JANATA SAHAKARI BANK LTD SATARA,SATARA vs. DEPUTY COMMISSIONER OF INCOME TAX , SATARA

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ITA 2235/PUN/2024Status: DisposedITAT Pune27 July 2026AY 2013-1413 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that once an assessee opts for the VSVS scheme and the Designated Authority issues Form No. 3, followed by the assessee filing Form No. 4 after payment, no further rectification proceedings under Section 154 are permissible. Such actions violate the conclusiveness provided by the VSVS Act.

What were the facts?

The assessee, a co-operative bank, sought to carry forward business losses and depreciation. After several rounds of assessment and appeals, the assessee opted for the Vivad Se Vishwas (VSVS) scheme. Subsequently, the Assessing Officer initiated rectification proceedings under Section 154 to withdraw the set-off of carry forward losses.

What were the issues?

Whether the Assessing Officer can initiate rectification proceedings under Section 154 after the assessee has availed the Vivad Se Vishwas scheme, and the Designated Authority has issued Form No. 3 and the assessee has filed Form No. 4.

Which sections of the Income-tax Act were involved?

Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI R. K. PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Pramod S Shingte
For Respondent: Shri R.Y. Balawade, Addl.CIT

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.2235//PUN/2024 Assessment year : 2013-14 Janata Sahakari Bank Ltd, Satara DCIT, Satara Vs. 179, Bhavani Peth, Satara – 415002 PAN: AAAJJ0029N (Appellant) (Respondent) Assessee by : Shri Pramod S Shingte Department by : Shri R.Y. Balawade, Addl.CIT Date of hearing : 20-05-2026 Date of pronouncement : 27-07-2026 O R D E R PER R.K. PANDA, VP:

This appeal filed by the assessee is directed against the order dated 29.08.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2013-14.

2.

Facts of the case, in brief, are that the assessee is a Co-operative bank i.e. society registered under the Maharashtra State Co-operative Societies Act and under the Banking Regulation Act, 1948 to carry on banking business. It filed its return of income for the impugned assessment year on 27.09.2013 declaring total income at Nil after claiming business loss of Rs.2,09,78,656/-, short term capital gain of Rs.23,91,899/- and income from other sources of Rs.2,30,86,978/-. The Assessing Officer on verification of record found that the assessee in its return of income has claimed carry forward of business loss of Rs.3,73,33,443/- and carry

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forward of depreciation of Rs.60,00,230/- to assessment year 2013-14. On verification of record he found that the correct figures of carry forward business losses of Rs.1,46,18,926/- and depreciation of Rs.48,00,246/- have been allowed by the Income Tax Authority. He observed that the case was selected for scrutiny and the assessment was completed on 30.11.2015 assessing the total income at Rs.1,99,63,846/-. During the course of assessment proceedings the Assessing Officer has not allowed carry forward losses of Rs.1,94,19,172/- (business loss of Rs.1,46,18,926/- & depreciation of Rs.48,00,246/-) from the previous years to set off for against the current assessed income of Rs.1,99,19,172/- because the brought forward business loss is not allowed against the income from Short term capital gain and the income from other sources. However, the assessee has neither filed any rectification application u/s 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) before the Assessing Officer nor filed appeal before the CIT(A) for not allowing the carry forward losses and depreciation. He observed that the assessee filed appeal before the Ld. CIT(A)-4, Pune against the order u/s 143(3) who partially allowed the appeal of the assessee by deleting the addition of Rs.7,69,736/- on account of amortization of premium on GOI securities and general provision / loss reserves. Again the assessee filed an appeal before the Tribunal against the order of the Ld. CIT(A)-4, Pune. During the order giving effect u/s 250 dated 24.04.2017 to the order of the Ld. CIT(A)-4, Pune the carry forward losses were not allowed at Rs.1,94,19,172/- (business loss of Rs.1,46,18,926/- and depreciation of Rs.48,00,246/-). Accordingly, the assessed

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income u/s 250 of the Act was determined at Rs.1,91,94,110/-. Subsequently the assessee filed a rectification application on 18.06.2018 u/s 154 requesting the Assessing Officer for rectification of the above mistakes and allow carry forward losses accordingly. The Assessing Officer passed the rectification order u/s 154 on 17.03.2020 and allowed carry forward losses of Rs.1,91,94,110/- (business loss of Rs.1,43,93,864/- and depreciation of Rs.48,00,246/-) against the income from other sources. According to the Assessing Officer, as per the provisions of section 70 of the Act, losses can be set off in next year to the same head only but depreciation can be set off against any head except salary. Accordingly, the assessed income u/s 154 dated 17.03.2020 was assessed at Nil in the hands of the assessee and the refund of Rs.60,14,350/- along with interest of Rs.11,78,458/- was issued to the assessee. He noted that the assessee has filed Vivad Se Vishwas application before the CIT-3, Pune against the appeal and the PCIT-3, Pune as per directions of CBDT, passed order u/s 154 and sent the correct reports of Vivad Se Vishwas Scheme. But during the Vivad Se Vishwas proceedings it was found that the assessee has claimed carry forward losses of Rs.1,91,94,110/- and the same was allowed in order u/s 154 dated 17.03.2020 which is not correct. This being a mistake apparent from record he initiated rectification proceedings u/s 154. Rejecting the various explanations given by the assessee the Assessing Officer determined the total income of the assessee at Rs.1,43,93,864/- by observing as under:

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3.

