GLOBAL CARD SYSTEM PVT. LTD.,CHENNAI vs. ITO, CORPORATE WARD-2(2), CHENNAI

आयकरअपील�यअ�धकरण ’बी’ �यायपीठ,चे�नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI �ी मनुकुमारिग�र, �ाियक सद� एवं �ी एस. आर. रघुनाथा लेखासद� BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRIS.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2441 & 2442/Chny/2025 �नधा�रण वष�/Assessment Years: 2017-18 & 2017-18 GLOBAL CARD SYSTEM PVT. v. ITO, CORPORATE WARD- LTD. NOO. 51, MOUNT 2(2) NUNGAMBAKKAM, POONAMALLEE ROAD, ST. CHENNAI-600034, THOMAS MOUNT, CHENNAI-600016 [PAN: AABCG5334R] (अपीलाथ?\Appellant) (@Aयथ?\Respondent)

अपीलाथ? कB ओर से/ Appellant by : Mr. P.M. Kathir, Advocate @Aयथ? कB ओर से /Respondent by : Ms. T.M. Suganthamala, CIT सुनवाई कB तार�ख/Date of Hearing : 12.08.2026 घोषणा कB तार�ख /Date of : 09.09.2026 Pronouncement आदेश / O R D E R PER MANU KUMAR GIRI, JM:

The captioned appeal (ITA No.2441/Chny/2025) arises out of the order passed by the Principal Commissioner of Income Tax (“PCIT”) under section 263 of the Income-tax Act, 1961 (“the Act”) dated 25.03.2022, whereby the PCIT sought to revise the assessment order passed under section 143(3) of the Act dated 02.12.2019 for the Assessment Year (“A.Y.”) 2017-18 where as the

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 2 :: appeal (ITA No.2442/Chny/2025) arises out of the order passed by the Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)”] under section 250 of the Income-tax Act, 1961 (“the Act”) dated 25.07.2022, confirming the assessment order passed under section 143(3) r.w.s 263 of the Act dated 23.03.2023 for the Assessment Year (“A.Y.”) 2017-18. 2. Brief facts of the case are that the Appellant is a private limited company engaged in the business of sale and personalization of cards. For the A.Y. 2017-18, the Appellant filed its Return of Income (“ROI”) on 09.08.2017, wherein the rental receipts received from Versatile Card Technology Pvt. Ltd. were offered to tax under the head “Profits and Gains of Business or Profession”, while the interest income was offered under the head “Income from Other Sources”. Accordingly, the Appellant declared a loss of Rs. 28,54,082/-. 2.1 The return of income was selected for limited scrutiny, pursuant to which the Assessing Officer (“AO”) issued a notice under section 143(2) of the Act dated 09.08.2018 for examining the following issues: (i) Share Application Money; and (ii) Income from House Property. 2.2 The AO completed the assessment under section 143(3) of the Act vide order dated 02.12.2019. In the said assessment order, the AO assessed the rental receipts amounting to Rs. 36,00,000/- under the head “Income from House Property”, as against the Appellant’s claim of treating the same as business income. While computing the income under the head “Income from House Property”, the AO allowed the statutory deduction of 30% amounting to Rs. 10,80,000/- and also allowed deduction towards interest paid on the

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 3 :: loan amounting to Rs. 10,11,321/- under section 24(b) of the Act. Consequently, the income from house property was determined at Rs. 15,08,679/-, and the total income of the Appellant was assessed at Rs. 15,49,312/-. Being aggrieved by the said assessment order, the Appellant preferred an appeal before the Commissioner of Income Tax (Appeals) [“CIT(A)”] under section 246A of the Act. 2.3 During the pendency of the appeal before the CIT(A), the Appellant opted to settle the dispute under the Direct Tax Vivad se Vishwas Scheme, 2020 (“DTVSV Scheme”) by filing the requisite declarations in Forms 1 and 2 on 11.01.2021. Thereafter, the Department issued Form 3 on 01.02.2021, determining the amount of tax payable under the scheme. Upon payment of the determined amount, the Appellant filed Form 4 on 28.03.2023. 2.4 In the meantime, the PCIT-1, Chennai, issued a notice under section 263 of the Act dated 01.03.2022, calling upon the Appellant to show cause as to why the assessment order passed under section 143(3) of the Act dated 02.12.2019 for the A.Y. 2017-18 ought not to be revised. The PCIT was of the view that the assessment order was erroneous insofar as it was prejudicial to the interests of the Revenue, on the following grounds: (i) As per the loan sanction letter, the purpose of the loan was stated to be “for maintenance of property and business investment” and, therefore, the deduction claimed under section 24(b) of the Act was not allowable; and (ii) The Appellant had claimed depreciation and carried forward the same as unabsorbed depreciation despite there being no business activity, and consequently, such depreciation was liable to be disallowed.

