Rajam Pictures Circuit and ors. Vs. Commissioner of Income-tax and ors. - Court Judgment

Excerpt:
direct taxation - demand of interest - sections 220 and 220 (2) of income tax act, 1961, kar vivad samadhan scheme, 1998 and sections 87 and 88 of finance (no. 2) act, 1998 - whether demand of interest under section 220 (2) in certificate of intimation issued under section 90 (1) justified - interest under section 220 is statutory levy - amount payable determined under act of 1961 - not necessary to issue separate notice for determination of interest on defaulting assessee - form of demand notice issued for payment of amount under section 156 specifies that assessee would be liable to pay interest if required amount not paid in time - no necessity of income-tax officer to issue separate order determining interest payable by defaulting assessee. - n.v. balasubramanian, j. 1. the question involved in the batch of writ petitions is whether the demand of interest under section 220(2) of the income-tax act, 1961 (hereinafter referred to as 'the income-tax act'), in the certificate of intimation issued under section 90(1) of the kar vivad samadhan scheme, 1998 (hereinafter to be referred to as 'samadhan scheme'), is proper, justified and valid in law.2. since the issues involved in all the writ petitions are similar, it is not necessary to notice the facts in each writ petition. in some cases, interest under section 220 has been demanded on the interest and in some cases, the interest has been levied on the penalty amount, but in all the cases, the petitioners are not aggrieved with reference to the demand of interest under sections.....

Judgment:

N.V. Balasubramanian, J.

1. The question involved in the batch of writ petitions is whether the demand of interest under Section 220(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Income-tax Act'), in the certificate of intimation issued under Section 90(1) of the Kar Vivad Samadhan Scheme, 1998 (hereinafter to be referred to as 'Samadhan Scheme'), is proper, justified and valid in law.

2. Since the issues involved in all the writ petitions are similar, it is not necessary to notice the facts in each writ petition. In some cases, interest under Section 220 has been demanded on the interest and in some cases, the interest has been levied on the penalty amount, but in all the cases, the petitioners are not aggrieved with reference to the demand of interest under Sections 139(8) and 217 in other demands made under other provisions of the Income-tax Act, 1961, and the petitioners are challenging only the demand of interest under Section 220(2) of the Income-tax Act in the certificate of intimation on the ground that under the Samadhan Scheme, the respondent has no power to levy interest under Section 220(2) of the Income-tax Act. According to the petitioners, the Samadhan Scheme has been introduced to avoid litigation and what is contemplated underthe Samadhan Scheme is to be given effect to and what is not contemplated under the Samadhan Scheme cannot be taken into consideration. In other words, it is stated that the designated authority under the Samadhan Scheme has no right to levy interest under the Samadhan Scheme and in all the cases, the petitioners are questioning the levy of interest under the Samadhan Scheme on the ground that the levy of interest under Section 220(2) of the Income-tax Act cannot be a part of the order determining the amount payable under the Samadhan Scheme.

3. In some of the writ petitions, it is also stated that the Samadhan Scheme does not contemplate the demand of interest under Section 220(2) of the Income-tax Act and Section 88(a)(iv) of the Samadhan Scheme does not authorise levy of both interest and penalty. It is also stated that Section 88(a) of the Samadhan Scheme does not contemplate payment of 50 per cent. penalty and interest and what is not contemplated in the Samadhan Scheme and what is not covered by the declaration cannot be a subject-matter of demand. In some cases, it has been stated that the Samadhan Scheme operates in a different sphere and Section 88 of the Samadhan Scheme provides for a non-obstante clause and for the operation of the Samadhan Scheme, before any amount can be claimed as tax arrears under the Samadhan Scheme, the tax arrears should first be determined and since the interest under Section 220(2) of the Income-tax Act was not determined by the respondent, the respondent has no power to levy interest under Section 220(2) of the Income-tax Act.

