NEUTRAL CITATION
C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3146 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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AMITKUMAR CHANDULAL RAJANI
Versus
PRINCIPAL COMMISSIONER OF INCOME TAX, PCIT, RAJKOT-1
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Appearance:
MR FENIL H MEHTA(11663) for the Petitioner(s) No. 1
MR KARAN SANGHANI FOR MRS KALPANA K RAVAL(1046) for the
Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 05/09/2023
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV) Page 1 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023 NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined
1. Heard learned advocate Mr.Fenil H. Mehta for the petitioner and learned advocate Mr.Karan Sanghani for the respondent.
2. Rule, returnable forthwith. Learned advocate Mr.Karan Sanghani waives service of notice of rule for and on behalf of the respondent.
3. With consent of the learned advocates for both the sides, this petition is taken up for final hearing today.
4. By way of this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice issued to him under Section 263 of the Income Tax Act, 1961 (for short 'the Act') for the Assessment Year 2012-
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5. The facts in brief indicate that the petitioner in his individual capacity filed his original return of income for Assessment Year 2012-13 on 2nd July, 2012. The case of the petitioner was re-opened under Section 147 of the Act. An assessment order under Section 143(3) read with Section 147 of the Act was passed on 19th December, 2019 assessing total income at Rs.46,14,570/- by making addition of Rs.43,88,469/- being profit of 8% earned from the unaccounted transactions of Rs.5,48,55,870/-. The petitioner preferred an appeal on 16th January, 2020 challenging the assessment order. It is the case of the petitioner that in order to overcome the long-
drawn and vexatious litigation process, he took the benefit of the Direct Tax Vivad se Vishwas Scheme (for short 'the Scheme') under the Act known as the Direct Tax Vivad se Page 3 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023 NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined Vishwas Act, 2020 (for short 'the DTVSV Act') for settling the dispute with regard to the subject matter in appeal. The case of the petitioner further is that the designated authority under the DTVSV Act determined the amount payable and issued a certificate in Form No.5.
6. Learned advocate Mr.Fenil Mehta for the petitioner would draw the attention of the Court to the provisions of the Scheme especially Section 5 thereof and submit that once the issue had been settled under the Scheme, it is not open for the respondent to initiate any proceedings much less the present proceedings invoking Section 263 of the Act.
He would rely on the decision of the Madras High Court in the case of Gopalakrishnan Rajkumar Versus Principal Commissioner of Income Tax reported in [2022] 140 taxmann.com Page 4 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023 NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined 394 (Madras).
7. Learned advocate Mr.Karan Sanghani appearing for the Revenue would submit that, Section 8 of the Act would indicate that in light of the declaration given by the petitioner, the issue that was under consideration under the DTVSV Scheme and the figures were not same as the one settled under the Scheme and therefore, it was open for the authorities to initiate proceedings under the provisions of Section 263 of the Act.
8. For the benefit of judgment, the provisions of Section 5 of the Act are reproduced which read as under :
"5. (1) The designated authority shall, within a period of fifteen days from the date of receipt of the declaration, by order, determine the amount payable by the declarant in accordance with the provisions of this Act and grant a certificate to the declarant containing Page 5 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023 NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined particulars of the tax arrear and the amount payable after such determination, in such form as may be prescribed.
(2) The declarant shall pay the amount determined under sub-section (1) within fifteen days of the date of receipt of the certificate and intimate the details of such payment to the designated authority in the prescribed form and thereupon the designated authority shall pass an order stating that the declarant has paid the amount.
(3) Every order passed under sub- section (1), determining the amount payable under this Act, shall be conclusive as to the matters stated therein and no matter covered by such - order shall be reopened in any other proceeding under the Income-tax Act or under any other law for the time being in force or under any agreement, whether for protection of investment or otherwise, entered into by India with any other country or territory outside India, Explanation.--For the removal of doubts, it is hereby clarified that making a declaration under this Act shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a party in appeal or writ petition or special leave petition to contend that the declarant or the Page 6 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023 NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined income-tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute. "
9. In the decision of the Madras High Court in case of Gopalakrishnan (Supra) wherein also in the facts akin to the present one, the Madras High Court considered the provisions of the Scheme and interpreting Section 5 of the Act held as under :
"39. The question therefore that arises for consideration is whether the impugned proceedings initiated after the petitioners opted to settle the dispute under the Direct Tax Vivad Se Vishwas Act, 2020 are sustainable or not?
