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2023 (10) TMI 42 - HC - Income TaxRevision u/s 263 - settlement of dispute under the Direct Tax Vivad Se Vishwas Act - Whether 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? - HELD THAT - As decided in case of Gopalakrishnan 2022 (5) TMI 1388 - MADRAS HIGH COURT once the petitioners had opted to settle the dispute under the Direct Tax Vivad Se Vishwas Act, 2020, the proceedings initiated under Section 263 have to go. If on the other hand the respective petitioners had not filed Form 1 and 2 or not accepted with the issue of Form 3, the Impugned Notice seeking to re-open the assessment under Section 263 of the Income Tax Act, 1961 could be justified. Tribunal therefore cannot be faulted for allowing the appeal of the assessee as it was not open for the authorities to initiate proceedings under Section 263 of the Act, when they were barred.
Issues Involved:
1. Justification of quashing the order under Section 263 of the Income Tax Act by the Appellate Tribunal. 2. Validity of the Assessment Order passed by the AO. 3. Applicability of the VSV Scheme and its impact on reopening cases under Section 263. 4. Adequacy of inquiry conducted as per the Apex Court's order. Summary: Issue 1: Justification of Quashing the Order under Section 263 The Appellate Tribunal quashed the order under Section 263 of the Income Tax Act by the Ld. PCIT. The Tribunal held that the opting of 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 under Section 263 for revising the assessment order. The Tribunal found that the impugned order passed by the Ld. PCIT lacked jurisdiction and was not sustainable in the eye of law. Issue 2: Validity of the Assessment Order The Tribunal observed that the Assessment Order passed by the AO was unsustainable in law. The Pr. CIT noted that the whole transaction of shares amounting to Rs.1,41,55,592/- was unexplained and required to be taxed under Section 68 of the Act, as the assessee did not file any details thereof. The total transaction value exceeded the threshold limit prescribed under Section 44AD. The Assessing Officer failed to consider this issue while finalizing the assessment, rendering the order erroneous and prejudicial to the interest of revenue. Issue 3: Applicability of the VSV Scheme The Tribunal referred to the judgment of the Madras High Court in the case of Gopalakrishnan vs. PCIT, which interpreted Section 5 of the VSV Act. It was held that the VSV Scheme's finality precludes reopening any matter covered by the order under any other proceeding under the Income Tax Act or any other law. The Tribunal concluded that the authorities were barred from initiating proceedings under Section 263 of the Act, especially when the issues were already settled under the VSV Scheme. Issue 4: Adequacy of Inquiry The Tribunal considered the order of the Apex Court in the case of Commissioner of Income Tax Vs. M/s. Paville Projects Pvt. Ltd. It was noted that there was gross inadequacy in the inquiry conducted. However, the Tribunal held that the initiation of proceedings under Section 263 was not justified, as the issues were already settled under the VSV Scheme. Conclusion: The High Court found that the Tribunal rightly quashed the order under Section 263 of the Income Tax Act. The appeal did not involve any substantial question of law and was accordingly dismissed. The Tribunal's decision was based on the finality of the VSV Scheme and the lack of jurisdiction for reopening settled disputes under Section 263.
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