2002 (11) TMI 5 - SC - Income Tax

Once the declarant makes payment of the amount so determined under section 90, the immunity under section 91 springs into effect - upon such declaration being made, tax arrears being determined, paid and certificate issued under the Kar Vivad Samadhan Scheme, there is no jurisdiction for the Assessing Officer to reopen the assessment by a notice under section 143 - High Court erred in dismissing the writ petition - judgment of the High Court is set aside and notices u/s 142(1) is quashed

Summary

Issues Involved:
1. Validity of the notice issued under section 142(1) of the Income-tax Act, 1961.
2. Finality of the assessment under the Kar Vivad Samadhan Scheme, 1998.
3. Jurisdiction of the Assessing Officer to reopen the assessment.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 142(1) of the Income-tax Act, 1961:
The appellant challenged the notice issued under section 142(1) of the Income-tax Act, 1961, arguing that the assessment for the assessment year 1992-93 had obtained finality under the Kar Vivad Samadhan Scheme (KVSS). The High Court dismissed the writ petition, but the Supreme Court found that the Assessing Officer had no jurisdiction to issue the notice under section 142(1) once the tax arrears were settled under the KVSS and a final certificate was issued.

2. Finality of the Assessment Under the Kar Vivad Samadhan Scheme, 1998:
The appellant contended that once the assessment was settled under the KVSS and the designated authority issued an order under section 90, the assessment could not be reopened. The Supreme Court agreed, stating that the order under section 90 is conclusive and the assessment for the entire year is settled. The scheme's purpose is to cut short litigations and encourage taxpayers to settle their dues. The Court emphasized that the designated authority's order is not mechanically passed but is a considered order intended to bring about legal consequences under the KVSS.

3. Jurisdiction of the Assessing Officer to Reopen the Assessment:
The Revenue argued that the Assessing Officer had not fully worked out the giving effect order made by the Commissioner of Income-tax (Appeals) and that certain disputed items were not finally computed. However, the Supreme Court found that the Assessing Officer had taken into account the disputed heads while giving effect to the appellate order. The Court noted that the Assessing Officer's order dated September 25, 1998, indicated that he had recomputed the total income and issued a demand notice, suggesting that the assessment was complete. The Court concluded that the Assessing Officer had no jurisdiction to reopen the assessment unless the case fell under the proviso (2) of sub-section (1) of section 90, which was not applicable here as no material particular furnished by the appellant in the declaration was found to be false.

Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's judgment, and quashed the notices issued under section 142(1) of the Act. The Court held that the assessment for the assessment year 1992-93 had obtained finality under the KVSS, and the Assessing Officer had no jurisdiction to reopen the assessment.