4. The case of the respondent, as seen from the counter affidavit, is that when the amount specified in the notice of demand is not paid within the prescribed time, under Section 220(2) of the Income-tax Act, the assessee is liable to pay interest from the date on which the amount has to be paid and the liability to pay interest is absolute, mandatory and automatic and it arises by the operation of the law. It is stated that Section 220(2) of the Income-tax Act, determines the quantum of interest and the rate at which it is to be charged and no discretion is left to the assessing authority to relieve the defaulting assessee from the liability to pay interest under Section 220(2) of the Income-tax Act. It is also stated that the respondent has not levied under Section 220(2), but demanded 50 per cent. of such interest after granting waiver of 50 per cent. as provided under Section 88(a)(iv) of the Samadhan Scheme.

5. P. P. S. Janarthana Raja, R. Janakiraman, S. S. Jagadev and Srinath Sri-devan submitted arguments on behalf of the petitioners. The submission of learned counsel for the petitioners was that the demand of interest in the certificate of intimation is not valid in law as the authority for the first time has levied interest under the Samadhan Scheme. Learned counsel also submitted that the interest demanded under Section 220(2) of the Income-tax Act was not determined on or before March 31, 1998, and,hence, it cannot be regarded as tax arrears and, therefore, the demand of interest under Section 88(a) of the Samadhan Scheme is beyond the provisions of the Samadhan Scheme. Learned counsel referred to the circular issued by the Central Board of Direct Taxes (CBDT), and submitted that to a question posed whether the interest determined under Section 220 after final payment of tax demanded, not forming part of the tax arrears determined on or before March 31, 1998, would be open for waiver, the Central Board of Direct Taxes has given an affirmative answer indicating that the interest does not form part of tax arrears determined on or before March 31, 1998. Learned counsel also submitted that as the interest has been demanded under the Samadhan Scheme, the petitioners have lost their right of approaching the Commissioner of Income-tax for waiver of entire interest under Section 220(2A) of the Income-tax Act. It is also stated that in the forms of declaration, the petitioners have not included the interest under Section 220(2) of the Income-tax Act as part of the tax arrears and the certificates of intimation also state that the declarants are required to pay the amount payable towards tax arrears covered by the said declarations under the Samadhan Scheme and since the declarations filed by the declarants have not included the interest under Section 220(2) of the Income-tax Act, it is not open to the respondent to call upon the petitioners to pay interest under Section 220(2) of the Income-tax Act as well. According to learned counsel, the interest cannot be thrust upon the petitioners and the interest under Section 220(2) of the Income-tax Act has not been levied under the Samadhan Scheme. It is further stated that there was no demand for the interest and since the declaration form is relevant, it is not open to the designated authority to go beyond the declaration. The further submission of learned counsel is that the declaration has not included the interest and any determination of tax arrears must be in accordance with the declaration and not against the declaration.

6. Mr. S. V. Subramaniam, learned senior counsel appearing for the respondent, submitted that the levy of interest under Section 220(2) of the Income-tax Act is automatic and once the amount covered under the notice of demand under Section 156 of the Act is not paid within the time stipulated, the interest would follow automatically and there is no question of determination of interest by the Income-tax Officer by a separate order as the interest has been determined under the Income-tax Act or any other direct tax enactment. Learned senior counsel therefore submitted that once the declaration has been filed under the Samadhan Scheme, the tax arrears have to be determined in accordance with the scheme and the settlement of tax or interest payable should also be done only in accordance with the Samadhan Scheme and not independent of the Scheme. Learned senior counsel submitted that the Scheme is a statutory one forming part of the Finance (No. 2) Act, 1998 and it is neither open to the Income-tax Department, nor to the assessee to go against the provisions of the Scheme and if the petitioners want to avail of the benefits granted under the Samadhan Scheme, they are liable to pay the amount determined under the Samadhan Scheme to get the benefit of the Samadhan Scheme and it is not open to them to contend that the interest under Section 220(2) of the Income-tax Act is not payable to get the benefits of the Samadhan Scheme.

