1999 (8) TMI 43 - HC - Income Tax

Court overturns rejection of assessee's declaration under Kar Vivad Samadhan Scheme for 1993-94

Bank Of Tokyo Mitsubushi Ltd. Versus Commissioner Of Income-Tax And Others

The court overturned the rejection of the assessee's declaration under the Kar Vivad Samadhan Scheme for the assessment year 1993-94. It found that the ... Refund, Kar Vivad Samadhan Scheme Issues:1. Rejection of declaration under Kar Vivad Samadhan Scheme for assessment year 1993-94.2. Authority's error in rejecting the declaration.3. Misinterpretation of the assessee's request for adjustment.4. Jurisdiction under section 245 of the Income-tax Act for set-off.5. Corrective measures and directions for payment and issuance of due certificates.Analysis:1. The judgment concerns the rejection of a declaration under the Kar Vivad Samadhan Scheme for the assessment year 1993-94. The assessee sought settlement of disputes pending before the Tribunal through this scheme due to an assessed liability for that year.2. The designated authority's order of rejection was based on the absence of tax arrears to be settled under the Scheme for the assessment year 1993-94. However, subsequent correspondence clarified that the dues for that year were adjusted against the refundable amount for the assessment year 1991-92, leaving no tax arrears to be paid or settled.3. The court found that the authority erred by treating the assessee's request for adjustment as an acquiescence to an adjustment already made by the Revenue. The set-off under section 245 of the Income-tax Act must originate from the Revenue, and the assessee's request for adjustment did not fulfill the legal requirements for such action.4. The judgment emphasized that the set-off between refundable amounts and tax dues must be made by the Revenue in accordance with section 245, and the authority's assumption that the assessee's request constituted completion of the adjustment process was incorrect. The court highlighted the necessity of following the law and natural justice in such matters.5. As a corrective measure, the court set aside the impugned order of rejection and directed the assessee to pay a specified sum within a stipulated period. Upon payment, due certificates were to be issued, and the liability for the assessment year 1993-94 would be cleared. The judgment also outlined separate proceedings for obtaining refunds for the assessment years 1991-92 and 1992-93, if necessary, emphasizing compliance with the law.In conclusion, the judgment rectified the error in rejecting the assessee's declaration, clarified the legal requirements for set-off under the Income-tax Act, and provided specific directions for payment and resolution of the tax liability for the assessment year 1993-94.