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Challenge to the validity of declaration under Kar Vivad Samadan Scheme for assessment year 1995-96 due to adjustment of refunds for subsequent years without proper intimation. Analysis: The petitioner filed an application under the Kar Vivad Samadan Scheme for the assessment year 1995-96, which was deemed invalid by a communication challenging the adjustment of refunds for subsequent years without proper intimation. The petitioner contended that refunds for the assessment years 1996-97 and 1997-98 were adjusted against the demand outstanding for 1995-96 without prior intimation, violating the provisions of section 245 of the Income-tax Act. The petitioner relied on various judgments emphasizing the mandatory requirement of sending intimation to the assessee before adjusting any refund against the tax payable. The court referred to judgments such as State Bank of Patiala v. CIT, A. N. Shaikh v. Suresh B. Jain, Hira Lal and Sons v. ITO, Shiv Narain Shivhare v. Asst. CIT, and Vijay Kumar Bhati v. CIT, all emphasizing the necessity of providing written intimation to the assessee before making any set off under section 245. The court highlighted that the word "after" in the section implies that intimation must precede the adjustment/set off. The petitioner argued that adjustments made without prior intimation were invalid and did not fulfill the conditions of the Kar Vivad Samadhan Scheme, 1998. The court observed that the adjustment/set off of refunds should have been preceded by intimation to the petitioner, as required by law. It noted that the petitioner had the opportunity to challenge the intimation but failed to do so promptly. However, the court found that for a specific amount of Rs. 3,96,505, there was no record of prior intimation or communication of the adjustment to the assessee. Therefore, the court directed the Commissioner of Income-tax to treat this amount as outstanding dues and partly allowed the petitions. In conclusion, the court held that adjustments of refunds without prior intimation to the assessee were procedural irregularities that did not impact the rights of the Department. The court emphasized the importance of providing intimation to safeguard the interests of the assessee and ensure the correctness of outstanding demands. While denying relief under the Kar Vivad Samadhan Scheme for certain adjustments, the court directed specific treatment for the amount lacking proper intimation, highlighting the significance of adherence to procedural requirements in tax matters.
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