The Delhi High Court while quasing the show cause notice and the income tax demand order held that the legislative intentions behind Direct Tax Vivad se Vishwas Act, 2020 (DTVSV Act) is the closure of all tax disputes.
The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that the Designated Authority upon receipt of a declaration made and referable to Section 4 is obliged to determine the amount payable by the declarant in accordance with the provisions of the DTVSV Act. To facilitate it the Designated Authority is required to grant a certificate which would encapsulate particulars of the tax arrears and the amount payable upon such determination. In terms of Section 5(2), the declarant is statutorily placed under an obligation to pay the amount as determined under sub-section (1) within 15 days of the receipt of the certificate and duly intimate the Designated Authority of compliance.
The petitioner/assessee undoubtedly came to obtain a settlement of all disputes pertaining to demands emanating from the Income Tax Act, 1961 by virtue of an application which was made under the Direct Tax Vivad Se Vishwas Act, 2020. Pursuant to the declarations which were made, Form 5 came to be issued and the total liability determined and conferred finality in terms as contemplated under the provisions of the DTVSV Act.
The respondent-department sought to invoke the power conferred by Section 154 of the Act to revisit a computation of liability which stood settled, at least upto the stage of the Commissioner of Income Tax (Appeals). The action commenced after the issuance of Form 5 under the DTVSV Act. The challenged the action for rectification.
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The dispute pertains to Assessment Year 2015-16 and in respect of which the petitioner filed a Return of Income on 15 September 2015 declaring a total income of INR 50,31,150. The Return was processed in terms of Section 143(1) of the Income Tax Act. The case of the petitioner was selected for scrutiny assessment and p a final assessment order under Section 143(3) of the Income Tax Act came to be framed by additions to the tune of INR 54,50,438 were made to the returned income of the writ petitioner and the total income was assessed at INR 1,04,81,590. The petitioner assailed the assessment order before the CIT(A) where those additions ultimately came to be upheld in terms of an order rendered by the said authority on 11 March 2019.
The petitioner approached the Income Tax Appellate Tribunal by way of a statutory appeal.
During the pendency of the appeal, the petitioner sought to derive benefit of the DTVSV Act which had, in the meanwhile come to be announced in the Budget Speech of the Finance Minister for the year 2020, opted for settlement of the dispute and submitted requisite Forms 1 and 2 on 17 November 2020.
After due processing of the Forms, the amount as payable by the petitioner was determined by the Designated Authority on 18 December 2020 when Form 3 was issued under the DTVSV Act. The disputed tax payable in terms was ultimately deposited on 26 March 2021 and department proceeded to issue Form 5.
The assessee contended that after more than a year from the date when Form 3 had been issued, that it came to be served with a notice dated 08 March 2022 under Section 154.
“If we were to assume that the power comprised in Section 154 of the Act were available to be exercised or wielded notwithstanding the conclusion of proceedings under the DTVSV Act and the issuance of Form 5, the same would clearly not be sustainable bearing in mind the statutory period of limitation which would apply,” the court said.
The court noted that the determination as carried out by the Designated Authority is clearly rendered finality and cannot possibly be reopened or revised by any authority under the Income Tax Act by taking recourse to a power which may otherwise be available to be exercised. The only contingency where a determination made may be liable to be revisited or recalled would be where it is subsequently found that the application made by the declarant is found to suffer from an incorrect declaration or the suppression of a material fact. Absent the above, the declaration and the determination is conferred finality under the DTVSV Act.
The court while allowing the petition stated that the order under Section 154 is liable to be struck down on a more fundamental plane. As per the scheme of the DTVSV Act, an applicant desirous of settlement is required to file a declaration carrying requisite particulars in terms of Section 4.
Case Details
Case Title: Satish Kumar Dhingra Versus Assistant/Deputy Commissioner Of Income Tax
Citation: W.P.(C) 17323/2022
Decision date: 22.08.2024