7. The constitutional validity of the Samadhan Scheme came up for consideration before the Delhi High Court in All India Federation of Tax Practitioners v. Union of India : [1999]236ITR1(Delhi) . R. C. Lahoti J., (as his Lordship then was), speaking for the Bench of the Delhi High Court, has upheld the validity of the Samadhan Scheme, subject to some of the provisions of the said Scheme being read down to make them valid and the learned judge, after noticing the Memorandum of the Finance (No. 2) Bill, 1998 (see ), explained the Scheme and held as under (page 7) :

'The Kar Vivad Samadhan Scheme seeks to provide a quick and voluntary settlement of tax dues outstanding as on 31-3-1998, both in various direct tax enactments as well as indirect taxes enactments by offering waiver of a part of the arrear taxes and interest and providing immunity against institution of prosecution and imposition of penalty. The assessee on his part shall seek to withdraw appeals pending before various appellate authorities and courts. The Scheme comes into force on the first day of September, 1998, and ends on the 31st day of December, 1998. It will have the following salient features.

2. The Scheme is applicable to tax arrears outstanding as on 31-3-98 under various direct tax enactments and indirect tax enactments. The amount payable by the applicants termed as declarants shall be determined as under :

(a) Direct taxes :

(i) The declarant shall be required to pay tax at 30 per cent. (35 per cent. in the case of firms and companies) on the amount of income in dispute (in other than search and seizure cases) ;

(ii) Where tax arrears include income-tax, interest payable or penalty levied, the amount payable shall be 30 per cent. of the disputed income (35 per cent. in the case of firms and companies) ;

(iii) Where tax arrears comprise only interest payable or penalty levied, the amount payable shall be 50 per cent. of the tax arrear ;

(iv) Where tax arrears include the tax, interest or penalty determined in any assessment on the basis of search and seizure proceedings under Section 132 or Section 132A of Income-tax Act, the amount payable shall be 40 per cent. of the disputed income (45 per cent. in the case of firms and companies) ;

(v) In respect of arrears under the Wealth-tax Act, the amount payable shall be one per cent. of disputed wealth where the tax arrears include wealth-tax or interest and penalty levied in addition to wealth-tax. Where tax arrear is only interest payable or penalty levied, 50 per cent. of such amount is to be paid. Where the tax arrears are determined on the basis of search and seizure proceedings under Section 37A or 37B of Wealth-tax Act, the tax payable shall be at 2 per cent. of the disputed wealth ;

(vi) In respect of tax arrears payable under the Gift tax Act the amount payable shall be 30 per cent. of the disputed value of the gift where the tax arrears include gift-tax or interest payable and penalty levied in addition to gift-tax. Where tax arrear is only interest payable or penalty levied, 50 per cent. of such amount shall be paid ;

(vii) In respect of tax arrears payable under the Expenditure-tax Act, the amount payable shall be 10 per cent. of the disputed chargeable expenditure where the tax arrear is expenditure-tax or includes interest payable and penalty, in addition. Where the arrear is only in respect of interest or penalty, only 50 per cent. of the arrear shall be payable ;

(viii) In respect of tax arrears payable under the Interest-tax Act, the amount payable shall be at 2 per cent. of the disputed chargeable interest where tax arrear includes interest-tax or interest payable and penalty levied, in addition. If the tax arrears include only interest or penalty, the amount payable will be 50 per cent. of the tax arrear. (b) Indirect taxes :

Under indirect taxes the amount payable shall be 50 per cent. of the tax arrear and including interest payable, fine or penalty levied.

3. A person desiring to avail of the Scheme is required to file a declaration in the prescribed form before the designated authority notified for this purpose. The designated authority shall pass an order within sixty days of the declaration determining the amount payable in accordance with the provisions of the Scheme and grant a certificate indicating the particulars of tax arrears and the sum payable and intimate the same to the declarant. The declarant will pay the sum payable as determined by the designated authority within thirty days of the passing of such order. The order passed by the designated authority shall be conclusive and shall not be reopened in any other proceedings or under any law for the time being in force. Where the declarant has filed an appeal or reference before any authority, tribunal or court, notwithstanding anything contained in any other provision of law for the time being in force, such appeal, reference or reply shall be deemed to have been withdrawn. Where writ petitions have been filed before the High Court or the Supreme Court the declarant shall move an application for withdrawing such petitions and furnish the proof of the same along with the intimation. Any amount paid in pursuance of declaration made under the Scheme shall not be refundable under any circumstances.

