Disputed income under the settlement scheme must be computed from unpaid tax; a circular cannot override the statute.

Under the Kar Vivad Samadhan Scheme, disputed income was required to be computed from the unpaid disputed tax outstanding on the date of declaration, because the Scheme's definitions of "disputed tax" and "disputed income" tied settlement computation to that basis. A CBDT circular or clarification could not alter the statutory formula or require computation on the basis of tax already paid. Where a circular conflicts with the Scheme, it must yield to the statute. The settlement certificate therefore had to be recomputed in accordance with the Scheme, in favour of the assessee.

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Issues: Whether, under the Kar Vivad Samadhan Scheme, the disputed income for settlement was to be computed on the basis of unpaid disputed tax on the date of declaration, and whether a CBDT circular could direct computation on the basis of tax paid.

Analysis: The definitions of "disputed tax" and "disputed income" under the Scheme link the computation to tax remaining unpaid on the date of declaration, and the amount payable under the settlement mechanism must be worked out from that foundation. A circular or clarification issued for administration of the Scheme cannot amend or depart from the Scheme itself. If the circular directs a computation inconsistent with the statutory definitions, it must yield to the statute.

Conclusion: The disputed income had to be computed on the basis of unpaid tax, and the CBDT circular could not validly require computation on the basis of tax paid. The certificate was therefore liable to be recomputed in accordance with the Scheme, in favour of the assessee.

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