In appeal, the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer.

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4.

Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds: 1. On the facts and in the circumstances of the case and in law the order passed by the AO in this case is not sustainable in law as the authorities are not entitled to decide the issues under S 154 of the Act which are debatable in nature. The order passed under S. 154 adverse to the assessee be set aside. 2. On the facts and in the circumstances of the case and in law the AO is confused in this case. In the first place it was decided the assessee the Bank earned business income and was entitled to carry forward the losses. The AO again took action u/s 154 and withdraw the benefits already allowed. This shows AO also believed it was a debatable issue which cannot be decided u/s 154 of the Act. S. 154 is not applicable. The order passed by AO be set aside. 3. On the facts and in the circumstances of the case and in law the Hon'ble Kerala High Court in Pr. CIT v. Peroorkada Service Co. Op. Bank Ltd. (2022) 442 ITR 141(Ker) at page 156 of the report held the court had consistently held that investments made by a banking concern are part of business of banking. The income arising therefrom would therefore, be attributable to the business of bank falling under the head 'profits and gains of business'. It is therefore, clear that it cannot be income from other sources. The order passed by AO under S. 154 be set aside. 4. On the facts and in the circumstances of the case and in law the principle would also cover situation where a co-operative bank carrying by the business of banking. The interest earned is also income from profits against of business and not income from other sources. The action u/s 154 by AO is not justified. It be set aside. 5. On the facts and in the circumstances of the case and in law the levy of interest u/s 234A, 234B and 234C is not justified. Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter, amend, modify, delete any or all grounds of appeal before or during the course of hearing in the interest of natural justice.

5.

The Ld. Counsel for the assessee submitted that Form No.3 had been issued by the Designated Authority under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) determining the amount payable by the assessee. Subsequently,

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Form No.4 had been filed by the assessee intimating the Designated Authority of payment of the full amount determined under Form No.3. He drew the attention of the Bench to the chronology of material events which read as under:

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6.

Referring to the provisions of section 5(3) of the DTVSV Act, he drew the attention of the Bench to the same which read as under: “Section 5(3) of the DTVSV Act, 2020: 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"

7.

He submitted that once Form No.3 was issued by the Designated Authority under section 5(1) of the DTVSV Act, the determination made therein becomes absolutely conclusive as to all matters stated therein. He submitted that section 5(3) constitutes an express and unqualified statutory bar on reopening any matter covered by that determination whether through reassessment, rectification under Section 154 or any other proceeding under the Income Tax Act. Therefore, the Assessing Officer's recourse to section 154 of the Act after the issuance of Form No.3 and after the assessee making the payment and filing Form No.4 directly violates the provisions of section 5(3) of the DTVSV Act. Such an order is wholly without jurisdiction and must be set aside. He submitted that the impugned order also does not fall within any exception under section 4(6) of the DTVSV Act. He submitted that section 4(6) of the DTVSV Act which is the only provision under which a settled determination can be disturbed, permits a declaration to be treated as never having been made in three situations namely (a) any material particular furnished in the declaration is found to be false; (b) the declarant violates any condition of the Act, or (c) the declarant acts contrary to the undertaking given

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under sub-section (5). He submitted that in the present case there is no false particulars furnished, no violation of conditions and no breach of undertaking. Therefore, in absence of any of the exceptions under section 4(6), the Assessing Officer had no authority to pass the impugned order u/s 154 and therefore, such order being without any legal basis is liable to be quashed. He submitted that if such actions u/s 154 are permitted, no declarant could ever be certain that a VSV settlement was truly final as the Revenue could at any time reopen the settled position under sections 154, 147 or any other provision of the Income Tax Act. This would render the DTVSV Act illusory and defeat its legislative mandate entirely. Referring to the following decisions, he submitted that the order passed u/s 154 being without any jurisdiction and contrary to the provisions of section 5(3) of DTVSV Act, should be set aside and the grounds raised by the assessee be allowed: i) Shetkari Shikshan Prasarak Mandal Vs. DCIT vide ITA No.2176/PUN/2024 order dated 21.07.2025 ii) Satish Kumar Dhingra Vs. Asstt./DCIT reported in (2024) 166 taxmann.com 2001 (Del) iii) Rajpal Lakhmichand Arya Vs. PCIT-3, Pune & Ors. vide W.P. No.5212 of 2022 order dated 27.01.2023.

8.

