Patna HC: AO Cannot Reopen Settled Vivad se Vishwas Act Dispute by Invoking Sec 154
Patna HC: AO Cannot Reopen Settled Vivad se Vishwas Act Dispute by Invoking Sec 154
The writ petition resulted from proceedings under Section 143(3) read with Section 153B for the 2018-19 financial year. The demand was Rs. 5,88,457 after income was assessed at Rs. 18,08,450 against the returned income of Rs. 2,88,577. The petitioner chose to settle under the Direct Tax Vivad se Vishwas Act, 2020, while the case was still pending in appeal. The concerned authority, after proper verification, had issued a certificate in Form-5 dated 05.11.2021, finally resolving the dispute.
As a result, a refund of Rs. 4,81,087 was held to be payable to the petitioner. When the petitioner sought a refund of excess payment, the Assessing Officer, by order passed under Section 154 of the Income Tax Act, 1961, rejected the refund and raised a fresh demand of Rs. 8,87,283, alleging miscalculation and misapplication of tax rates under Sections 69/69A read with Section 115BBE. A revision under Section 264 against this rectification was also dismissed, leading to the present writ petition.
Central Issue: Whether the Assessing Officer was empowered to invoke Section 154 to reopen and raise a fresh demand in respect of AY 2018-19 after issuance of a final certificate under the Direct Tax Vivad se Vishwas Act, 2020.
HC’s Ruling: The Court held that once a certificate is issued under Section 5 of the Direct Tax Vivad se Vishwas Act, 2020, the matter attains finality and cannot be reopened through rectification under Section 154 of the Income Tax Act. It clarified that Section 154 powers apply only to orders passed under the Income Tax Act and cannot be invoked to unsettle a determination made under the special scheme of 2020.
The Court noted that the refund of Rs. 4,81,087 stood crystallised upon the issuance of the certificate dated 5 November 2021, and the Assessing Officer had no authority to demand any further amount. A certificate under the 2020 Act is binding, and reopening it indirectly would undermine the very purpose of the scheme. Relying on the Delhi High Court’s decision in SAN Garments Manufacturing Pvt. Ltd., the Court reiterated that even delegated jurisdiction under the 2020 Act does not extend to modifying or revisiting a certificate once issued.
Thus, the rectification order and revisional order were quashed. The Department was directed to release the refund of Rs. 4,81,087 along with statutory interest within four weeks. Allowing the writ petition, the Court reaffirmed both the sanctity of the Vivad se Vishwas scheme and the statutory limits placed on rectification under Section 154.
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