4. The designated authority shall, subject to the conditions provided in the Scheme, grant immunity from prosecution or penalty under the relevant Acts in respect of matters covered in the declaration.'

8. Now, it is necessary to refer to the definitions of few terms found in the Samadhan Scheme. The words, 'disputed income' is defined under Section 87(e) of the Samadhan Scheme as under (see [1998] 232 ITR 80) :

' 'disputed income' in relation to an assessment year, means the whole or so much of the total income as is relatable to the disputed tax.'

9. The expression, 'disputed tax' is defined in Section 87(f) of the Samadhan Scheme as under (see [1998] 232 ITR 80) :

' 'disputed tax' means the total tax determined and payable, in respect of an assessment year under any direct tax enactment but which remains unpaid as on the date of making the declaration under Section 88.'

10. The expression, 'tax arrear' in so far as it relates to direct tax enactment is defined under Section 87(m)(i) as under (see : [1998]232ITR81(Ker) ) :

' 'tax arrear' means--(i) in relation to direct tax enactment, the amount of tax, penalty, or interest determined on or before the 31st day of March, 1998, under that enactment in respect of an assessment year as modified in consequence of giving effect to an appellate order but remaining unpaid on the date of declaration.'

11. Section 87(n) provides that all other words and expressions used but not defined in the Samadhan Scheme shall bear the same meaning as defined in the direct tax enactment. Under Section 88 of the Samadhan Scheme, the declarant is required to file the declaration before the designated authority in accordance with the provisions of Section 89 of the Samadhan Scheme in respect of tax arrears, and the designated authority is required to determine the amount payable under the Samadhan Scheme by the declarant at the rates specified in that Section. Section 89 of the Samadhan Scheme provides for the form of declaration to be made and Section 90 deals with the time and manner of payment of tax arrear. It is not necessary to notice other provisions of the Samadhan Scheme.

12. The expression, 'disputed tax' is defined to mean the total tax determined and payable, in respect of any assessment year under any direct tax enactment which remains unpaid as on the date of making the declaration under Section 88 of the Samadhan Scheme. The expression, 'tax arrear' is also defined to mean in relation to a direct tax enactment, the amount of tax, penalty, or interest determined on or before March 31, 1998, under that enactment in respect of an assessment year subject to the modifications in consequence of giving effect to an appellate order, but remaining unpaid on the date of declaration. Section 88(a)(iii) of the Samadhan Scheme provides that where tax arrears include income-tax, interest payable or penalty levied, the declarant is required to pay 35 per cent. or 30 per cent. as the case may be of the disputed income. We are not actually concerned with that provision, as none of the cases relates to one falling under Section 88(a)(iii) of the Samadhan Scheme. Section 88(a)(iv) of the Samadhan Scheme provides that in case tax arrear comprises only interest payable or penalty levied, the amount payable under the Samadhan Scheme would be 50 per cent. of the tax arrears.

13. A close reading of various sections of the Samadhan Scheme shows that once the amount has been determined under the Income-tax Act, the Samadhan Scheme would operate. The levy of interest payable under Section 220(2) of the Income-tax Act is a statutory levy and the interest under Section 220(2) of the Income-tax Act is determined by the statute itself, if the amouat covered in the demand notice is not paid within the period stipulated in the said demand notice. In Kanga and Palkhivala's The Law and Practice of Income Tax (VIII edition--volume I), the learned authors have made the following observation :

'The section also provides for levy of interest in case there is default in payment. The liability to pay interest at the rate prescribed by Sub-section (2) is absolute and unconditional, and the rate cannot be varied, even if the time for payment of tax is extended under Sub-section (3).'

