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2008] 300 ITR 384 [2008] 166 TAXMAN 108 (MP) HIGH COURT OF MADHYA PRADESH H.L. Taneja v. Commissioner of Income-tax ARUN MISHRA, J. WRIT PETITION NO. 1032 OF 1999 JULY 4, 2006 Section 87(e), read with sections 88 and 89, of the Finance (No. 2) Act, 1998 - Kar Vivad Samadhan Scheme, 1998 - Disputed income - Assessment years 1994-95 and 1995-96 - Whether additional tax levied under section 143(1A) in respect of an assessment year is a tax and would, therefore, form a part of disputed tax for purposes of determination of disputed income under Kar Vivad Samadhan Scheme - Held, yes FACTS The assessee had filed a declaration under section 89, read with section 88, for settlement of tax payable for the assessment years 1994-95 and 1995-96. The total tax payable on the disputed income was worked out to Rs. 2,13,310. The department did not accept the aforesaid figure and determined the tax payable under section 89 at Rs. 3,03,134 by taking into consideration the amount of the additional tax payable under section 143(1A) of the Income-tax Act. The assessee objected to the aforesaid working, but there was no response. In writ petition, the assessee contended that the additional tax is in the nature of a penalty, which is imposed on an assessee in those cases where prima facie adjustments are made under section 143(1)(a) of the Income-tax Act and that it is not relatable to the determination of income and thus, it could not be taken into account in determination of disputed income on which tax was payable at the rate of 30 per cent under the Scheme. The assessee also relied upon circular dated 6-11-1998 for the aforesaid purpose. HELD It is amply clear from the CBDT clarification to question No. 6 given under reference No. Samadhan 2/98, dated 3-9-1998-Ed., that the additional tax levied in respect of an assessment year is a tax and would, therefore, form a part of the disputed tax for the purposes of determination of the disputed income. Accordingly, in the instant case, the disputed income was worked out by taking into consideration additional tax also. The contention of the assessee that the additional tax being in the nature of penalty was not required to be taken into…

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