Settlement scheme verification must follow statutory procedure; merits of assessment cannot be examined before proper scrutiny and hearing.

Under a settlement scheme, the Designated Authority must confine itself to verifying the application, checking the particulars against the records, and computing the payable amount in accordance with the statutory formula. It cannot enter the merits of the underlying assessment at the processing stage or bypass the prescribed procedure. Where the authority failed to follow the verification mechanism and did not afford a fair opportunity to produce books of account and relevant records, the resulting orders were treated as procedurally unsustainable. The matter was remanded for fresh consideration under the scheme after personal hearing and proper verification.

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Issues: Whether the Designated Authority, while dealing with an application for settlement of arrears, was required to confine itself to verification of the application and computation under the settlement scheme, and whether the impugned orders could stand when passed after examining the merits of assessment without following the prescribed procedure.

Analysis: The settlement scheme required the applicant to file an application under Section 5 with proof of payment computed at the rates specified in Section 7. The Designated Authority was then bound under Section 6 to verify the correctness of the particulars furnished with reference to the relevant records and determine the amount payable. Only if the shortfall fell within the statutory limit could further demand be made, and if the statutory conditions were not satisfied the application was to be rejected. The scheme was to be strictly applied, and the authority could not travel into the merits of the assessment at the stage of processing a settlement application. The record showed that the authority had not followed the prescribed verification process and had proceeded on the merits of the assessment, which amounted to a serious procedural defect. The absence of proper verification and opportunity to produce books of account and relevant records also offended fairness in procedure.

Conclusion: The impugned orders were unsustainable. The writ petitions were allowed, the orders were set aside, and the matters were remanded for fresh consideration under the settlement scheme after affording personal hearing and opportunity to produce the relevant records.

Final Conclusion: The settlement applications must be processed strictly in accordance with the statutory scheme, with verification of particulars taking precedence over any merits-based determination of the underlying assessment.

Ratio Decidendi: In proceedings under a settlement or amnesty scheme, the designated authority must first verify the application strictly in accordance with the statute and cannot decide the merits of the assessment without following the prescribed procedure and affording a fair opportunity where required.

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