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 4 :: 2.5 In response to the notice, the Appellant filed its reply dated 16.03.2022, wherein it was submitted that the loan had been availed for the purpose of renovating the building and, accordingly, the interest paid thereon was eligible for deduction under section 24(b) of the Act. The Appellant further submitted that the issues sought to be examined by the PCIT had already been considered by the AO during the assessment proceedings and that the AO had adopted one of the possible views on the issues. Accordingly, the assessment order could not be regarded as erroneous merely because the PCIT sought to take a different view.The Appellant also clarified that the depreciation pertaining to the A.Y. 2017-18 had not been carried forward and that the amount carried forward represented only the unabsorbed depreciation pertaining to A.Ys. 2009-10, 2012-13 and 2013-14. Further, the Appellant brought to the notice of the PCIT that it had opted for the DTVSV Scheme, 2020 in respect of the appeal arising from the very assessment order sought to be revised and had duly discharged the tax liability determined under the said scheme. 2.6 However, the PCIT did not accept the submissions of the Appellant. The PCIT observed that the bank’s loan sanction letter constituted neutral documentary evidence and, therefore, could not be disregarded. He accordingly held that both the issues required detailed examination by the AO, which, according to him, had not been undertaken during the scrutiny assessment proceedings. 2.7 With regard to the Appellant’s contention that the dispute had been settled under the DTVSV Scheme, 2020, the PCIT held that the issue relating to the allowability of interest under section 24(b) of the Act did not form part of the disputed issue before the ld.CIT(A).

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 5 :: The PCIT further observed that Form 5 had not been issued as on the relevant date. Accordingly, the PCIT rejected the contentions of the Appellant and proceeded to pass the impugned order under section 263 of the Act dated 25.03.2022. The said revision order is the subject matter of challenge before this Hon’ble Tribunal in ITA No. 2441/Chny/2025. 3. Pursuant to the directions contained in the order passed under section 263 of the Act, the AO passed an order under section 143(3) read with section 263 of the Act dated 23.03.2023. In the said order, the AO added the interest amounting to Rs. 10,11,321/- and the unabsorbed depreciation amounting to Rs.45,41,785/- to the returned loss and consequently determined the total income at Rs.26,99,024/-. Aggrieved by the said order, the Appellant preferred an appeal before the CIT(A). The appeal was dismissed by the CIT(A) vide the impugned order dated 25.07.2025. Being aggrieved by the said order, the Appellant has preferred the appeal before this Hon’ble Tribunal in ITA No. 2442/Chny/2025. 4. At the outset, before proceeding to adjudicate the merits of the case, it is noted that the appeal in ITA No. 2441/Chny/2025 was filed with a delay of 1,197 days. In this regard, the Appellant filed an affidavit seeking condonation of delay, explaining that it was initially under the bona fide belief that the order passed under section 263 of the Act was not required to be challenged separately. The Appellant was advised to challenge the said order only when it approached its present counsel for filing an appeal against the order of the CIT(A) dated 25.07.2025.

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 6 :: 4.1 Having considered the contents of the affidavit and the submissions advanced by the Learned Authorised Representative (“Ld. AR”) during the course of hearing, it is found that the Appellant had demonstrated sufficient and reasonable cause for the delay in filing the appeal. Accordingly, the delay of 1,197 days in filing the appeal in ITA No. 2441/Chny/2025 is hereby condoned, and the appeal is taken up for adjudication on merits. 5. The Ld. AR, at the outset, submitted that since the Appellant had opted for the DTVSV Scheme, 2020 in respect of the appeal arising from the assessment order sought to be revised and had duly paid the tax determined under the said scheme, the assumption of jurisdiction under section 263 of the Act was unsustainable and unwarranted. It was contended that the disputes arising from the assessment order had already been settled in accordance with the statutory scheme and had consequently attained finality. 5.1 The Ld. AR further submitted that the DTVSV Scheme, 2020 was introduced with the legislative objective of reducing pending litigation and bringing finality to tax disputes. Therefore, permitting revision of an assessment order in respect of which the assessee had already availed the benefit of the said scheme and discharged the determined tax liability would frustrate and defeat the very object and purpose underlying the DTVSV Scheme, 2020. 5.6 The Ld. AR drew our attention to the relevant provisions of the Direct Tax Vivad Se Vishwas Act, 2020 (“DTVSV Act”). It was submitted that section 3 of the DTVSV Act provides for filing of a declaration by the declarant. Further, sub-section (1) of section 5 of the DTVSV Act mandates the designated authority to issue a certificate to the declarant, specifying the amount of tax payable by

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 7 :: the declarant upon acceptance of the declaration.The Ld. AR further submitted that, in terms of sub-section (2) of section 4 of the DTVSV Act, upon filing of the declaration, any appeal pending before the appellate authority in respect of disputed income, disputed interest, disputed penalty, disputed fee or tax arrears shall be deemed to have been withdrawn from the date on which the certificate under sub-section (1) of section 5 is issued by the designated authority. 5.7 It was further submitted that sub-section (3) of section 5 of the DTVSV Act specifically provides as under: “5. (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.

