The federation has argued that the scheme is discriminatory and violates Articles 14 and 19 of the Constitution of India. Samadhan will be operational from September 1, 1998 to December 31, 1998.

The petition, filed in the court on August 14, is likely to come up for admission before justice Lahoty on Wednesday.

The federation will be represented by former chief justice of Assam and Andhra Pradesh high court Raghubir and KM Shukla former president of the Income Tax Appellate Tribunal and former high court judge.

The final arguments will be made by former finance minister P Chidambaram, whose voluntary disclosure of income scheme was challenged in the Supreme Court by the federation.

The much-touted Samadhan scheme is being opposed on the grounds that it will discriminate against the taxpayer who has paid the tax and those who have not paid the `disputed' tax.

The federation has contended that the assessee who is either law-abiding or, by succumbing to the pressure of recovery officer has paid the tax, should also be eligible to come under the scheme.

"The scheme creates two classes of assessees within a group of assessees and gives a preferential treatment to that class of the assessee who have disputed certain additions and disallowances but have not paid any taxes on the same," the petition states.

The taxpayers who have already paid the entire tax, interest and penalty and whose appeals are still pending before various authorities should be allowed to come under Samadhan, federation vice-president PS Sarin said.

According to the federation, the standing committee on finance has also suggested that the scope of the scheme be extended from a purely `tax arrears' scheme to the `tax paid' scheme. The committee also agreed that the definition of eligibility be broadened in consultation with the law ministry and that certain anomalies also be weeded out.

The petition seeking prohibitory orders against the scheme states that the "it does not satisfy the test of reasonable classification or intelligible differential which can be said to have rational relation with the object sought to be achieved".

The basic objective of the scheme is to reduce litigation, but this very purpose is defeated because the department is not allowed to withdraw the appeals.

"The scheme grants benefit only to those assessees who have lost before the first appellate authority (commissioner of income tax appeals) or the second appellate authority (ITAT). This is so because in case the appeal of the taxpayer is allowed, there would not be any arrears even though further appeal is filed by the department," the petition states.

As the income tax department itself is a major litigant, the Samadhan scheme will fail in achieving its basic objective of reducing litigation, said chairman, representative committee, AIFTP, K Shivaram.

According to him, as on March 31, 1998, around 293,508 appeals are pending before the ITAT out of these 1,51,607 are filed by the department.

Litigation over fee hike likely

The All India Federation of Tax Practitioners will shortly file a public interest litigation in the Supreme Court against the decision of the finance ministry to enhance the fees for filing appeals before various appellate authorities, including the commissioner of income tax (appeals), the Income Tax Appellate Tribunal and high court.

The federation has also strongly opposed the decision of the ministry to allow the taxpayers to approach the high court directly, thereby, by-passing the tribunal.