Facts of the Case

The petitioner, S A N Garments Manufacturing Private Limited, filed its return of income for Assessment Year 2012-13 declaring income of ₹13,57,73,250/-, which was initially accepted. Subsequently, reassessment proceedings were initiated under Section 147, and an assessment order dated 17.12.2019 was passed making an addition of ₹3,07,39,590/- under Section 69C.

The petitioner filed an appeal before the Commissioner of Income Tax (Appeals), which remained pending when the Direct Tax Vivad Se Vishwas Act, 2020 came into force. The petitioner qualified as an “appellant” under the DTVSV Act and filed a declaration under Section 4(1) to settle the tax arrears.

Pursuant to the declaration, the Designated Authority issued Form No.3 dated 16.10.2020 determining the payable amount, followed by issuance of Form No.5 under Section 5(2) of the DTVSV Act, recording full and final settlement after payment of ₹59,73,812/- by the petitioner.

Subsequently, the Designated Authority issued a fresh modified Form No.3 dated 29.01.2021, effectively seeking to reopen the concluded settlement. This modified certificate was challenged in the present writ petition.

Issues Involved

Whether, after issuance of a final certificate under Section 5 of the Direct Tax Vivad Se Vishwas Act, 2020 and payment by the declarant, the Designated Authority has the power to reopen or modify the settled tax arrear by issuing a fresh or modified Form No.3.

Petitioner’s Arguments

The petitioner contended that once Form No.5 was issued and payment was made, the settlement attained finality under Sections 5 and 6 of the DTVSV Act. It was argued that the Act does not confer any power upon the Designated Authority to reopen a concluded settlement and that issuance of a modified Form No.3 was wholly without jurisdiction and contrary to the statutory scheme.

Respondent’s Arguments

On a direct query from the Court, the Revenue fairly conceded that there is no provision under the DTVSV Act empowering the Designated Authority to reopen or revise a settlement once a final certificate under Section 5 has been issued.

Court Order / Findings

The Delhi High Court examined the scheme of the DTVSV Act and held that once a certificate under Section 5(1) is issued and the declarant makes payment, the settlement becomes final and conclusive. The Court observed that Section 6 expressly bars initiation of any further proceedings in respect of the tax arrear once settlement is completed.

The Court found that issuance of the impugned modified Form No.3 dated 29.01.2021 amounted to reopening a concluded settlement, which is impermissible in law. The Court held that the impugned certificate was issued without authority of law and contrary to the express provisions of the DTVSV Act.

Important Clarification

The Court clarified that the Direct Tax Vivad Se Vishwas Act is a complete code in itself and does not permit reopening or modification of a settlement once finality is achieved through issuance of Form No.5. Administrative convenience or subsequent reconsideration cannot override statutory finality.

Final Outcome

The writ petition was allowed. The Delhi High Court set aside the impugned modified Form No.3 dated 29.01.2021 and held that the settlement under the Direct Tax Vivad Se Vishwas Act had attained finality upon issuance of Form No.5 and payment by the petitioner. All pending applications were disposed of accordingly.

 

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769841365_SANGARMENTSMANUFACTURINGPRIVATELIMITEDVsPRCOMMISSIONEROFINCOMETAX7ANDANRANR..pdf

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