5.8 The Ld. AR accordingly submitted that, in terms of the statutory scheme embodied in the DTVSV Act, once a declaration is filed in respect of a pending appeal and the prescribed tax liability is discharged, the dispute forming the subject matter of such appeal attains finality and cannot thereafter be reopened or disturbed through any other proceedings under the Income-tax Act. 5.9 In the present case, the Ld. AR submitted that the issue relating to the assessability of the rental receipts under the head “Income from House Property” and the computation of such income, including the allowance of deduction towards interest paid on the loan availed for renovation/reconstruction of the property, had

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 8 :: already been examined and adjudicated upon by the AO in the course of the scrutiny assessment proceedings. 5.10 It was further submitted that the Appellant had opted for the DTVSV Scheme, 2020 in respect of the appeal arising from the very same assessment order in which the aforesaid issues had been considered by the AO. Accordingly, once the dispute arising from the assessment order was settled under the DTVSV Scheme and the tax liability determined thereunder was duly discharged, the matter stood concluded and attained finality. Consequently, the PCIT could not thereafter seek to disturb the concluded matter by invoking the revisionary jurisdiction under section 263 of the Act. 5.11 The Ld. AR placed reliance on the judgment of the Hon’ble Jurisdictional High Court in the case of Gopalakrishnan Rajkumar v. PCIT [2022] 445 ITR 577 (Madras). In the said case, the assessee had initially disclosed the sale consideration arising from the sale of a jointly owned property under the head “Capital Gains”. An addition was subsequently made in the assessment order in respect of the said transaction, and the dispute arising therefrom was ultimately settled under the DTVSV Scheme, 2020.Thereafter, the PCIT sought to invoke the provisions of section 263 of the Act on the ground that the assessee was not the owner of the property and, consequently, the sale consideration ought to have been assessed under the head “Income from Other Sources”.The Hon’ble Jurisdictional High Court, while quashing the proceedings initiated under section 263 of the Act, held as under: “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.

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 9 :: 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. 47. The Finance Minister in her speech on 1-2-2020 announced the the Direct Tax Vivad Se Vishwas Scheme to bring down the litigation. The Government intended to reduce the litigation, so that the taxpayers can buy peace with the department. The aforesaid scheme was to be implemented on 30-6-2020. 48. The taxpayers whose appeals were pending at any level were entitled to avail benefit of the scheme. Therefore, there is no justification in proceeding further with the impugned proceedings initiated by the first respondent under section 263 of the Income-tax Act, 1961.” 5.12 Relying upon the aforesaid judgment, the Ld. AR prayed that the order passed by the PCIT under section 263 of the Act be quashed. With regard to the issue concerning the carry forward of unabsorbed depreciation for A.Y. 2017-18, the Ld. AR submitted, in the first instance, that the same had no impact on the income assessed for the relevant assessment year, since such unabsorbed depreciation was neither set off nor allowed to be set off against the income from house property while completing the scrutiny assessment. 6. Without prejudice to the above, the Ld. AR submitted that although the unabsorbed depreciation pertaining to A.Y. 2017-18 was reflected as carried forward in the ROI originally filed for the said assessment year, the same was not carried forward in the ROI filed for the immediately succeeding assessment year. In support of the said contention, reliance was placed on Schedule UD of the ROI for A.Y. 2018-19, placed at page 52 of the Paper Book filed in ITA No. 2442/Chny/2025, wherein the unabsorbed depreciation pertaining to A.Y. 2017-18 does not find any mention.It was,

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 10 :: therefore, contended that the said issue could not constitute a valid ground for invoking the revisionary jurisdiction under section 263 of the Act, particularly when the assessment order had neither caused any prejudice to the interests of the Revenue nor resulted in any under-assessment of income on account of the alleged carry forward of unabsorbed depreciation. 7. Per contra, the Ld. DR for the revenue vehemently submitted that the proceedings under section 263 of the Act were initiated in respect of issues which had not formed part of the disputes settled under the DTVSV Scheme, 2020. Accordingly, it was contended that the PCIT was justified in exercising his revisionary jurisdiction under section 263 of the Act and in revising the assessment order. 8. We have heard the rival submissions, perused the orders of the authorities below, examined the paper books placed on record and considered the judicial precedents relied upon by the parties. 8.1 At the outset, with regard to the delay in filing the appeal in ITA No. 2441/Chny/2025, we find that the Hon’ble Supreme Court, in Collector, Land Acquisition v. Mst. Katiji [1987] taxmann.com 1072 (SC), has laid down the principles governing the consideration of an application for condonation of delay and emphasized that, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice should be preferred.Similarly, the Hon’ble Madras High Court, in Sreenivas Charitable Trust v. DCIT [2006] 280 ITR 357 (Madras), has held that the expression “sufficient cause” is required to be construed liberally, keeping in view the paramount consideration of advancing substantial justice.