The Ld. DR on the other hand submitted that during the VSV proceedings it was found that brought forward business losses of Rs.1,43,93,864/- were erroneously adjusted against the income from other sources and the income from short term capital gain in the order passed u/s 154 dated 17.03.2020 and this being a mistake apparent from record, rectification proceedings were initiated. He

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submitted that during the rectification proceedings the Assessing Officer after giving due opportunity of being heard to the assessee has passed the order u/s 154 and disallowed the brought forward business losses of Rs.1,43,93,864/- stating therein that the brought forward losses can be set off from the same head only. He submitted that the income is chargeable on real income theory which means that correct income is to be charged for taxation. He submitted that erroneous set off of losses in 154 order is essentially a mistake apparent from record which was rightly taken care in the subsequent order u/s 154 dated 14.02.2022. He submitted that the VSVS order must be passed in the right spirit of law with correct income and the correct income is the essence of any order. He submitted that there is no bar in the provisions of the Act not to pass order u/s 154 after VSVS application filed nor the provisions of section 154 expressly prohibit so. He accordingly submitted that the order of the Ld. CIT(A) / NFAC being in accordance with law should be upheld and the grounds raised by the assessee be dismissed.

9.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case is a Co-operative bank i.e. society registered under the Maharashtra State Co-operative Societies Act and under the Banking Regulation Act, 1948 to carry on banking business. Original assessment order was passed u/s 143(3) of the Act on 30.11.2015 determining the

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total income of the assessee at Rs.1,99,63,846/- against the returned business loss of Rs.2,09,78,656/-. In appeal, the Ld. CIT(A) / NFAC gave part relief to the assessee by deleting the addition of Rs.7,69,736/- on account of amortization of premium on GOI securities and general provision / loss reserves. The assessee filed an appeal before the Tribunal. However, the assessee filed an application withdrawing the appeal filed by it and the Tribunal vide ITA No.1179/PUN/2017 order dated 25.11.2020 allowed the application of the assessee withdrawing the appeal and accordingly the appeal was dismissed as ‘withdrawn’. The Assessing Officer while giving effect to the order of the Ld. CIT(A) dated 20.02.2017 did not allow carry forward losses to the tune of Rs.1,94,19,172/- (business loss of Rs.1,46,18,926/- & depreciation of Rs.48,00,246/-) from the current assessed income of Rs.1,99,19,172/- on the ground that brought forward business loss is not to be allowed against the income from Short term capital gain and the income from other sources. We find the assessee filed a rectification application on 18.06.2018 u/s 154 requesting the Assessing Officer to rectify the mistakes and allow carry forward losses accordingly. We find the Assessing Officer passed the rectification order u/s 154 on 17.03.2020 wherein he allowed carry forward losses of Rs.1,91,94,110/- (business loss of Rs.1,43,93,864/- and depreciation of Rs.48,00,246/-) against the income from other sources. We find the assessee thereafter filed an application under VSVS before the CIT-3, Pune who issued Form No.3 and thereafter the assessee paid the taxes and intimated the same by submitting Form No.4. Subsequenlty the Assessing Officer issued a notice u/s 154

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and rectified the order withdrawing the set off of carry forward losses of earlier year from the current year’s business income. Under these circumstances, we have to see as to whether once Form No.3 was issued by the Designated Authority under DTVSV Act, 2020 determining the amount payable by the assessee and the assessee has filed Form No.4 intimating the Designated Authority of payment of the full amount determined under Form No.3, can the Assessing Officer rectify the order u/s 154.

10.

We find an identical issue had come up before the Co-ordinate Bench of the Tribunal in the case of Shetkari Shikshan Prasarak Mandal vs. DCIT (supra). The Tribunal, following the decision of the Hon’ble Delhi High Court in the case of Satish Kumar Dhingra Vs. Asstt./DCIT (supra) has held that no rectification order can be passed u/s 154 in such a situation. It has been held in various decisions that once an assessee opts for VSVS, 2020 for which the Designated Authority has issued Form No.3 and the assessee has paid the taxes and filed Form No.4 before the Designated Authority intimating the payment of such taxes, then in such a situation no proceedings u/s 154 are permissible. Since the assessee in the instant case has filed an application under DTVSV, 2020 and the Designated Authority has issued Form No.3 determining the amount payable by the assessee and the assessee has filed Form No.4 intimating the Designated Authority of payment of the full amount determined in Form No.3, therefore, no rectification proceedings in

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our opinion are permissible in the instant case. We, therefore, set aside the order of the Ld. CIT(A) / NFAC and allow the grounds raised by the assessee.

11.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open Court on 27th July, 2026.

Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 27th July, 2026 GCVSR Gajjala Chinna Digitally signed by Gajjala Chinna Venkata Subba Reddy Venkata Subba Reddy Date: 2026.07.27 14:36:25 +05'30' आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘A’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

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S.No. Details Date Initials Designation 1 Draft dictated on 20.07.2026 Sr. PS/PS 2 Draft placed before author 21.07.2026 Sr. PS/PS Draft proposed & placed before 3 JM/AM the Second Member Draft discussed/approved by 4 AM/AM Second Member Approved Draft comes to the 5 Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to 9 the Office Superintendent Date on which file goes to the 10 A.R. 11 Date of Dispatch of order

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