Credit for advance tax and self-assessment tax must be adjusted when computing liability under the Income Declaration Scheme.

Amounts already paid as advance tax and self-assessment tax for the relevant assessment years had to be credited while computing liability under the Income Declaration Scheme. The refusal to adjust those payments was held unsustainable, because tax paid for the same assessment years could not be ignored in determining the balance payable. On that basis, the assessment order and the consequential demand and penalty notices were quashed, and credit for the earlier payments was directed to be given.

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Issues: Whether credit was required to be given for advance tax and self-assessment tax paid for relevant assessment years while computing liability under the Income Declaration Scheme, and whether the reassessment notice and consequential demand and penalty notices were liable to be quashed.

Analysis: The petitioner's payments towards advance tax and self-assessment tax for the relevant assessment years were held to be liable for credit against the liability worked out under the Income Declaration Scheme. The refusal to adjust such payments was not accepted, and the Court held that amounts already paid for the relevant assessment years could not be ignored while determining the balance payable.

Conclusion: Credit had to be granted for the advance tax and self-assessment tax paid, and the assessment order as well as the consequential demand and penalty notices were quashed. The petition was allowed.

Ratio Decidendi: Amounts paid by the assessee for the relevant assessment years must be given credit while computing liability under the Income Declaration Scheme.

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