14. It is well settled that under the Income-tax Act the liability to tax arises by virtue of the charging section alone and arises not later than the closing of the previous year, though the quantification of the amount payable is made later and the liability to tax does not depend upon the assessment and the liability has already been fixed. Applying the same principle, the interest under Section 220 of the Income-tax Act arises by virtue of the default committed by an assessee and once the default has been committed, the interest payable by the assessee is also determined under the Income-tax Act and it is not necessary to issue a separate order directing the assessee to pay the interest payable under Section 220(2) of the Income-tax Act.

15. The Delhi High Court in All India Federation of Tax Practitioners v. Union of India : [1999]236ITR1(Delhi) , has made the following observation which is relevant for the purpose of this case (page 20) :

'Under the Scheme of the Income-tax Act, it is well known that a determination of liability to pay tax does not necessarily call for an order of adjudication. Take the cases of self-assessment, payment of advance tax, deduction of tax at source and so on. Several provisions, prescribe for penalty or interest which liability is incurred automatically and by operation of law, even when an order of adjudication has not been made, though there may be need for quantification which may be a mathematical exercise merely.'

16. Though the above observation was made in a different context, that observation is relevant in the sense that arrears means an amount payable or an amount that remains unpaid, and it is not necessary that there should be a separate notice of demand for the amount to be classified as arrears to be payable and the arrears can also arise by virtue of the statutory provisions without an order of adjudication and there would be determination of tax arrears under the direct tax enactment.

17. The interest under Section 220 of the Income-tax Act is a statutory levy and the amount payable is determined under the Income-tax Act itself. In my view, it is not necessary to issue a separate notice for the determination of interest on the defaulting assessee, as the form of demand notice issued for the payment of amount under Section 156 of the Income-tax Act also specifies that the assessee would be liable to pay interest, if the required amount is not paid within the stipulated time. In other words, there is no necessity or requirement for the Income-tax Officer to issue a separate order determining the interest payable by the defaulting assessee as on March 31, 1998, and, therefore, the submission of learned counsel for the petitioners that interest has not been determined is not correct.

18. Further, the expression, 'amount of tax, penalty or interest' in Section 87(m) of the Samadhan Scheme is followed by the expression, 'determined on or before March 31, 1998, under that enactment' and it is not possible to read the former clause distinctively and without reference to the latter clause. I am of the view, the proper way to construe the expression, 'tax arrears' would be to read the entire words found in Section 87(m)(i) of the Samadhan Scheme together and once the interest has been found determined under the Income-tax Act on or before March 31, 1998, it would constitute tax arrears, and the settlement of tax payable under Section 88 of the Samadhan Scheme would also be with reference to the interest determined under the direct tax Act.

19. The submission of learned counsel for the petitioners that the petitioners have not requested for the settlement of interest payable and, therefore, it is not open to the designated authority to demand 50 per cent. of interest under the provisions of the Samadhan Scheme as part of the tax arrears is not acceptable. The Samadhan Scheme is meant to provide a package deal and it is at the option of the declarant to avail of the benefits granted under the Samadhan Scheme, and if the declarant intends to have the benefits under the Samadhan Scheme, he is required to pay the amount determined under the Samadhan Scheme and even after the determination of the amount payable under the Samadhan Scheme, it is open to the declarant to pay the amount within the time stipulated for payment, if he desires to avail the benefits under the Samadhan Scheme and if the declarant does not pay the amount, the declarant will not be entitled to get the benefits of the Samadhan Scheme. That apart, the designated authority is also required to determine the amount payable in accordance with the provisions contained in the Samadhan Scheme and not de hors the Samadhan Scheme. The fact that the declarant has not prayed for the settlement of interest to be determined under the Income-tax Act is of no consequence when the liability to pay interest has to be determined in accordance with and under the provisions of the Samadhan Scheme.

