2023 (4) TMI 1252 - AT - Income Tax

Reopening of assessment after opting the VSV Scheme and finalizing thereof - HELD THAT - As carefully considered the facts of the matter and the judgment relied upon by the Ld. Counsel in the case of GopalaKrishnan Rajkumar 2022 (5) TMI 1388 - MADRAS HIGH COURT wherein as pleased to observe opting the VSV Scheme and finalizing thereof is nothing but the closure of disputes in respect of tax arrears which cannot be subsequently reopened by issuing notice u/s 263 of the Act for revising the assessment order. Needless to mention that the view is squarely applicable in favour of the assessee before us. A bare reading of the above Section, particularly, sub-section (3) of Section 5 clearly rejects restriction in reopening in any other proceeding under the Income Tax Act or under any other law for the time being in force in any matter covered by such order which has been passed under sub-section (1) determining the amount payable under this Act which has been said to be conclusive. In that view of the matter, the impugned order passed by the Ld. PCIT, is according to us, lacks jurisdiction and the same is, therefore, not sustainable in the eye of law. Thus, the impugned order is quashed. Assessee s appeal is allowed.

Summary

Issues involved:
The appeal against the order under Section 263 of the Income Tax Act, 1961, pertaining to the reopening of assessment and addition of income from share/commodity transactions.

Reopening of Assessment:
The assessment was reopened due to unexplained income from share/commodity transactions, resulting in an addition to the total income. The assessee settled the matter under the VSV Scheme, paying taxes. The Principal Commissioner of Income Tax (PCIT) believed that the addition should have been higher and directed the Assessing Officer (AO) to reexamine the issue. The PCIT set aside the matter for fresh assessment, instructing the AO to investigate the remaining correct amount and unexplained transactions.

VSV Scheme and Finality of Assessment:
The Appellate Tribunal considered the applicability of the VSV Scheme and a judgment from the Madras High Court. The Tribunal observed that finalizing the VSV Scheme closes disputes regarding tax arrears, preventing subsequent reopening of assessments under Section 263. The Tribunal found this view favorable to the assessee.

Legal Provisions and Conclusive Orders:
Section 5 of the VSV Act was examined, particularly sub-section (3), which states that orders determining the amount payable under the Act are conclusive and cannot be reopened in any other proceeding under the Income Tax Act or any other law. The Tribunal concluded that the PCIT's order lacked jurisdiction and was unsustainable in law, ultimately quashing the impugned order.

This judgment highlights the importance of finality in tax assessments, especially in cases involving settlement under the VSV Scheme. The Tribunal's decision emphasizes the binding nature of orders issued under the VSV Act, preventing subsequent challenges to settled tax disputes.