Income Tax Section 154 Cannot Override DTVSV Final Settlement, Holds HC
For the 2017–18 assessment year, taxpayer Sanjay Singh found himself in a dispute after a routine assessment under Section 143(3). To put the matter to rest, he opted for the Direct Tax Vivad Se Vishwas (DTVSV) Act, 2020, a government scheme designed to end tax litigation. He paid the settled amount, and on March 11, 2022, the department issued Form-V, the final certificate confirming the dispute was officially closed.
However, the peace didn’t last. Following a later audit objection, the Assessing Officer (AO) tried to use Section 154 to “rectify” the original assessment, essentially trying to dig up a settled grave. Despite the taxpayer’s protests, the AO issued a fresh demand notice in late 2023.
Central Issue: Can the tax department initiate rectification proceedings under Section 154 after a case has been conclusively settled and a Form-V has been issued under the DTVSV Act?
HC’s Ruling: The Jharkhand High Court sided firmly with the taxpayer. The Court ruled that the whole point of the DTVSV Act is to provide finality. Once Form-V is issued, the curtain falls on that specific assessment year.
The Court clarified that Section 154 cannot be used as a backdoor to reopen or tweak an assessment that has already reached a statutory conclusion. Relying on several legal precedents, the High Court emphasized that the issuance of the settlement certificate signifies a total closure of the dispute. Consequently, the Court quashed the rectification order and the fresh tax demand, allowing the writ petition.
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