Statutory settlement payments are non-refundable where the scheme bars refund, and a contrary assessment can be revised.

Amounts paid under the Kar Vivad Samadhan Scheme, 1998 pursuant to a declaration under Section 88 could not be refunded because Section 93 expressly barred refund of any amount paid under the Scheme. The assessee, having elected to settle the dispute under the statutory framework and paid the amount determined by the designated authority, could not later rely on the earlier assessment position to claim return of that sum. An assessment order directing such refund was therefore contrary to the statutory prohibition and was treated as erroneous and prejudicial to the interests of the Revenue, justifying revision under Section 263.

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Issues: (i) Whether the assessee was entitled to refund of the amount voluntarily paid under the Kar Vivad Samadhan Scheme, 1998 in view of the prohibition contained in Section 93 of the Scheme. (ii) Whether the Commissioner was justified in invoking revisionary power under Section 263 of the Income-tax Act, 1961 on the ground that the assessment order granting such refund was erroneous and prejudicial to the interests of the Revenue.

Issue (i): Whether the assessee was entitled to refund of the amount voluntarily paid under the Kar Vivad Samadhan Scheme, 1998 in view of the prohibition contained in Section 93 of the Scheme.

Analysis: The Scheme was availed by declaration under Section 88, the designated authority determined the tax payable, and the assessee paid the amount in terms of the Scheme. Section 93 expressly provides that any amount paid in pursuance of a declaration made under Section 88 shall not be refunded under any circumstances. Once the assessee elected to settle the dispute under the statutory scheme and paid the amount determined thereunder, the assessee could not later seek refund by relying on the earlier assessment position.

Conclusion: The assessee was not entitled to refund of the amount paid under the Scheme.

Issue (ii): Whether the Commissioner was justified in invoking revisionary power under Section 263 of the Income-tax Act, 1961 on the ground that the assessment order granting such refund was erroneous and prejudicial to the interests of the Revenue.

Analysis: Since Section 93 barred refund of the amount paid under the Scheme, the assessment order directing refund of that amount ran contrary to the statutory prohibition. An order granting such refund was therefore erroneous and prejudicial to the interests of the Revenue, satisfying the twin conditions for exercise of power under Section 263.

Conclusion: The Commissioner was justified in invoking Section 263.

Final Conclusion: The challenge to the revisional order failed, and the statutory bar against refund under the settlement scheme was upheld.

Ratio Decidendi: Amounts voluntarily paid under a statutory settlement scheme pursuant to a declaration cannot be refunded where the scheme expressly prohibits refund, and an assessment order contrary to that prohibition is erroneous and prejudicial to the interests of the Revenue for the purpose of revision.

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