Approved settlement liability remains enforceable even when the exact amount is quantified later, absent proven prejudice.

An approved settlement under section 34(1B) of the Income-tax Act, 1922 created a binding obligation to pay an additional sum linked to two-thirds of the appreciation in share value, even though the exact figure was not fixed when the settlement was made. The liability was enforceable because the contingent payment formed part of the settlement terms accepted by the revenue authorities. Later quantification by the Income-tax Officer did not invalidate the demand, as the amount became payable only on actual appreciation and no prejudice, excessive computation, or infringement of a legal right was shown. On that basis, writ relief under article 226 was unavailable.

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Issues: (i) Whether the settlement under section 34(1B) of the Income-tax Act, 1922 created a binding liability on the assessee to pay an additional sum equal to two-thirds of the appreciation in the value of shares. (ii) Whether the demand was invalid because the amount was quantified later by the Income-tax Officer and without a further hearing, so as to justify relief under article 226 of the Constitution of India.

Issue (i): Whether the settlement under section 34(1B) of the Income-tax Act, 1922 created a binding liability on the assessee to pay an additional sum equal to two-thirds of the appreciation in the value of shares.

Analysis: The settlement expressly provided for an additional payment if the market value of the shares appreciated before the instalment liability was fully discharged. The approved terms of settlement were accepted in full by the Central Board of Revenue and the Central Government. The liability was therefore part of the settlement itself, even though the exact amount could not be quantified at the time the settlement was made.

Conclusion: The liability under the settlement was binding and enforceable against the assessee.

Issue (ii): Whether the demand was invalid because the amount was quantified later by the Income-tax Officer and without a further hearing, so as to justify relief under article 226 of the Constitution of India.

Analysis: The Court held that the later quantification did not defeat the liability because the amount became payable only when appreciation actually occurred. No factual basis was shown to establish that the figure computed was excessive or that any legal right had been infringed. In the absence of demonstrated injury or prejudice, extraordinary writ relief was not warranted, even assuming that a further formal quantification or hearing might technically have been expected.

Conclusion: The demand was not invalidated on this ground and no writ relief was available to the assessee.

Final Conclusion: The settlement-based liability was upheld, and the assessee failed to establish any actionable prejudice or legal infirmity in the demand.

Ratio Decidendi: A liability expressly created by an approved settlement remains enforceable even if its exact monetary quantification is deferred, and writ relief will be refused absent proof of prejudice or infringement of a legal right.

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