Kar Vivad Samadhan Scheme treatment of additional tax under section 143(1A) as disputed tax for settlement purposes

Additional tax under section 143(1A) of the Income-tax Act is treated as tax under the Act, not as a mere penalty, for purposes of the Kar Vivad Samadhan Scheme, 1998. On that basis, it can form part of the tax arrear and be included in the computation of disputed tax and disputed income where the amount remained unpaid on the date of declaration. The stated effect is that settlement computation under the Scheme extends to such additional tax, and a challenge excluding it from the computation fails.

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Issues: Whether additional tax levied under section 143(1A) of the Income-tax Act, 1961 forms part of the disputed tax and disputed income for settlement under the Kar Vivad Samadhan Scheme, 1998.

Analysis: The Scheme defines "tax arrear" to include amounts of tax, penalty, or interest remaining unpaid, and defines "disputed tax" as the total tax determined and payable for an assessment year but remaining unpaid on the date of declaration. Additional tax under section 143(1A) was treated by the Board's clarification as tax under the Act and not as a mere penalty. On that basis, the amount remained part of the tax arrears and was capable of being included in the computation of disputed tax and disputed income for settlement under the Scheme.

Conclusion: Additional tax under section 143(1A) was rightly included in the disputed tax and disputed income, and the petitioner's challenge to the computation failed.

Ratio Decidendi: For the Kar Vivad Samadhan Scheme, 1998, additional tax treated as tax under the Income-tax Act forms part of the tax arrear and disputed tax for settlement purposes.

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