Court sets aside rejection under Kar Vivad Samadhan Scheme, emphasizes adherence to provisions

The Court allowed the writ petition challenging the rejection of the application under the Kar Vivad Samadhan Scheme, 1998. The Court held that the dismissal of the pending revision by the authority should not be a basis for denying relief under the Scheme. Emphasizing adherence to the Scheme's provisions and spirit, the Court set aside the rejection order, highlighting the importance of extending benefits under the Scheme appropriately, particularly when proceedings are pending.

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Issues:
1. Assessment of income tax for the year 1997-98.
2. Application under Kar Vivad Samadhan Scheme, 1998.
3. Rejection of application under the Scheme by the designated authority.
4. Challenge to the rejection order through a writ petition.

Analysis:
1. The petitioner, a Limited Company, was assessed to income tax for the year 1997-98, with a demand of tax, additional tax, and interest amounting to specific figures. The petitioner filed a revision under Section 264(3) of the Income Tax Act before the Commissioner of Income Tax while the revision was pending, the Kar Vivad Samadhan Scheme, 1998 was introduced, allowing termination of proceedings if the assessee offers to pay the stipulated amount under the Scheme.

2. To avail the benefit under the Scheme, the petitioner submitted an application to the designated authority, who was also handling the pending revision. The authority rejected both the revision and the application under the Scheme. The petitioner challenged the rejection of the Scheme application through a writ petition, citing that the Scheme allowed for termination of proceedings irrespective of their merits and that the authority's decision was against the spirit of the Scheme.

3. The Court noted that one of the conditions for the Scheme was the pendency of a revision, appeal, or proceedings before the relevant authorities. The authority's dismissal of the pending revision was cited as a reason for rejecting the Scheme application, which the Court found untenable and against the intended purpose of the Scheme. The Court highlighted a similar case where a comparable view was taken, emphasizing that the dismissal of a pending revision should not be a basis for denying relief under the Scheme.

4. Ultimately, the Court allowed the writ petition, setting aside the impugned order and disposing of the case without any costs. The judgment emphasized the importance of adhering to the provisions and spirit of the Kar Vivad Samadhan Scheme, ensuring that the benefits under the Scheme are extended appropriately, especially when proceedings are pending before the authorities.

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