Designated Authority Has No Power to Reopen a Concluded Settlement Under DTVSV Act | HC

Case Details: S A N Garments Manufacturing (P.) Ltd. vs. PCIT - [2025] 170 taxmann.com 242 (Delhi)

Judiciary and Counsel Details

• Vibhu Bakhru, ACJ & Tushar Rao Gedela, J.
• R. Santhanam and Rishabh Ostwal, Advs. for the Petitioner.
• Puneet Rai, SSC, Ashvini Kumar, Rishabh Nangia, JSCs and Nikhil Jain, Adv. for the Respondent.

Facts of the Case

The assessee filed its return of income for the relevant assessment year and declared its income. Subsequently, notice under section 148 was issued, and the assessment was completed by making certain additions. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A).

During the pendency of the appeal, the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) was enacted. The assessee made a declaration to settle the tax arrear. The Designated Authority (DA) issued Form No. 3 and Form No. 5, determining the balance amount payable and the amount deposited by the assessee. However, the DA again issued a fresh Form No. 3, which was a modified version of the earlier Form No. 3.

Aggrieved-assessee filed a writ petition before the Delhi High Court contending that the DA had effectively sought to reopen a concluded settlement.

High Court Held

The High Court held that Section 5(2) of the DTVSV Act mandates the DA to determine the amount payable by the declarant within a period of 15 days from the date of receipt of the declaration. Rule 7 of the DTVSV Rules expressly provides that the order of the DA with respect to the payment of the amount made by the declarant as per the certificate granted under section 5(1) shall be in Form No. 5.

It is clear that once a declarant is issued a certificate (Form No. 5) in terms of section 5 of the DTVSV Act, and the declarant deposits the determined amount, the DA is proscribed from initiating any action or proceedings in respect of the ‘tax arrear’. The dispute stands settled.

It was fairly stated that no provision under the DTVSV Act empowers a Designated Authority to reopen a concluded settlement. As noted above, a plain reading of the provisions of the DTVSV Act indicates that once a final certificate is issued under section 5(1), all disputes regarding the ‘tax arrear’ stand concluded.

In the instant case, the assessee deposited the determined amount and was issued Form No. 5 by the DA. Thus, all disputes with regard to the ‘tax arrear’ stood concluded. Therefore, the issuance of the impugned certificate was without the authority of law.