Kavumkal Road Builders Vs ITO (Kerala High Court)
Conclusion: Mere initiation of reassessment proceedings, which remain unfinalized, could not be a ground to deny an assessee the benefits available under the Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024.
Held: Assessee – Builders had challenged the denial of relief under both the Vivad Se Vishwas Scheme, 2020, and the subsequent DTVSV Scheme, 2024, in relation to Assessment Year 2015-16. While their appeal against the original assessment order was pending, the government introduced both settlement schemes to resolve pending income tax disputes. Despite applying for the 2020 scheme, assessee’s payment was delayed due to serious health issues, leading to the rejection of the benefit as the payment was not made within the stipulated statutory time, nor within the extended deadline. This claim was rejected by the court, which noted that the 2020 scheme did not provide for enlargement of the time period under any circumstances, even for genuine hardships. During the pendency of the earlier writ petition, the DTVSV Scheme, 2024, was introduced, leading assessee to file a fresh application for relief under the new scheme. However, this application was rejected by the Income Tax Department on the grounds that reassessment proceedings for the same year (under Section 148 of the Income Tax Act) were pending before the High Court, and hence, the “disputed tax” was allegedly “not ascertainable.” The department relied on guidelines (Circular No. 12/2024) which state that when a writ was filed against a Section 148 notice and no consequent assessment order had been passed, the disputed tax was not ascertainable and the taxpayer would not be eligible for the scheme. It was held that Court carefully examined the scheme and the guidelines. The scheme did allow for the settlement of disputes arising from original assessment orders, even if reassessment was pending, provided the original disputed tax amount was clearly ascertainable. The Court observed that the ineligibility under the scheme, as clarified in the guidelines (Sl. No. 26), was restricted to situations where no assessment order had been passed after the issuance of a reassessment notice. In the present case, the original assessment order existed, and the disputed tax therein was ascertainable. The pendency of reassessment proceedings did not affect assessee’s right to settle the original dispute. The scheme (see Sl. No. 31 of the Circular) even contemplated cases where both original and reassessment appeals were pending, allowing taxpayers the option to settle either or both. Therefore, the mere pendency of a reassessment, which had not culminated in an order, could not be used to deny benefits under the DTVSV Scheme for the original assessment. The court further stressed that the objective of the DTVSV Scheme was to reduce pending litigation, and permitting settlement of the original assessment dispute would further that aim. The High Court thus quashed the rejection order of the Income Tax Department and directed the designated authority under the DTVSV Scheme, 2024, to consider and grant the benefit to assessee in respect of the original assessment.
