Designated Authority Cannot Initiate Any Action In Respect Of ‘Tax Arrear' After Issuance Of Certificate U/s. 5 Viwad Se Vishwas Act: Delhi HC
The Delhi High Court has held that once a Certificate in terms of Section 5 of the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) is issued, the Designated Authority is proscribed from initiating any action or proceedings in respect of ‘tax arrear’.
The Court was considering a Writ-Petition challenging the Notice issued under Section 148 of the Income Tax Act, 1961 seeking re-opening of assessment for the year 2012-13 under Section 147 of the Act.
The division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela held, "...once a declarant is issued a certificate (Form No.5) in terms of Section 5 of the DTVSV Act, and the declarant deposits the determined amount, the Designated Authority is proscribed from initiating any action or proceedings in respect of ‘tax arrear’."
The Petitioner was represented by Advocate R. Santhanam while the Respondent was represented by SSC Puneet Rai.
Aggrieved of the re-assessment order, the Petitioner had preferred an Appeal before the Commissioner of Income Tax (Appeals) under Section 246A of the Act. While the said appeal was pending, the Parliament enacted the Direct Tax Vivad Se Vishwas Act, 2020. The petitioner qualified as an ‘appellant’ under Section 2(1)(a) of the DTVSV Act and accordingly, made a declaration under Section 4(1) of the DTVSV Act seeking to settle the ‘tax arrear’. The ‘tax arrear’ was required to be resolved in terms of Section 3 of the DTVSV Act.
The Court noted that the provisions of sub-sections (1) and (2) of Section 4 of the DTVSV Act expressly provide that upon filing of the declaration, any appeal which is pending either before the Income Tax Appellate Tribunal or the Commissioner of Income Tax (Appeals) in respect of ‘disputed income’, ‘disputed interest’, ‘disputed penalty’ or ‘disputed fee' or ‘tax arrear’, shall be deemed to have been withdrawn.
The Court after taking note of the relevant rules concluded that Designated Authority cannot initiate any action in respect of ‘Tax Arrear' after issuance of Certificate under Section 5 of the DTVSV Act.
"In view of the above, all disputes regarding the tax arrear stood settled with the issuance of a certificate as contemplated under Section 5 of the DTVSV Act," the Court held.
The Petition was accordingly allowed.
Cause Title: S A N Garments Manufacturing Pvt. Ltd. vs. PR Commissioner Of Income Tax 7 And Anr (2024: DHC: 9845-DB)
Appearances:
Petitioner- Advocate R. Santhanam, Advocate Rishabh Ostwal
Respondent- SSC Puneet Rai, JSC Ashvini Kumar, JSC Rishabh Nangia, Advocate Nikhil Jain