch note: the petitioner decided to put an end to the litigation and buy peace with the department by filing a declaration under the kvs scheme--such a declaration was to be filed before the respondent who was the designated authority under the kvs scheme--the petitioner sent a copy of the declaration to him by registered post on 28-1-1999, and also faxed the declaration to his office on 29-1-1999--after the said declaration had been filed, the petitioner on 12-2-1999, received a copy of the order dated 29-1-1999, passed by the tribunal dismissing its application under section 256(1) of the act--this order had been passed ex parte as the petitioner-applicant was not present on the date of hearing on 29-1-1999--the petitioner, thereafter filed an application before the tribunal for the recall of the ex parte order dated 29-1-1999, on the ground that no notice about the fixation of reference application before the tribunal on the 29-1-1999, had been given to it and as such it was deprived of the opportunity of hearing which is a prerequisite for disposal of a reference application--the tribunal by its order dated 27-5-1999, recalled the ex parte order dated 29-1-1999, and restored the reference application filed by the petitioner to its original position--however, before the order of recall had been passed, the respondent had passed the impugned order dated 26-2-1999, intimating the petitioner that its declaration under the kvs scheme filed on 29-1-1999, was invalid as its reference application had already been rejected by the tribunal on that very day and as such could not be said to be pending on that date--not proper--the respondent is directed to consider the issue afresh as the impugned order of the respondent became ineffective on calling the tribunal its ex parte order and restored the reference application to its original position. held: it is true that on 29-1-1999, when the declaration was filed with the respondent, the reference application of the petitioner had already been dismissed and as such no fault could be found with the order of the respondent dated 26-2-1999, intimating the petitioner that its declaration under the kvs scheme was invalid as on the date of its filing no reference application was pending. however, it is also equally, true that the tribunal by its subsequent order dated 27-5-1999, has accepted the contention of the petitioner that it had no notice about the date of hearing in the reference application on 29-1-1999, and as such the ex parte order passed on that date was illegal and needed to be recalled. the tribunal, therefore, recalled its ex parte order dated 29-1-1999, and restored the reference application filed by the petitioner to its original position. the effect of this order was that the impugned order dated 29-1-1999, ceased to exist and the position existing prior to its passing stood restored. once the order dated 29-1-1999, is held to be non-existent it is but natural that all consequential results flowing therefrom also ceased to have any effect. accordingly, the impugned order dated 26-2-1999, rejecting the declaration filed by the petitioner on the basis of order dated 29-1-1999, must also be held to have been rendered ineffective. it would, therefore, be in the interest of justice to vacate the impugned order dated 26-2-1999, and restore the matter to the file of the respondent with the observation that the declaration filed by the petitioner under the kvs scheme on 29-1-1999, may be considered in the light of fact that the reference application filed by the petitioner was pending before the tribunal on that date. the respondent shall now process the declaration afresh and dispose it of in accordance with law.in the result, the writ petition is allowed. application: not to current assessment year. decision: in favour of assessee. finance (no 2) act 1998 s.95 in the punjab & harayana high court n.k. sodhi & n.k. sud, jj. - administrative law - government contract: [vijender jain, c.j., rajive bhalla & sury kant, jj] government contract rejection of highest bid challenge as to held, state has no dominus status to dictate unilateral terms and conditions when it enters into contract. its actions must be reasonable, fair and just in consonance with rule of law. as a necessary corollary thereto, state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. the state is free to enter into a contract just like any other individual and the contract shall not change its legal character merely because other party to contract is state. though no citizen possesses a legal right to compel state to enter into a contract, yet latter can neither pick and choose any person arbitrarily for entering into such agreement nor can it discriminate between persons similarly circumstanced. similarly, where breach of contract at hands of state violates fundamental rights of a citizen or its refusal to enter into a contract is contrary to statutory provisions or public duty, judicial review of such state action is inevitable. likewise, if state enters into a contract in consonance with article 299 rights of the parties shall be determined by terms of such contract irrespective of fact that one of the parties to it is a state or a statutory authority. for these precise reasons the equitable doctrine of promissory estoppel has been made applicable against the government, as against any other private individual, even in cases where no valid contract in terms of article 299 was entered into between the parties. hence, if government makes a representation or a promise and an individual alters his position by acting upon such promise, the government may be required to make good that promise and shall not be allowed to fall back upon the formal defect in the contract, though subject to well known limitations like larger public interest. the state, thus, has no dominus status to dictate unilateral terms and conditions when it enters into contract and its actions must be reasonable, fair and just and in consonance with rule of law. as a necessary corollary thereto state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. -- consumer protection act, 1986 [c.a. no. 68/1986]. articles 14 & 300a: government contract noon-acceptance of highest bid held, it does not result in taking away right to property of highest bidder highest bid, per se, unless it is accepted by competent authority, and consequential sale certificate is issued, does not grant the highest bidder right to property of type which is protected under article 300a right to property is limited to confer highest bidder the right to challenge action of appropriate authority in refusing to accept highest or other bids. [air 1984 p&h 282 (fb) explained] articles 14 & 226: government