Karasamadhana Scheme relief turns on whether later bank recovery falls within the refund restriction tied to appeal-stage payments.

An application under the Karasamadhana Scheme could not be rejected without first determining whether recovery from the assessee's banker during the pendency of the appeal fell within Clause 2.4's refund restriction, which was framed around amounts paid at the time of filing the appeal. The authority had not clearly examined that factual and legal question before applying the cited circular, so the rejection was set aside and the matter was sent back for fresh consideration after hearing the assessee. The competent authority was directed to pass a new order on the Scheme application in accordance with law.

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Issues: Whether the rejection of the assessee's application under the Karasamadhana Scheme on the basis of Clause 2.4 and the cited circular was sustainable where recovery was made from the banker after filing of the appeal and before withdrawal of the appeal.

Analysis: The rejection order relied on the circular stating that no refund would be admissible where excess arose from adjustment of penalty or interest paid at the time of filing the appeal. The record, however, showed ambiguity as to whether the authority had correctly applied Clause 2.4 to the facts, since that clause concerned amounts paid at the time of appeal and not necessarily amounts subsequently recovered through bank action during the pendency of proceedings. The Court found that the authority had not clearly addressed whether such later recovery could be treated as payment for the purpose of the Scheme and held that the issue required a fresh examination on the petitioner's case.

Conclusion: The rejection was unsustainable and the matter required reconsideration by the authority after hearing the petitioner.

Final Conclusion: The impugned endorsement was set aside and the competent authority was directed to pass a fresh order on the Scheme application, leaving the parties to work out the consequences of any fresh decision in accordance with law.

Ratio Decidendi: Where a scheme is rejected by applying a refund restriction tied to amounts paid at the time of filing an appeal, the authority must specifically determine whether later recovery through coercive process falls within that restriction before denying relief.

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