Mandatory defect-notification procedure under settlement scheme breached, so rejection based on short interest payment was unsustainable.

Where a settlement scheme requires the designated authority to notify defects in an application within a fixed period for rectification, failure to give that timely intimation vitiates a later rejection based on the same defect. The assessee's applications were rejected for alleged short payment of interest, but the authority did not return them within the statutory ten-day period to allow cure of the defect. The High Court held that this non-compliance with the mandatory procedure deprived the assessee of an opportunity to rectify the omission, and the rejection was set aside as unsustainable.

---

---

Issues: Whether the rejection of the settlement applications was sustainable when the designated authority did not intimate the alleged defect in payment of interest within the statutory period.

Analysis: The applications were filed under the settlement scheme after the revised assessment orders, and the dispute turned on the authority's objection that the interest paid was short of the amount payable. The statutory scheme required the designated authority, if any defect or omission was noticed, to return the application for rectification within ten days from receipt. Since no such timely intimation was given, the assessee was deprived of the chance to cure the defect. In these circumstances, the rejection of the applications was contrary to the statutory procedure.

Conclusion: The rejection was unsustainable and was set aside.

Ratio Decidendi: Where a settlement statute prescribes that defects in an application must be notified within a fixed time for rectification, failure to comply with that mandatory procedure vitiates a subsequent rejection on the same defect.

---