20. It is also contended that in the certificate of intimation, the designated authority has mentioned the amount payable by the declarant towards tax arrears covered by the said declaration and therefore, it is stated, when the declaration filed by the declarant has not included the interest, the demand for interest is not legal. A careful reading of the certificate of intimation shows that the designated authority has determined the amount payable by the declarant in full and final settlement of the tax arrears covered in the declaration filed by the declarant. Therefore, the fact that the declarant has not included the interest portion payable in the declaration is of no consequence when the designated authority has determined the amount payable under the Samadhan Scheme in full and final settlement of the tax arrears. The designated authority by the said certificate of intimation has not stated or even admitted that the amount covered in the declaration would alone be the subject-matter of settlement of tax arrears. As already held by me, under the Samadhan Scheme, if a declarant desires to avail of the benefits of the said Scheme, it is neither open to him, nor is it open to the Department to go behind or act contrary to the provisions of the Samadhan Scheme. Therefore, a reference to the certificate of intimation as if the designated authority has accepted that it is only the amount specified in the declaration was the subject-matter of settlement of tax arrears is not well-founded, as the designated authority has determined the amount in accordance with the Samadhan Scheme and required the declarant to pay the said amount in full and final settlement of tax arrears disclosed by the declarant in the declaration filed by him. The certificate does not mean that the amount to be settled under the Samadhan Scheme should be confined to the amount specified in the declaration.

22. Learned counsel for the petitioners also referred to the clarifications of the Kar Vivad Samadhan Scheme, 1998, issued by the Central Board of Direct Taxes, particularly, question No. 29. Question No- 29 proceeds on the basis that the interest under Section 220 of the Income-tax Act would be determined only after the preliminary demand of tax is made and, therefore, the interest may not form part of tax arrears determined on or before March 31, 1998, and the question that was raised is whether such interest would be open for waiver and the answer given was, 'yes'. Learned counsel therefore submitted that the Central Board of DirectTaxes has accepted the position that the interest under Section 220 of the Income-tax Act did not form part of tax arrears. However, I am unable to accept the submission of learned counsel for the petitioners. The answer to question No. 29 was an affirmative answer indicating that interest under Section 220(2) of the Income-tax Act would also be a subject-matter of the Samadhan Scheme and it is not open to the declarant to read the question and answer given as if they are statutory provisions, nor is it open to them to pick out one sentence in the question and contend that the Central Board of Direct Taxes has accepted that the interest did not form part of the tax arrears. The clarifications issued to the Samadhan Scheme and the reliance placed by learned counsel for the petitioners do not in any way advance the case of the petitioners, nor support the case of the petitioners as well.

23. It is also contended that if the interest is also a subject-matter of consideration under the Samadhan Scheme, the petitioners will be losing their right of approaching the Commissioner of Income-tax for waiver of interest under Section 220(2A) of the Income-tax Act. That may be so. As already held by me, it is at the option of the declarant to avail of the benefit of the Samadhan Scheme and once he claims the benefit under the Samadhan Scheme the Scheme will operate notwithstanding the provisions contained in the Income-tax Act. Therefore, the contention that the petitioner has lost the right of waiver of interest is not a material consideration. If the petitioners with open eyes have opted and claimed the benefits of the Samadhan Scheme, it will not be open to them to contend that they have lost their right to approach the Commissioner of Income-tax for waiver of interest and this argument would apply not only with reference to levy of interest under Section 220(2) of the Income-tax Act but would equally apply to other levies for which there are provisions for the waiver of the same under some other provisions of the Income-tax Act. Therefore, I am unable to accept the submission of learned counsel for the petitioners that the petitioners have lost their right of waiver and, hence, the designated authority has no right to include interest under the provisions of the Samadhan Scheme.

