2007 (4) TMI 237 - HC - Income Tax

In a matter of Kar Vivad Samadhan Scheme or any such statutory scheme, as the case may be, the courts have no power to act beyond the terms of the statutory scheme under which the benefits have been granted to the assessee matter remitted to the appropriate authority to determine the benefits and liabilities of the assessee under the Samadhan Scheme

Summary

Issues:
1. Assessment under the Income-tax Act for the assessment year 1995-96.
2. Application for benefit under the Kar Vivad Samadhan Scheme, 1998.
3. Disputed income determination and tax liability under the Samadhan Scheme.
4. Interpretation of rights and liabilities under the Samadhan Scheme.
5. Judicial review of the order under the Samadhan Scheme.

Assessment under the Income-tax Act for the assessment year 1995-96:
The appellant, an assessee before the Assistant Commissioner of Income-tax, filed the return of income for the assessment year 1995-96. The total income was determined at Rs. 29,26,025, with tax payable at Rs. 8,45,175 after adjustments. The appellant sought benefit under the Kar Vivad Samadhan Scheme, 1998, making applications under section 89. An order dated February 22, 1999, directed the appellant to pay Rs. 6,08,987 towards tax arrears under the Samadhan Scheme.

Application for benefit under the Kar Vivad Samadhan Scheme, 1998:
The appellant applied for benefits under the Samadhan Scheme, seeking resolution of tax arrears. The order under section 90(1) of the Finance (No. 2) Act, 1998, directed the appellant to pay a specified amount for the settlement of tax arrears. This led to the filing of a writ petition challenging the order.

Disputed income determination and tax liability under the Samadhan Scheme:
The appellant contended that her total income for the assessment year 1995-96 comprised capital gain and other income. The Revenue argued that choosing the Samadhan Scheme limited rights and liabilities to the scheme's purview. The court set aside the order directing payment under the Samadhan Scheme, emphasizing that the determination of disputed income and tax liability must align with the scheme's provisions.

Interpretation of rights and liabilities under the Samadhan Scheme:
The court highlighted that in statutory schemes like the Samadhan Scheme, courts cannot exceed the scheme's terms when granting benefits to the assessee. It emphasized strict adherence to the scheme's provisions in determining rights and liabilities. The court noted that any unintended injuries faced by the appellant should be addressed within the framework of the Samadhan Scheme, without judicial interference beyond the scheme's scope.

Judicial review of the order under the Samadhan Scheme:
The court modified the earlier order, remitting the matter to the appropriate authority under the Samadhan Scheme for determining the appellant's benefits and liabilities strictly in accordance with the scheme's terms. The court directed the authority to consider the appellant's application and make decisions based on the scheme's provisions, without reference to previous judicial observations. The writ appeal was disposed of accordingly, emphasizing adherence to the Samadhan Scheme's guidelines without judicial overreach.