Kar Vivad Samadhan Scheme finality bars further assessment and revision proceedings after settlement of tax arrears.

Settlement under the Kar Vivad Samadhan Scheme, 1998 gave conclusive finality to the tax arrears covered by the declaration, and barred further proceedings on the same assessment except where false material particulars were disclosed. Continued scrutiny and assessment proceedings under the Income-tax Act after issuance of the settlement certificate were therefore impermissible and had to be quashed. For the same reason, the revisional order under section 264 could not survive once the underlying assessment stood covered by the scheme, and it too was liable to be set aside.

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Issues: Whether, after settlement of the dispute under the Kar Vivad Samadhan Scheme, 1998, the revenue authorities could continue scrutiny and assessment proceedings under the Income-tax Act, 1961 and sustain the revisional order passed under section 264.

Analysis: The dispute had already been settled under the Kar Vivad Samadhan Scheme, 1998, and the designated authority had issued the consequential certificate. The governing principle applied was that the scheme brings about a conclusive settlement of the tax arrears covered by the declaration and bars further proceedings in relation to the same assessment, save for the limited exception where the declaration contains false material particulars. The assessment proceedings continued under section 143 of the Income-tax Act, 1961, after such settlement, were therefore inconsistent with the finality attached to the scheme. On the same reasoning, the revisional order under section 264 could not be sustained once the underlying assessment itself stood covered by the settlement.

Conclusion: The continuation of scrutiny and assessment proceedings after settlement under the scheme was impermissible, and the revisional order as well as the assessment order were liable to be quashed.

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