CHANDRABABU GANGADHARAN, V. THE PRINCIPAL COMMISSIONER OF INCOME TAX,

WP(C)/13974/2022

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The case revolves around a writ petition filed by Chandrababu Gangadharan challenging an order passed by the Principal Commissioner of Income Tax, Thiruvananthapuram, which set aside an earlier assessment order and directed further examination of certain income assessments. The petitioner had previously availed the Direct Tax Vivad Se Vishwas Act, 2020, a scheme aimed at resolving disputed tax cases, by filing a declaration and settling the disputed tax. The core legal issue was whether the Income Tax authorities could reopen the settled assessment under the scheme, which was contested by the petitioner and supported by the specific provisions of the Act. The court's decision emphasized the finality of the settlement under the Act and the legislative intent to reduce litigation by allowing taxpayers to settle disputes conclusively.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 748567 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-07-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961, Direct Tax Vivad Se Vishwas Act 2020
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: SANTHOSH MATHEW; ANIL PULICKEL MATHEW; NEVIN ANANDAPADMANABHAN UNNIKRISHNAN
• Keywords: Assessment Order; Disputed tax; Income Tax; Revisional proceedings; Vivad se Vishwas
• Section: 263; 5; 4; 226; 5(1)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 27TH DAY OF JULY 2023 / 5TH SRAVANA, 1945 WP(C) NO. 13974 OF 2022 PETITIONER/S: CHANDRABABU GANGADHARAN, AGED 69 YEARS TC 9/875, SREEDHANYA, SASTHAMANGALAM, THIRUVANANTHAPURAM-695010. BY ADVS. SANTHOSH MATHEW ANIL SEBASTIAN PULICKEL MATHEW NEVIN THOMAS ANANDAPADMANABHAN UNNIKRISHNAN RESPONDENT/S: 1 THE PRINCIPAL COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM, 4TH FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003. 2 THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE -1, 1ST FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003. 3 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), 1ST FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003. 4 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(2), 1ST FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003. 5 UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI-110001. W.P.(C) No.13974/2022 -2- BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27.07.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.13974/2022 -3- J U D G M E N T Heard Mr Mathew Nevin Thomas, learned Counsel for the petitioner, and Mr Christopher Abraham, learned Standing Counsel for the Income Tax Department. 2. The present writ petition under Article 226 of the Constitution of India has been filed impugning the order dated 11.03.2022 passed by the Principal Commissioner of Income Tax, 4th Floor, Aayakar Bhavan, Thiruvananthapuram, under Section 263 of the Income Tax Act 1961 (hereinafter referred to as the ‘I.T. Act’). By the said order, the assessment order dated 30.12.2019 passed under Section 5(1) of the Direct Tax Vivad Se Vishwas Act 2020 (Act No.3 of 2020) has been partly set aside with a direction to the Assessing Officer to examine the issue regarding assessing the profit on the sale of property as income from business or profession after proper verification. W.P.(C) No.13974/2022 -4- 3. Parliament enacted Act No.3 of 2020 to resolve disputed tax and for matters connected therewith or incidental thereto. The aim and object of Act No.3 of 2020 is to bring down the litigation with taxpayers, and taxpayers can buy peace with the Department by invoking the provisions of Act No.3 of 2020. 3.1 In the present case, the scheme of Act No.3 of 2020 is that the assessee is required to file a declaration as prescribed under Section 4 of Act No.3 of 2020 before the designated authority. Upon filing such declaration, any appeal pending before the Income Tax Appellate Tribunal or the Commissioner (Appeals), in respect of disputed income or disputed interest or disputed penalty or disputed fee/tax arrears shall be deemed to have been withdrawn from the date on which the designated authority issues the certificate under sub-section (1) of Section 5. W.P.(C) No.13974/2022 -5- 4. Section 5 provides the time and manner of payment of the disputed arrears of the tax, penalty and other liabilities if the competent designated authority passes an order under Section 5(1) of Act No.3 of 2020. Sub-section (3) of Section 5 puts a fetter on any authority for reopening or taking up any other proceedings regarding the matters covered by the order passed under sub-section (1) of Section 5. 4.1 Section 5 of Act No.3 of 2020 is reproduced and reads as under: “5. Time and manner of payment. (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 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. W.P.