contract rejection of highest bid held, highest bidder has locus standi to maintain writ petition and assail action of state government or its authorities by contending that his bid has been turned down for arbitrary, illegal or perverse reasons however in such matters, heavy onus would like on petitioner bidder to establish his allegations as state action shall always be presumed to be in accordance with lawn.k sud, j.this writ petition is directed against the intimation under section 91 of the finance (no. 2) act, 1998, dt. 26-2-1999, sent by the respondent to the petitioner informing it that the declaration filed by it under the 'kar vivad samadhan scheme, 1998' (hereinafter referred to as 'the kvs scheme') was invalid. the relevant facts may first be noticed. the petitioner, a partnership firm, is an assessee within the jurisdiction of income tax officer, faridkot. for the assessment year 1989-90 an assessment under section 143(3) of the income tax act, 1961 (for short 'the act'), was framed by the income tax officer on 26-3-1999, wherein certain additions were made to the income declared by the petitioner in the return of income. one of the additions, which is relevant for the purpose of this writ petition, was on account of unexplained cash credits amounting to rs. 1,50,000. on an appeal filed by the petitioner, the commissioner (appeals), bathinda, by his order dated 18-11-1991, deleted this addition of rs. 1,50,000. however, the tribunal, on an appeal filed by the revenue, restored this addition of rs. 1,50,000 by its order dated 13-5-1998. against the order of the tribunal the petitioner filed an application under section 256(1) of the act seeking reference of questions of law arising out of its order dated 13-5-1998, to this court. the hearing of the said application was fixed on 4-12-1998, before the tribunal. however, due to the inability of the counsel for the petitioner to appear on that date, an application for adjournment was moved on 2-12-1998, and thereafter it is claimed that the petitioner did not receive any intimation from the tribunal about the next date of hearing.meanwhile the petitioner decided to put an end to the litigation and buy peace with the department by filing a declaration under the kvs scheme. such a declaration was to be filed before the respondent who was the designated authority under the kvs scheme. the petitioner sent a copy of the declaration to him by registered post on 28-1-1999, and also faxed the declaration to his office on 29-1- 1999. after the said declaration had been filed, the petitioner on 12-2-1999, received a copy of the order dated 29-1-1999, passed by the tribunal dismissing its application under section 256(1) of the act. this order had been passed ex parte as the petitioner- applicant was not present on the date of hearing on 29-1-1999. the petitioner, thereafter filed an application before the tribunal for the recall of the ex parte order dated 29-1-1999, on the ground that no notice about the fixation of reference application before the tribunal on the 29-1-1999, had been given to it and as such it was deprived of the opportunity of hearing which is a prerequisite for disposal of a reference application. the tribunal by its order dated 27-5-1999, recalled the ex parte order dated 29-1-1999, and restored the reference application filed by the petitioner to its original position. however, before the order of recall had been passed, the respondent had passed the impugned order dated 26-2-1999, intimating the petitioner that its declaration under the kvs scheme filed on 29-1-1999, was invalid as its reference application had already been rejected by the tribunal on that very day and as such could not be said to be pending on that date. it is in the background of this factual position that the present controversy has to be resolved.2. it may be pertinent to note that one of the conditions for making a declaration under the kvs scheme was that some proceedings by way of appeal, reference, or writ petition should be admitted and pending before any appellate authority or the high court or the supreme court on the date of filing of the declaration. for the sake of convenience, the relevant provision contained in section 95 of the finance act (no. 2) of 1998, may be reproduced as under :'95- scheme not to apply in certain cases.-the provisions of this scheme shall not apply :(i) in respect of tax arrear under any direct tax enactment:(a)************(b)************(c) 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 declaration or no application for revision is pending before the commissioner on the date of filing declaration.'3. the short question for our consideration is whether the reference application filed by the petitioner before the tribunal can be said to be pending on 29-1-1999. it is true that on 29-1-1999, when the declaration was filed with the respondent, the reference application of the petitioner had already been dismissed and as such no fault could be found with the order of the respondent dated 26-2-1999, intimating the petitioner that its declaration under the kvs scheme was invalid as on the date of its filing no reference application was pending. however, it is also equally, true that the tribunal by its subsequent order dated 27-5-1999, has accepted the contention of the petitioner that it had no notice about the date of hearing in the reference application on 29-1-1999, and as such the ex parte order passed on that date was illegal and needed to be recalled. the tribunal, therefore, recalled its ex parte order dated 29-1-1999, and restored the reference application filed by the petitioner to its original position. the effect of this order was that the impugned order dated 29-1-1999, ceased to exist and the position existing prior to its passing stood restored. once the order dated 29-1-1999, is held to be non-existent it is but natural that all consequential results flowing therefrom also ceased to have any effect. accordingly, the impugned order dated 26-2-1999, rejecting the declaration filed by the petitioner on the basis of order dated 29-1-1999, must also be held to have been rendered ineffective. it would, therefore, be in the interest of justice to vacate the impugned order dated 26-2-1999, and restore the matter to the file of the respondent with the observation that the declaration filed by the petitioner under the kvs scheme on 29-1-1999, may be considered in the light of fact that the reference application filed by the petitioner was pending before the tribunal on that date. the respondent shall now process the declaration afresh and dispose it of in accordance with law.in the result, the writ petition is allowed. however, there shall be no order as to costs.