2002 (2) TMI 7 - SC - Income Tax

Appellant set out the details of the matters in dispute in the said appeals requesting the Dept. to indicate or compute the tax arrears as per the Kar Vivad Samadhan Scheme 1998 so that all disputes in relation to these three assessment years can be resolved - As there was no response from the Department till January 30 1999 the appellant submitted three separate declarations u/s 88 and 89 of the KVSS - notice issued by Commissioner under section 90(1) was not justified

Summary

Issues:
1. Validity of notice issued under the Kar Vivad Samadhan Scheme for amending the tax arrears determination.
2. Jurisdiction of the Commissioner under the second proviso to section 90(1) of the Kar Vivad Samadhan Scheme.
3. Conclusive nature of the certificate issued under section 90(1) and section 91 of the Kar Vivad Samadhan Scheme.

Analysis:
1. The appellant, widow of the original assessee, filed declarations under the Kar Vivad Samadhan Scheme for assessment years 1988-89, 1989-90, and 1991-92. The Department verified the declarations and issued a certificate determining the tax payable. The appellant deposited the sum determined and sought immunity from further proceedings. Subsequently, the Department issued a notice for amending the tax arrears determination based on adjustments not considered earlier. The Supreme Court held that the notice was without jurisdiction as it lacked allegations of false declaration and reopening the matter at that stage was impermissible.

2. The High Court, in a writ petition challenging the notice, opined that the question of lack of jurisdiction could be raised before the Commissioner. The Court found that the notice lacked grounds of false declaration and was solely based on adjustments not accounted for earlier. The Court emphasized that the notice was issued without jurisdiction as the information was already available during the finalization of the proceedings under the Kar Vivad Samadhan Scheme.

3. The Court emphasized the conclusive nature of the certificate issued under section 90(1) and section 91 of the Kar Vivad Samadhan Scheme. The Department's counter affidavit acknowledged the tax adjustments made in previous years but did not specifically reject the appellant's claim. The Court noted that the appellant's declarations were accepted based on the Department's adjustments of refunds without following the mandatory procedure. The Court concluded that the authorities could not change their stance after accepting the appellant's claim and that the notice issued lacked jurisdiction.

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court's order and quashing the notice issued by the Department. The Court emphasized the importance of adhering to the procedures outlined in the Kar Vivad Samadhan Scheme and ensuring that notices are issued based on valid grounds, such as false declarations, to maintain the integrity of the scheme and protect declarants' rights.