SOL INDIA PRIVATE LIMITED,CHENNAI vs. PRINCIPAL COMMISSIONER OF INCOME TAX, CHENNAI 3, CHENNAI

Per Mahavir Singh, Vice President :

2 -: 2. The only issue in this appeal of assessee is against the revision order passed by PCIT u/s. 263 of the Act on the issue already resolved and closed by an order for full and final settlement under Direct Tax Vivad Se Vishwas Scheme, 2020 in Form No.5 issued by the Revenue Department vide order dated 23.04.2021. For this, the assessee has raised following four grounds:

“1. The learned PCIT has failed to consider the fact that the issue under consideration had already been resolved and closed by an order for full and final settlement under the Direct Tax Vivad Se Vishwas Act, 2020 (VSVS Act, 2020) in Form No. 5 dated 23rd April, 2021 and hence cannot be again subject to revisionary proceedings.

3. The learned PCIT had ignored the fact that the appellant had preferred an appeal before the C1T(A) against the impugned order u/s 143(3) dated 6th January, 2020 and the order dismissing the appeal was received on 12th May, 2021 pursuant to filing a request for withdrawal before the CIT(A).

“5. The submissions filed by the assessee company are carefully considered. It is seen that the Assessee had made declaration under DTVSS Act 2020 in respect of the additions made in the Assessment Order dated 07-02-2019. The protection given under the DTVSS Act is applicable only for the issues for which the assessee or the department filled^ appeal with the appellate authorities. It will not apply for the other issues.

6. In the present case, it is clear that the Assessing Officer had not made proper additions u/s.14A of the Act r.w. Rule 8D correctly. Therefore, I hereby set-aside the assessment order directing him to compute the disallowances under rule 8D correctly after affording reasonable opportunities of beard heard to the Assessee. While computing income, the balance tax and interest payable, the Assessing Officer should give proper allowance for the tax paid under the DTVSV Act, 2020.”

4. The Ld. Counsel for the assessee argued on behalf of the assessee and on the other hand, the Ld. CIT-DR argued on behalf of Revenue. We have gone through the revision order as well as the assessment order and find that the PCIT has nowhere gone into the details of expenses or given a finding how the assessment order is erroneous so far as the prejudicial to the Revenue. Even, there is no whisper about the facts how the A.O has not made proper disallowance of expenses relatable to exempt income while invoking the provisions of s. 14A of the Act r/w Rule 8D(2) of the Rules. We

4 -: have extracted the findings of PCIT and there is no whisper or no discussion at all as to how and which expenses are relatable to exempt income. Moreover, the Hon’ble Jurisdictional High Court in the case of Gopalakrishnan Rajkumar/Gopalakrishnan Ravim vs. PCIT/CIT in W.P Nos.6367 & 6368 of 2021 (Mad.) has considered the identical issue and held at Para 43 to 48 as under:

“43. Section 6 of the Direct Tax Vivad Se Vishwas Act, 2020, makes it very clear that once there is a compliance with the timeliness specified under Section (5), the designated authority shall not institute any proceedings in respect of an offence or aims or levy any penalty or charge any interest under the Income Tax in respect of the tax arrears.

5 -: 5. The Hon’ble High Court in this case has categorically held that on the very same issue, the PCIT has no power to initiate proceedings u/s. 263 of the Act.

Manju Osatwal [2022] 139 taxmann.com 376 (Calcutta) in great detail has considered this issue and finally held in para 17 & 18 as under:

“17. After going through the provisions of the scheme, this Court finds that Chapter IX of the Finance Act, 2016 is a complete code by itself. It provides an opportunity to an assessee to offer income, which was not disclosed earlier, to tax. Chapter IX provides for a special procedure for disclosure and charging income to tax. It lays down the procedure for disclosure of such income; the rate of income tax and the penalty to be levied thereupon and the manner of making such payment. Under the said scheme the competent authority has been vested with the power to accept the declaration made by the assessee and such power to be exercised only upon being satisfied with such disclosure. It is also open to such authority not to accept such declaration. But once accepted, the same attains finality. The scheme does not empower and/or authorise the competent authority to reopen and/or revise a decision taken on such declaration. It is well settled that a statutory authority has to function within the limits of the jurisdiction vested with him under the statute. Thus, once the declaration is accepted by the PCIT such authority is estopped from taking any steps which would in effect amount to reopening and/or revising the decision already taken on such declaration. The said scheme was introduced in order to encourage an assessee to make a disclosure of the income not disclosed earlier. PCIT in the instant case invoked its power under section 263 in respect of an item of income which was declared in terms of the said scheme. All particulars were available before the PCIT in respect of such income and the PCIT upon being satisfied, accepted such declaration. Thus, if the contention of the revenue is accepted that the PCIT has power to invoke section 263 of the I.T. Act the same, in our considered view, would frustrate the object behind introduction of such Scheme. The PCIT was not justified in invoking the power under section 263 of the I.T. Act as it would amount to revising a decision taken by the PCIT on such declaration by the assessing officer which is not contemplated under the Income Tax Act.

Order pronounced in the Open Court on 18th August, 2022.