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Impugned action of the Commissioner of Income-tax in directing withdrawal of applications before Settlement Commission as a condition for availing KVS Scheme benefits. Analysis: The High Court addressed the issue of whether the Commissioner of Income-tax was justified in directing the petitioners to withdraw their applications pending before the Settlement Commission as a condition for availing the benefits of the Kar Vivad Samadhan Scheme, 1998 (KVS Scheme). The petitioners, income-tax assessees for the years 1987-88, 1988-89, and 1989-90, had submitted declarations under the KVS Scheme seeking settlement of outstanding arrears. The Commissioner opined that since no order had been passed under section 245D(4) of the Income-tax Act, the petitioners could only avail the KVS Scheme benefits upon withdrawing their Settlement Commission applications. However, the Settlement Commission did not allow the withdrawal, leading the petitioners to approach the High Court via writ petitions under Article 226 of the Constitution of India. The Court analyzed the provisions of the KVS Scheme, specifically section 95, which outlines cases where the Scheme shall not apply. Section 95(i)(b) states that the Scheme does not apply if an order has been passed by the Settlement Commission under section 245D(4) of the Income-tax Act for any assessment year. Since the petitioners' applications were only admitted under section 245D(1) and had not reached the stage of section 245D(4), the mere pendency of applications before the Settlement Commission should not disentitle the petitioners from availing the KVS Scheme benefits. After careful consideration of the facts and legal provisions, the Court held that the Commissioner had failed to exercise the statutory jurisdiction vested in him by not processing the petitioners' applications under the KVS Scheme. The Court found that the petitioners were eligible for the KVS Scheme benefits and should not be deprived of their statutory rights due to the Commissioner's incorrect interpretation. Consequently, the Court directed the Commissioner to reconsider the matter, determine the amount payable by the declarants under the KVS Scheme, and issue the necessary certificates for full and final settlement of tax arrears in accordance with the Scheme's provisions. The Court allowed the petitions, making the rule absolute and ordering no costs to be paid.
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