24. Moreover, in the letter issued by the Central Board of Direct Taxes to all the Chief Commissioners of Income-tax dated January 5, 1999, it has been clarified that where tax arrears comprise only interest payable or penalty levied, the interest under Section 220(2) of the Income-tax Act has been worked out till March 31, 1998, and the declarant would be entitled to a waiver of 50 per cent. thereof as in view of the provisions contained in Sub-clause (iv) of Section 88(a) and the definition of 'tax arrears' appearing in Clause (m) of Section 87 of the Samadhan Scheme, no interest under Section 220(2) can be charged in such cases beyond March 31, 1998. The above clarification makes it clear that the interest under Section 220(2) of the Income-tax Act would also be the subject-matter of waiver under the Samadhan Scheme.

25. Mr. R. Janakiraman, learned counsel for some of the petitioners, referred to the declaration made by the petitioner in W. P. No. 4677 of 1999 and submitted that under the Samadhan Scheme only the penalty, determined and payable as on March 31, 1998, should be taken into consideration and the interest cannot be a subject-matter of consideration under the Samadhan Scheme. In the counter affidavit, it has been made clear that for two assessment years, penalties were levied by order dated March 2, 1994, and notice of demand has been issued for the payment of penalty, but the petitioner has not paid the penalty amount and the petitioner is therefore liable to pay interest after expiry of the period mentioned in the demand notice till March 31, 1998. The contention of the petitioner that the provisions of Section 88(a)(iv) of the Samadhan Scheme contemplates only levy of interest or penalty and not both is not correct as the use of the alternative expression, 'interest' or 'penalty' payable does not indicate that the interest cannot be a subject-matter of consideration under the Samadhan Scheme. If the section is interpreted in the above manner, it is clear that if there is a liability of interest, the interest would be the subject-matter of consideration and where there is any amount of penalty payable, the penalty would also be the subject-matter of consideration under the provisions of the Samadhan Scheme. Equally the declarant would be liable to pay the penalty and interest amount, if both were the subject-matter of consideration under the Samadhan Scheme. It is further stated in the counter affidavit filed on April 21, 1999, that the petitioner in W. P. No. 4677 of 1999 has not paid the amount of penalty within the time stipulated and the order of intimation was issued on February 24, 1999, and it is not clear when it was received by the petitioner. However, when this matter came up for admission, this court has granted interim stay of collection of interest alone under Section 220(2) of the Income-tax Act and if the petitioner has not paid the penalty amount as demanded in the certificate of intimation for the necessary consequences, the petitioner would be liable.

26. In so far as W. P. Nos. 4531 and 4532 of 1999 are concerned, the writ petitions are filed by the partner and it is stated that once the firm has opted for the Samadhan Scheme, the partners need not opt separately for the Samadhan Scheme and the benefits of the Samadhan Scheme would be given to the partners as well. A reference has been made to a press release issued by the Central Board of Direct Taxes wherein it is stated that the firm is required to pay only 35 per cent. of the disputed income and the partners are not required to pay any further tax on the disputed income of the firm. However, in the counter affidavit filed in W. P. No. 4532 of 1999, it is stated that the clarification issued by the Central Board of Direct Taxes has no application to a case where interest alone is outstanding in the case of the firm and the firm pays 50 per cent. of such interest payable. On the other hand, in a case where the firm in which the petitioners are also partners had some disputed income and if the firm pays 35 per cent. of the disputed income, the petitioners need not pay any further tax on their share income from the firm. Since the settlement under the Samadhan Scheme has been filed by the firm, and the declaration was only with reference to the interest payable by the firm, the circular has no application to the facts of the case and the interest payable by the partners was rightly determined under Section 88(a)(iv) of the Samadhan Scheme.

27. In all cases, the interim stay of payment of interest under Section 220(2) of the Income-tax Act shown in the respective certificate of intimations was granted and since the writ petitions are disposed of today, all the petitioners are given four weeks time from this date to pay the interest amount Under Section 220(2) of the Income-tax Act. However, it is made clear that this court has not granted any further time to the petitioners to pay other amounts mentioned in the respective certificates of intimations issued to the petitioners which are not the subject-matter of the writ petitions.

28. In the result, the various contentions raised by learned counsel for the petitioners in the various writ petitions are rejected and the writ petitions are liable to be dismissed and, accordingly, they are dismissed. No costs.