Gujarat High Court

Amitkumar Chandulal Rajani vs Principal Commissioner Of Income ... on 5 September, 2023

Bench: Bhargav D. Karia

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     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)

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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-

13.

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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

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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

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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

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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

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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,

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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-

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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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tax Act, 1961;

(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)

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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

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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

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issue before the CIT (Appeals) which was

sought to be brought to rest by opting for the