Law:

Section:

Section 90 of the Finance (No. 2) Act, 1998 - Kar Vivad Samadhan Scheme, 1998 - Time and manner of payment of tax arrears - Assessee's declarations filed under Scheme were rejected by department - On writ, High Court directed department to entertain declarations, and to determine payment of tax arrear under section 90(1) with an additional direction making assessee liable to pay interest on amount determined - Whether since liability of assessee towards amount of disputed tax payable accrued only after ascertainment of same by designated authority under section 90, he was not liable to pay interest thereon, particularly when department had wrongly rejected his declarations filed under section 88 - Held, yes FACTS The assessee's declarations filed under Scheme were rejected by the Designated Authority (DA). On writ, the High Court directed the DA to entertain the declarations and to determine the amount payable under section 90(1), with an additional direction making the assessee liable to pay interest on the amount determined. On revenue's appeal, the Supreme Court upheld the impugned order. The assessee filed the instant appeals before the Supreme Court against the additional direction given by the High Court. HELD The Finance (No. 2) Act, 1998 introduced a Scheme called Kar Vivad Samadhan Scheme, 1998. It was a recovery scheme. Under the Scheme, the tax arrears had to be outstanding as on 31-3-1998. Under section 87(f ), 'disputed tax' was defined to mean total tax determined and payable under the Income-tax Act, Wealth-tax Act, in respect of an assessment year but which remained unpaid as on the date of making of the declaration from which TDS, self-assessed tax, advanced tax paid, if any, had to be deducted under section 90; the DA had to determine the amount payable and for that purpose, he had to determine the tax arrears as well as the disputed amount as defined under section 87(f). Thus, the DA had to make an assessment of tax arrears, disputed amount and amount payable for each year of assessment; that appeal was barred against the order under section 90 and such determination had to be done within 60 days from the receipt of the declaration and based…

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