CHANDRABABU GANGADHARAN, vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX,

The present writ petition under Article 226 of the Constitution of India has been filed impugning the order dated 11.03.2022 passed by the Principal Commissioner of Income Tax, 4th Floor, Aayakar Bhavan, Thiruvananthapuram, under Section 263 of the Income Tax Act 1961 (hereinafter referred to as the ‘I.T. Act’). By the said order, the assessment order dated 30.12.2019 passed under Section 5(1) of the Direct Tax Vivad Se Vishwas Act 2020 (Act No.3 of 2020) has been partly set aside with a direction to the Assessing Officer to examine the issue regarding assessing the profit on the sale of property as income from business or profession after proper verification.

Parliament enacted Act No.3 of 2020 to resolve disputed tax and for matters connected therewith or incidental thereto. The aim and object of Act No.3 of 2020 is to bring down the litigation with taxpayers, and taxpayers can buy peace with the Department by invoking the provisions of Act No.3 of 2020. 3.1 In the present case, the scheme of Act No.3 of 2020 is that the assessee is required to file a declaration as prescribed under Section 4 of Act No.3 of 2020 before the designated authority. Upon filing such declaration, any appeal pending before the Income Tax Appellate Tribunal or the Commissioner (Appeals), in respect of disputed income or disputed interest or disputed penalty or disputed fee/tax arrears shall be deemed to have been withdrawn from the date on which the designated authority issues the certificate under sub-section (1) of Section 5. -5-

Section 5 provides the time and manner of payment of the disputed arrears of the tax, penalty and other liabilities if the competent designated authority passes an order under Section 5(1) of Act No.3 of 2020. Sub-section (3) of Section 5 puts a fetter on any authority for reopening or taking up any other proceedings regarding the matters covered by the order passed under sub-section (1) of Section 5. 4.1 Section 5 of Act No.3 of 2020 is reproduced and reads as under:

The learned Counsel for the petitioner submits that after the petitioner made the declaration in the prescribed form and manner under Section 4 and the designated authority passed the order under sub-section (1) of Section 5, the initiation of revisional proceedings under Section 263 of the I.T. Act by the same designated authority, i.e., Principal -7-

On the other hand, Mr Abraham, learned Standing Counsel for the Income Tax, has submitted that the Revenue is well within the power to reopen the assessment order passed under sub-section (1) of Section 5 of Act No.3 of 2020. Explanation to Section 5 of Act No.3 of 2020 provides that a declaration under Act No.3 of 2020 should not amount to conceding the tax position by the Income-tax authority, or it would not amount to acquiescence in the decision of the disputed issue by settling the dispute.

I have considered the submissions and the provisions of Act No.3 of 2020. I have mentioned above that the purpose of the enactment of Act No.3 of 2020 is to bring down the litigation with the taxpayers. A special scheme has -8-

1 In the present case, the designated authority has accepted the declaration and has passed the order under Section 5(1) of Act No.3 of 2020. If, after passing an order under Section 5(1), the designated authority or any other authority is given the power to reopen the assessment passed under Section 5(1), the whole purpose of the Act would become redundant, and provisions of Section 5 would be rendered otiose. The explanation on which a great emphasis has been placed by the learned Counsel for the Revenue nowhere empowers the Revenue Authorities to reopen the assessment. It is only an explanation to the extent that in any pending proceedings, i.e., writ petition, appeal, or special leave -9-