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 11 :: 8.2 Having regard to the aforesaid principles and considering the explanation furnished by the Assessee, we are satisfied that the reasons stated for the delay are bona fide and genuine and constitute “sufficient cause” within the meaning of the relevant provisions. Accordingly, the delay in filing the appeal is condoned and the appeal is admitted for adjudication on merits. 9. Coming to the validity of the impugned revisionary proceedings, we find considerable merit in the submissions of the Assessee that the issue sought to be revised by the PCIT had already been examined by the AO during the course of the scrutiny assessment proceedings and that the appeal arising from the said assessment order had subsequently been settled under the DTVSV Scheme, 2020.The contention of the Ld.DR that the issue relating to the allowability of interest expenditure against the income assessed under the head “Income from House Property” was not examined by the AO and, consequently, did not form part of the dispute settled under the DTVSV Scheme, 2020, cannot, in our considered view, be accepted. 10. The Assessee had originally offered the rental receipts under the head “Profits and Gains of Business or Profession”. However, the AO, while completing the scrutiny assessment, re-characterised the said receipts and brought the same to tax under the head “Income from House Property”. In computing the income under the said head, the AO allowed both the statutory standard deduction and the interest expenditure claimed by the Assessee.It was this very adjustment arising from the re-characterisation of the rental receipts and the consequential determination of income from house property that was challenged by the Assessee in appeal before the

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 12 :: CIT(A), and the said appeal was thereafter settled under the DTVSV Scheme, 2020.In the aforesaid factual and legal backdrop, it would not be correct to hold that the issue concerning the allowability of interest expenditure was wholly outside the scope of the dispute pending in appeal or that the same did not form part of the matter ultimately settled under the DTVSV Scheme, 2020. 11. We find further support for the aforesaid view from the judgment of the Hon’ble Jurisdictional High Court in Gopalakrishnan Rajkumar (supra), wherein the Hon’ble Court held as under: 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 12. Hence, the issue of interest expense in regards to the income from house property having been settled in the DTVSV Scheme, 2020, the same cannot be agitated by the PCIT by exercising his powers u/s.263 of the Act, as the same is contrary to the provisions of Section 5(3) of the DTVSV Act. 13. Adverting to the other issue sought to be revised by the PCIT, (i.e) the carry forward of unabsorbed depreciation for the A.Y.2017- 18, we find force in the Ld. AR’s submissions that the issue cannot be said to be prejudicial to the revenue’s interests, when; The depreciation for the A.Y.2017-18 has not been set off against the income for the year, and;

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 13 :: ii. The unabsorbed depreciation for the A.Y.2017-18 has not been carried forward to the subsequent years, as is clear from the ROI filed for the A.Y.2018-19. 14. In view of the above discussion and findings, we hold that the impugned revision by the PCIT is unsustainable and thus quash the order u/s.263 of the Act dated 25.03.2022. The appeal in ITA No.2441/Chny/2025 is thus allowed. 15. Adverting to the appeal in ITA No.2442/Chny/2025, the same has been preferred against the order of assessment u/s.143(3) r.w.s.263 dated 23.03.2023, giving effect to the order of the PCIT dated 25.03.2022 impugned in ITA No.2441/Chny/2025. Since we have quashed the underlying order of the PCIT dated 25.03.2022, the order giving effect to the same does not survive. Hence, the appeal in ITA No.2442/Chny/2025 is dismissed as infructuous. 16. In the result, appeal of the assessee in ITA No.2441/Chny/2025 is allowed and the appeal in ITA No.2442/Chny/2025 is dismissed as infructuous. Order pronounced in the open court on the 09th day of September, 2026 in Chennai.

Sd/- Sd/- (एस. आर. रघुनाथा) (मनु कुमार िग�र) (S.R.RAGHUNATHA) (MANU KUMAR GIRI) लेखा सद[य/ACCOUNTANT MEMBER �या�यक सद[य/JUDICIAL MEMBER चे�नई/Chennai, \दनांक/Dated: 09th September 2026 SNDP, Sr. PS

ITA No. 2441 & 2442/Chny/2025 (AY 2017-18 & 2017-18) Global Card System Pvt Ltd. Vs ITO CW-2(2) :: 14 :: आदेश कB @�त]ल^प अ_े^षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF Digitally signed SANDE by SANDEEP KUMAR EP Date: 2026.09.11 KUMAR 12:58:35 +05'30'