(C) No.13974/2022 -6- (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 income-tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute.” 5. The learned Counsel for the petitioner submits that after the petitioner made the declaration in the prescribed form and manner under Section 4 and the designated authority passed the order under sub-section (1) of Section 5, the initiation of revisional proceedings under Section 263 of the I.T. Act by the same designated authority, i.e., Principal W.P.(C) No.13974/2022 -7- Commissioner of Income Tax is completely barred under sub- section (3) of Section 5. The Order impugned in the present writ petition is without jurisdiction and, therefore, is liable to be set aside. 6. On the other hand, Mr Abraham, learned Standing Counsel for the Income Tax, has submitted that the Revenue is well within the power to reopen the assessment order passed under sub-section (1) of Section 5 of Act No.3 of 2020. Explanation to Section 5 of Act No.3 of 2020 provides that a declaration under Act No.3 of 2020 should not amount to conceding the tax position by the Income-tax authority, or it would not amount to acquiescence in the decision of the disputed issue by settling the dispute. 7. I have considered the submissions and the provisions of Act No.3 of 2020. I have mentioned above that the purpose of the enactment of Act No.3 of 2020 is to bring down the litigation with the taxpayers. A special scheme has W.P.(C) No.13974/2022 -8- been envisaged under the Act. Act No.3 of 2020 provides for making a declaration in the form and manner on which the designated authority is required to verify the assessee’s claims and then may accept the declaration and pass the order under sub-section (1) of Section 5 or reject the declaration. 7.1 In the present case, the designated authority has accepted the declaration and has passed the order under Section 5(1) of Act No.3 of 2020. If, after passing an order under Section 5(1), the designated authority or any other authority is given the power to reopen the assessment passed under Section 5(1), the whole purpose of the Act would become redundant, and provisions of Section 5 would be rendered otiose. The explanation on which a great emphasis has been placed by the learned Counsel for the Revenue nowhere empowers the Revenue Authorities to reopen the assessment. It is only an explanation to the extent that in any pending proceedings, i.e., writ petition, appeal, or special leave W.P.(C) No.13974/2022 -9- petition, a declaration would not be treated as conceding the tax position or acquiescing in the disputed issue by settling the dispute. The legal position may still be adjudicated despite settling the tax liability. This explanation does not empower the Revenue Authorities to reopen the assessment, which has attained finality under Sub-section (1) of Section 5 of Act No.3 of 2020. 8. In view thereof, I find the impugned order dated 11.03.2022 is wholly without jurisdiction and illegal inasmuch as under the provisions of Act No.3 of 2020, the Commissioner has no power to reopen the assessment order passed under sub-section (1) of Section 5 of Act No.3 of 2020 by taking recourse to the provisions of Section 263 of the I.T. Act. The writ petition is allowed. The impugned order is set aside. Sd/- DINESH KUMAR SINGH JUDGE jjj W.P.(C) No.13974/2022 -10- APPENDIX OF WP(C) 13974/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE IMPUGNED ORDER DATED 11.3.2022 PASSED BY THE 1ST RESPONDENT UNDER SECTION 263 OF THE ITA. Exhibit P2 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.12.2019 PASSED BY THE 4TH RESPONDENT UNDER SECTION 143(3) OF THE ITA. Exhibit P3 TRUE COPY OF THE DEMAND NOTICE DATED 30.12.2019 UNDER ISSUED BY THE 4TH RESPONDENT SECTION 156 OF THE ITA. Exhibit P4 TRUE COPY OF THE APPEAL IN FORM NO.35 DATED 29.1.2020 FILED BY THE PETITIONER UNDER SECTION 246A OF THE ITA. Exhibit P5 TRUE COPY OF THE DECLARATION DATED 8.1.2021 IN DTVSV FORM-1 ALONG WITH THE UNDERTAKING IN DTVSV FORM-2 FILED BY THE PETITIONER UNDER SECTION 4(1) OF THE DTVSV ACT. Exhibit P6 TRUE COPY OF THE CERTIFICATE DATED 31.1.2021 IN DTVSV FORM-3 ISSUED BY THE 1ST RESPONDENT UNDER SECTION 5(1) OF THE DTVSV ACT. Exhibit P7 TRUE COPY OF THE PAYMENT INTIMATION DATED 10.10.2021 IN DTVSV FORM-4 GIVEN BY THE PETITIONER UNDER SECTION 5(2) THE DTVSV ACT. Exhibit P8 TRUE COPY OF THE LETTER DATED 26.9.2021 SENT BY THE PETITIONER TO CIT(A) WITHDRAWING THE APPEAL FILED FOR AY 2017-18. Exhibit P9 TRUE COPY OF THE ORDER DATED 24.11.2021 IN DTVSV FORM-5 ISSUED BY THE 1ST RESPONDENT UNDER SECTION 5(3) THE DTVSV ACT. Exhibit P10 TRUE COPY OF THE NOTICE DATED 13.1.2022 ISSUED BY THE 1ST RESPONDENT UNDER SECTION 263 OF THE W.P.(C) No.13974/2022 -11- ITA. Exhibit P11 TRUE COPY OF THE PETITIONER'S RESPONSE DATED 25.1.2022 TO THE NOTICE ISSUED UNDER SECTION 263 OF THE ITA. "