Saumitra Dayal Singh, J.
1. Heard Sri Suyash Agarwal, learned counsel for the applicant-assessee and Sri B.K. Pandey, learned Standing Counsel.
2. Though the present revision was admitted without reference to any question of law, it has been heard on the following question of law:
"Whether upon subsequent acceptance of compounding for the A.Y. 2001-02, the assessee became entitled to apply for compounding for the A.Y. 2002-03 though on the date of initial rejection of his application for compounding for that year, he was in arrears of compounding fee for the A.Y. 2001-02 ?"
3. The present revision arises for the A.Y. 2002-03. The assessee had operated a brick kiln in that assessment year. Under the instruction issued by the state government under Section 7D of the U.P. Trade Tax Act, 1948, hereinafter referred to as the Act, popularly known as the compounding scheme for the A.Y. 2002-03, dated 08.01.2003, the assessee made an application to be admitted to the benefit of that scheme. It also appears that earlier the assessee had made a similar application to be admitted to the benefit of the compounding scheme for the A.Y. 2001-02. However, there were certain defaults in payment of instalments under that compounding application. Then, under the compounding scheme for the A.Y. 2002-03, under Clause 3, a negative condition had been prescribed being that an applicant would not be eligible for compounding for the A.Y. 2002-03 if he had not cleared the default together with interest towards compounding fee for the earlier assessment year. To this extent, there is no dispute or challenge raised by the assessee.
4. In such facts and in view of the admitted default existing for the A.Y. 2001-02, the Assessing Authority by his order dated 14.08.2006 rejected the application filed by the assessee under Section 7D of the Act for the A.Y. 2002-03 since the compounding application for the A.Y. 2001-02 had been filed belatedly without payment of interest as contemplated under that scheme.
5. The first appeal arising from that order was rejected. The Tribunal had also rejected the second appeal of the assessee in that regard. Hence this revision.
6. Learned counsel for the applicant-assessee submits that subsequent to rejection of the first appeal (for the A.Y. 2002-03) by order dated 17.1.2007, the assessee cleared the default towards payment of compounding fee with interest for the A.Y. 2001-02. Therefore, in his submission, the defect in the application for compounding for the A.Y. 2002-03 stood cured and the Tribunal has erred in not taking note of that fact and in rejecting the appeal filed by the assessee.
7. Learned Standing Counsel on the other hand submits that the acceptance of compounding fee is an alternative to the regular mode of assessment and the assessee does not have any inherent or vested right to claim compounding except upon compliance or fulfilment of conditions to seek compounding. In the instant case, in view of the admitted facts noted above, it has been submitted that clearly the assessee was in default towards payment of compounding fee with interest for the A.Y. 2001-02, at least up to the date 14.08.2006 when his compounding application for the A.Y. 2002-03 came to be rejected. The assessee having failed to clear the default for the A.Y. 2001-02, up to that date, he lost his right to seek compounding for the A.Y. 2002-03. The subsequent events of the assessee having cleared the default for the A.Y. 2001-02 after 14.08.2006 would not revive the rights of the assessee to seek compounding in lieu of assessment for the A.Y. 2002-03.
8. Having heard learned counsel for the parties, it is seen that though learned counsel for the applicant-assessee is right in his contention that for the A.Y. 2001-02, the assessee contested the matter up to appeal, where upon the matter was remanded and upon such remand, the assessee cleared the default of compounding fee for that year together with interest yet, its effect on the proceedings for the A.Y. 2002-03 may be negligible in the context of the controversy involved in the present revision.
9. In the first place, each assessment year is a separate unit. Then, the alternative method of assessment through payment of compounding fee is governed by principles of contract. In this regard, indisputably, the state government had offered to accept the compounding for the A.Y. 2002-03, subject to fulfilment of conditions chiefly that the assessee should not be in default for similar compounding for an earlier year. While offering an alternative method of assessment, it was open to the state government to provide for such stipulation in its own interest. Thus, even if it is assumed that the assessee could have made an application for compounding for the A.Y. 2002-03 while continuing to stand in default for the earlier assessment year, it is difficult to accept that such an application could be allowed in view of the default having survived on the date of rejection of that application. Thus, the assesseee may have had time till his application for compounding of A.Y. 2002-03 was pending to remove the default towards payment of compounding fee for the earlier year. However, that having not been done, the ineligibility to be allowed to pay compounding fee in lieu of tax (on assessment basis), was rightly adjudged against the assessee.
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, the assessee only lost its right to be considered for an alternative to assessment. No prejudice arose since the assessee continued to remain obliged to be assessed to tax, which he otherwise was. 11. The subsequent facts of the application for the A.Y. 2001-02 having been allowed would therefore remain largely extraneous so far as the rights of the parties during the A.Y. 2002-03. 12. Accordingly, the question of law framed above is answered in the negative i.e. in favour of the revenue and against the assessee. 13. The revision is dismissed. No order as to costs.