High Profile Softech Pvt Ltd Vs ITAT & Anr. (Delhi High Court)
The Delhi High Court allowed the writ petition filed by High Profile Softech Pvt. Ltd. concerning Assessment Year 2018-19. The petitioner submitted that an assessment order dated 24.03.2023 had been challenged before the Commissioner of Income Tax (Appeals) (CIT(A))/National Faceless Assessment Centre (NFAC). During the pendency of that appeal, the petitioner opted for settlement under the Direct Tax Vivad se Vishwas Scheme, 2024 (VSV Scheme). After issuance of Form No.2, the petitioner informed the CIT(A)/NFAC about the pending settlement proceedings and requested that the hearing of the appeal be deferred until issuance of the final settlement order. Subsequently, the petitioner deposited the amount determined by the competent authority and Form No.4 was issued on 14.05.2025.
According to the petitioner, despite being informed of the pending VSV proceedings, the CIT(A)/NFAC remanded the matter to the Assessing Officer instead of disposing of the appeal in accordance with the Scheme. The petitioner challenged that order before the Income Tax Appellate Tribunal, contending that the demand already stood modified and satisfied under the VSV Scheme and that the CIT(A)/NFAC’s order deserved to be set aside. However, the Tribunal dismissed the appeal as withdrawn, and a miscellaneous application filed thereafter was also dismissed.
The petitioner argued before the High Court that, because of the orders passed by the CIT(A)/NFAC and the Tribunal, concluded assessment proceedings had effectively been revived despite the assessment attaining finality under the VSV Scheme. It was further contended that the Tribunal had erred in failing to set aside the order dated 07.03.2025 passed by the CIT(A)/NFAC.
On behalf of the Revenue, the learned Senior Standing Counsel did not advance any valid argument supporting the approach adopted by the CIT(A)/NFAC and the Tribunal.
The High Court observed that the petitioner’s application under the VSV Scheme had been accepted, the requisite amount had been paid, and Form No.4 had been issued on 14.05.2025. Consequently, the adjudication or assessment for the relevant assessment year became conclusive and final. The Court further noted that it was undisputed that, after issuance of Form No.2 dated 16.01.2025, the Appellate Authority had been informed of the pending settlement proceedings and had been requested to defer the appeal until issuance of the final settlement order. Instead, the CIT(A)/NFAC decided the appeal, set aside the assessment order, and remanded the matter to the Assessing Officer.
The Court observed that, although the order of the CIT(A)/NFAC technically preceded the issuance of Form No.4 and therefore could not strictly be termed illegal on that basis, the Appellate Authority, after being informed of the filing of the application under the VSV Scheme and issuance of Form No.2, ought to have refrained from deciding the appeal. The Court held that, once Form No.4 was issued, the appeal should have been disposed of as withdrawn instead of being decided on merits. The Court further observed that the approach adopted by the CIT(A)/NFAC had resulted in multiplicity of litigation and unnecessary proceedings for the assessee.
Accordingly, the High Court quashed and set aside the order dated 07.03.2025 passed by the CIT(A)/NFAC and the Tribunal’s orders dated 29.09.2025 and 08.05.2026 as being contrary to the spirit of the VSV Scheme. The Court also quashed all consequential proceedings and orders arising from the CIT(A)/NFAC’s order. It held that the certificate in Form No.4 dated 14.05.2025 would remain conclusive in terms of the Scheme. The writ petition was allowed, and all pending applications were disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Ms. Rano Jain, learned Counsel for the petitioner, informs the Court that for the Assessment Year 2018-19, the petitioner’s assessment order was made on 24.03.2023, whereagainst an appeal was preferred before the Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘CIT(A)’)/National Faceless Assessment Centre (hereinafter referred to as ‘NFAC’).
2. During the pendency of the above appeal, the petitioner applied under the Direct Tax Vivad se Vishwas Scheme, 2024 (hereinafter referred to as ‘VSV Scheme’) and paid the applicable amount determined by the competent authority after issuance of Form No.2 and Form No.4, in turn, was issued on 14.05.2025. She submitted that though such fact was duly brought to the notice of CIT(A)/NFAC yet, instead of deferring the hearing and disposing it of as per the provisions of the VSV Scheme, he remanded the matter back to the Assessing Officer.
3. Against the aforesaid order of CIT(A)/NFAC, the petitioner preferred an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as ‘Tribunal’) with a prayer that the order of the CIT(A)/NFAC be set aside as the petitioner’s entire demand stands modified/satisfied in terms of the settlement under VSV Scheme. She further submitted that to utter surprise of the petitioner, the Tribunal, instead of passing an order in accordance with law, has dismissed the petitioner’s appeal as withdrawn.
4. Learned Counsel for the petitioner further submitted that to the petitioner’s dismay, even the miscellaneous application, which it had filed, also came to be dismissed.
5. Learned Counsel argued that as a consequence of the order passed by the Tribunal and the CIT(A)/NFAC, the petitioner’s concluded assessment proceedings stands revived in spite of the fact that the same has attained finality by virtue of the order passed under the VSV Scheme. She further submitted that the Tribunal has seriously erred in not setting aside the order dated 07.03.2025 passed by the CIT(A)/NFAC.
6. Mr. Shlok Chandra, learned Senior Standing Counsel for the Department, had no valid argument to support such an approach of the CIT(A)/NFAC and the Tribunal.
7. Having heard learned Counsel for the parties, we find that the fact that the petitioner’s application for settlement of the dues under VSV Scheme had been accepted and the fact that due amount had been deposited and Form No.4 has been issued on 14.05.2025, the adjudication or assessment for that particular year became conclusive and final.
8. It is admitted case of the parties that once Form No.2 was issued to the petitioner, the Appellate Authority i.e., CIT(A)/NFAC was informed and it was prayed that hearing of the appeal be deferred until issuance of final settlement order and then the appeal be disposed of in terms of the settlement. However, the Assessing Authority did not do what was expected of him. As a result thereof, before the petitioner’s right could be crystallized under the VSV Scheme, the CIT(A)/NFAC decided the petitioner’s appeal and set aside the assessment order and remanded the same back to the Assessing Officer.
9. Technically speaking, since the CIT(A)/NFAC’s order preceded the final order or issuance of Form No.4, the said order may not be said to be illegal. However, considering the mandate of law, we are of the view that the CIT(A)/NFAC, having learnt about the factum of filing of application under the VSV Scheme and Form No.2 dated 16.01.2025 having been issued and produced, respondent ought to have stayed his hands off and rather than deciding the appeal, he should have disposed the appeal as withdrawn, once Form no.4 was issued.
10. The approach of the CIT(A)/NFAC has resulted in multiplicity of litigation and unwarranted proceedings to be taken up by the assessee.
11. The impugned order dated 07.03.2025 passed by the CIT(A)/NFAC and order of the Tribunal dated 29.09.2025 and 08.05.2026 are, therefore, quashed and set aside being contrary to the spirit of VSV Scheme. Consequential proceedings and order, if any, in furtherance of order dated 07.03.2025 passed by the CIT(A)/NFAC are also hereby quashed and set aside.
12. It is held that the certificate/Form No.4 dated 14.05.2025 shall remain conclusive, albeit in terms of the Scheme.
13. The writ petition stands allowed accordingly. All pending applications are also disposed of.
