Settlement Scheme eligibility is not barred by a merely admitted settlement application; disqualification arises only after a section 245D(4) order.

Under the Kar Vivad Samadhan Scheme, 1998, an assessee was not disqualified merely because a settlement application before the Settlement Commission had been admitted under section 245D(1). The statutory bar in section 95(i)(b) applied only where the Commission had already passed an order under section 245D(4) for the relevant assessment year. Pending settlement proceedings alone did not justify refusal to process a declaration under the Scheme. The designated authority was required to consider the declarations and determine the amount payable in accordance with law.

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Issues: Whether an assessee whose application before the Settlement Commission stood admitted under section 245D(1) of the Income-tax Act, 1961, but had not reached the stage of an order under section 245D(4), could be denied the benefit of the Kar Vivad Samadhan Scheme, 1998 on the ground that the settlement application was still pending.

Analysis: The disqualification in section 95(i)(b) of the Scheme applies only where the Settlement Commission has already passed an order under section 245D(4) of the Income-tax Act, 1961 for the relevant assessment year. A mere admitted application under section 245D(1), without any order under section 245D(4), does not attract the statutory bar. The pendency of the settlement application, by itself, was therefore not a valid basis for refusing to process the declaration under the Scheme. The designated authority was bound to consider the declarations and determine the amount payable under the Scheme.

Conclusion: The refusal to process the declarations on the basis of the pending settlement applications was unjustified. The petitioners were entitled to have their declarations considered under the Scheme, and the direction to reconsider and pass appropriate orders was warranted in their favour.

Final Conclusion: The petitions were allowed, and the authority was required to process the declarations under the settlement scheme and determine the tax arrears payable in accordance with law.

Ratio Decidendi: Disqualification under a settlement scheme cannot be inferred from the mere pendency of an admitted settlement application unless the statutory condition expressly triggering the bar has occurred.

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