VDIS immunity under an operative certificate blocked reassessment and addition of disclosed income.

A declaration accepted under the Voluntary Disclosure of Income Scheme, 1997, accompanied by an operative certificate under section 68(2), could not be disregarded by the Assessing Officer or treated as void ab initio merely by invoking section 78(b). Because the certificate had not been cancelled or withdrawn by the competent authority, the disclosed income could not be reopened under section 148 or added back without a valid legal basis to deny the scheme's immunity. The Tribunal also noted that the assessee was not shown to have been facing prosecution in a manner that defeated the declaration when it was made and accepted, and the reassessment notice and consequential addition were therefore unsustainable.

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Issues: Whether reassessment under section 148 of the Income-tax Act, 1961, and addition of income disclosed under the Voluntary Disclosure of Income Scheme, 1997, were valid when the certificate issued under section 68(2) remained operative and section 78(b) was relied upon to deny immunity.

Analysis: The declaration under the Voluntary Disclosure of Income Scheme, 1997 had been accepted and the certificate issued under section 68(2) was never cancelled or withdrawn by the competent authority. The Tribunal accepted the finding that section 78(b) dealt with denial of immunity in relation to specified prosecutions and did not authorise the Assessing Officer to treat the declaration as void ab initio or to ignore the operative certificate. On the facts, the Tribunal also accepted that the assessee was not shown to have been facing prosecution in a manner that would defeat the declaration when it was made and accepted. Following the jurisdictional High Court, the Tribunal held that the reassessment notice and the consequential addition of the VDIS-disclosed amount could not be sustained.

Conclusion: The reassessment and the addition of the VDIS-disclosed amount were invalid; the issue was decided in favour of the assessee.

Ratio Decidendi: A declaration accepted under the Voluntary Disclosure of Income Scheme, 1997 cannot be ignored by the Assessing Officer or treated as void ab initio unless the certificate issued under section 68(2) is cancelled or withdrawn by the competent authority, and the disclosed income cannot be reassessed in the absence of a valid legal basis to deny the scheme's immunity.

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