40. The expression disputed tax has been denied in Section 27 of the Direct Tax Vivad Se Vishwas Act, 2020 reads as under:
(j) "disputed tax", in relation to an assessment year or financial year, as the case may be, means the income-tax, including surcharge and cess (hereafter in this clause referred to as the amount of tax) payable by the appellant under the provisions of the Income-tax Act, Page 7 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023 NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined 1961, as computed hereunder:--
(A) in a case where any appeal, writ petition or special leave petition is pending before the appellate forum as on the specified date, the amount of tax that is payable by the appellant if such appeal or writ petition or special leave petition was to be decided against him; (B) in a case where an order in an appeal or in writ petition has been passed by the appellate forum on or before the specified date, and the time for filing appeal or special leave petition against such order has not expired as on that date, the amount of tax payable by the appellant after giving effect to the order so passed; (C) in a case where the order has been passed by the Assessing Officer on or before the specified date, and the time for filing appeal against such order has not expired as on that date, the amount of tax payable by the appellant in accordance with such order;
(D) in a case where objection filed by the appellant is pending before the Dispute Resolution Panel under section 144C of the Income-tax Act as on the specified date, the amount of tax payable by the appellant if the Dispute Resolution Panel was to confirm the variation proposed in the draft order; (E) in a case where Dispute Resolution Panel has issued any direction under sub-section (5) of section 144C of the Income-tax Act and the Assessing Officer has not passed the order under sub-
Page 8 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined section (13) of that section on or before the specified date, the amount of tax payable by the appellant as per the assessment order to be passed by the Assessing Officer under sub-section (13) thereof;
(F) in a case where an application for revision under section 264 of the Income-tax Act is pending as on the specified date, the amount of tax payable by the appellant if such application for revision was not to be accepted:
Provided that in a case where Commissioner (Appeals) has issued notice of enhancement under section 251 of the Income-tax Act on or before the specified date, the disputed tax shall be increased by the amount of tax pertaining to issues for which notice of enhancement has been issued:
Provided further that in a case where the dispute in relation to an assessment year relates to reduction of tax credit under section 115JAA or section 115Dof the Income-tax Act or any loss or depreciation computed thereunder, the appellant shall have an option either to include the amount of tax related to such tax credit or loss or depreciation in the amount of disputed tax, or to carry forward the reduced tax credit or loss or depreciation, in such manner as may be prescribed.
(k) "Income-tax Act" means the Income-
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(l) "last date" means such date as may be notified by the Central Government in the Official Gazette;
(m) "prescribed" means prescribed by rules made under this Act;
(n) "specified date" means the 31st day of January, 2020;
(o) "tax arrear" means,--
(i) the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, and penalty leviable or levied on such disputed tax; or
(ii) disputed interest; or
(iii) disputed penalty; or
(iv) disputed fee, as determined under the provisions of the Income- tax Act.
41. As per Section 3 of the the Direct Tax Vivad Se Vishwas Act, 2020, notwithstanding anything contained in the Income Tax Act or any other law for the time inforce the amount payable by a declarant shall be as specified in the table to the said section.
42. As per Section 4(6) of the Direct Tax Vivad Se Vishwas Act, 2020, the declarations filed under Section(1) Page 10 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023 NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined shall be presumed to have never been made if : -
"a) Any material particular furnished in the declaration is found to be false at any stage;
b) The declarant violates any of the conditions referred to in this Act;
c) The declarant acts in any manner which is not in accordance with the undertaking given by him under sub- section(5) And in such cases, all the proceedings and claims which were withdrawn under Section 4 and all the consequences under the Income-Tax Act against the declarant shall be deemed to have been revived.".
43. Section 6 of the Direct Tax Vivad Se Vishwas Act, 2020, makes it very clear that once there is a compliance with the timeliness specified under Section (5), the designated authority shall not institute any proceedings in respect of an offence or aims or levy any penalty or charge any interest under the Income Tax in respect of the tax arrears.
44. Section 5 of the Direct Tax Vivad Se Vishwas Act, 2020, also makes it clear that save as otherwise expressly provided in sub-section(3) of Section 5 or Section 6, noting contained in this Act shall be construed as conferring any benefit, concession or immunity on the declarant in any proceedings other than those in relation to which the Page 11 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023 NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined declaration has been made.
45. The intention of the parliament enacting the of the Direct Tax Vivad Se Vishwas Act, 2020, is to bring a closure of disputes in respect of tax arrears. Whether the petitioner had correctly or wrongly availed the benefit of Section 57(F) of the Income Tax Act or not cannot be re-opened once again under Section 263 of the Income Tax Act, 1961.
46. Once the petitioners had opted to settle the dispute under the Direct Tax Vivad Se Vishwas Act, 2020, the proceedings initiated under Section 263 have to go. If on the other hand the respective petitioners had not filed Form 1 and 2 or not accepted with the issue of Form 3, the Impugned Notice seeking to re-open the assessment under Section 263 of the Income Tax Act, 1961 could be justified."
10. In light of the facts and the decision of the Madras High Court, it was not open for the authorities to initiate proceedings under Section 263 of the Act, especially when they were clearly so barred. We are also conscious of the fact that even if the appeal memo which is placed on record is seen, the matter in Page 12 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023 NEUTRAL CITATION C/SCA/3146/2022 JUDGMENT DATED: 05/09/2023 undefined issue before the CIT (Appeals) which was sought to be brought to rest by opting for the benefit of the Scheme was in context of the same issue which the Revenue sought to invoke by issuing notice under Section 263 of the Act.
11. For the aforesaid reasons, the notice dated 13th January, 2022 is quashed and set aside. The petition is allowed accordingly.
Rule is made absolute.
(BIREN VAISHNAV, J) (BHARGAV D. KARIA, J) PALAK Page 13 of 13 Downloaded on : Sat Sep 16 16:04:26 IST 2023