IMPORTANT POINT
Once the declaration of assessee under Section 89 of Kar Vivad Samadhan Adhiniyam, 1998 is determined and the declarant makes the payment of the amount so determined under Section 90, the immunity under Section 91 springs into effect, then there is no jurisdiction for the ITO to reopen the assessment by a notice under Section 143 of IT Act, 1961.

Headnote:Income Tax Act, 1961-Sections 142(1) and 143-Kar Vivad Samadhan Scheme, 1998-Sections 89, 90 and 91-Assessment year 1992-93-CIT (Appeals) directing ITO to reassess-Assessment done-Demand raised-Declaration under KVSS 1998 assessment completed-ITO s order under Section 142(1) calling upon assessee to furnish details about income from house property and written off bad debts for A.Y. 92-93-On receipt of details, reopened assessment by notice under Section 143 IT Act-Challenged in High Court-Dismissed on grounds that ITO while reassessing income on order of CIT (Appeals) did not take into account four major heads of dispute and that order of designated authority under KVSS 1998 was not a considered order and can be reopened-Whether correct? (No)-Appeal allowed.
Held : A careful scrutiny of this order suggests that, even while giving effect to the CIT (Appeals) order, the Assessing Officer has taken account of bad debt amounting to Rs. 68,02,046.00 and amount treated as business income as per the Appellate Authority direction of Rs. 27,93,977.00 while working out the revised total income. Out of the four items indicated at the end of the order item Nos. 1 and 2 (Income from house property = Rs. 27,93,977.00 and claim of bad debt = Rs. 68,02,046.00) have been deducted by the Assessing Authority, indicating that he agrees with the Assessee s claim. The Assessing Authority does not seem to have taken account of two other items (Capital gains = Rs. 4,00,000.00 and Rule 6D disallowance = Rs. 31,963.). We are, therefore, unable to accept the contention that the Assessing Authority had not assessed the disputed heads while giving effect to the CIT (A) s order. We are fortified in our conclusion by reason of the fact that no demand notice/refund order could have been issued if the assessment was not complete. If the Assessing Officer had not completely assessed the income after taking note of the four issues remitted to him, there was no question of determining the revised total income, much less was there any scope for issuing a demand notice/refund order at that stage. Hence, we are unable to accept that the Assessing Officer had not fully given effect to the CIT (Appeals) order with respect to the four major heads. It is true that even after this order there was correspondence between the appellant and authorities with respect to disallowance of certain items of tax deducted at source as the appellant-assessee was unable to produce documentary evidence, though it had furnished the necessary indemnity bonds. That, however, was an outstanding dispute by which the assessee, if at all, could be aggrieved. It is also pointed out that revised assessment order giving effect to the appellate order has not taken account of the heads of capital gains and rule 6D disallowance totalling Rs. 4,31,963.00. The grievance, if any, on this count can only be made by the assessee and not the Revenue. As far as the provisions of KVSS are concerned, we agree with the contention of the learned Senior Counsel for the assessee that the order to be made by the Designated Authority under Section 90 is a considered order which is intended to be condusive in respect of tax arrears and sums payable after such determination towards full and final settlement of tax arrears. Once the declarant makes payment of the amount so determined under Section 90, the immunity under Section 91 springs into effect. We are also of the view that upon such declaration being made, tax arrears being determined, paid and certificate issued under the KVSS, there is no jurisdiction for the Assessing Officer to reopen the assessment by a notice under Section 143 of the Act except where the case falls under the proviso (2) of sub-section (1) of Section 90 as it is found that any material particular furnished in the declaration is found to be false. In the present case, it is not the case of the Revenue that any material particular furnished by the appellant-assessee in the declaration was found to be false. Consequently, the Assessing Officer could not have re-opened the assessment by a notice under section 143 of the Act. In our view, the High Court erred in both counts in dismissing the writ petition. In the result, we allow the appeal, set aside the judgment of the High Court and quash the notices under Section 142 (1) of the Act dated 16-8-1999 and 30-12-1999 read with letters dated 16-8-1999, 30-12-1999 and 15-2-2000. In the facts and circumstances of the case, there shall be no order as to costs. (Paras 17, 18, 19, 20, 21 and 22)

JUDGMENT

Srikrishna, J.-This appeal by special leave is directed against the judgment of the High Court of Bombay dated 4-12-2000 dismissing the Writ Petition under Article 226 of the Constitution by which the appellant challenged the notice issued under Section 142 (1) of the Income Tax Act, 1961 (hereinafter referred to as the Act )

2. The brief facts necessary to decide this appeal are as under:

On 26th February, 1993 the appellant filed its return for assessment year 1992-93 and followed it up with a revised return. The Assessing Officer made an order dated 27th March, 1995 under Section 143 (3) of the Act disallowing certain claims and rejecting the contentions of the assessee. The appellant filed an appeal before the Commissioner of Income Tax (Appeals). The Appellate Authority by its order dated 25-9-1998 confirmed the order of the Assessing Officer in respect of the following items:

(a) Premium amount of Rs. 3,57,153.00

(b) Depreciation to the extent of Rs. 2,13,000.00

(Totaling Rs. 32,84,153.00)

3. With regard to four items/heads the Appellate Authority set aside the order of the assessment and remitted the matter back to the Assessing Authority with the direction to recompute/reassess after giving an opportunity of hearing to the assessee. The four items/heads remitted to the Assessing Officer were:

"(a) Whether receipt of Rs. 27,93,977.00 represented income from house property or whether it represented business income.

(b) Claim for bad debt of Rs. 68,02,046.00.

(d) Disallowance under Rule 6D to the extent of Rs. 31,963.00."

4. Being aggrieved by the decision of the CIT (Appeals), the assessee carried an appeal before the Income Tax Tribunal in respect of premium, depreciation and interest, which together represented an amount of Rs. 32,84,153.00.

5. Pursuant to the order of the CIT (Appeal), the Assessing Officer made an order dated 25-9-1998 giving effect to the appellate order. The Assessing Officer determined the assessed income of the appellant at Rs. 33,65,298.00 and raised a demand of Rs. 26,27,545.00. In the meanwhile, Kar Vivad Samadhan Scheme, 1998 (herein after referred to as KVSS) was brought into effect by Finance (No.2) Act, 1998. The appellant filed a declaration under the KVSS on 20-11-1998 disclosing its assessed income as Rs. 33,65,298.00 and working out the tax payable under the Scheme at Rs. 8,65,795.00. The said declaration was accepted by the Designated Authority under the KVSS by an order dated 19-1-1999 made under Section 90(1) of the Finance (No.2) Act, 1998. The Designated Authority accepted the assessed income of the appellant at Rs. 33,65,298.00 and determined the tax payable by the appellant at Rs. 9,35,888.00. This amount of Rs. 9,35,888.00 was paid by the appellant on 12-2-1999 upon which a final certificate under Section 92 read with Section 91 of the Finance (No.2) Act, 1998 and the KVSS, 1998 was issued certifying that the appellant had paid towards full and final settlement of the tax arrears determined in the order dated 19-1-1999 on the declaration made by the appellant and granting immunity consequent under the provisions of the Scheme.

6. By an order made on 16th August, 1999 purportedly under Section 142 (1) of the Act, the Assessing Officer called upon the appellant to furnish details in respect of Assessment Year 1992-93 in connection with taxing of the licence fee of Rs. 24,12,114.00 received from the State Bank of India for let out portion of its property under the head "Income from House Property" as also to furnish evidence to establish that the written-off debts had become bad and have been written-off in the books of accounts.

7. The appellant protested by its letter dated 21st January, 2000 and pointed out that the assessment for t

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