Tribunal quashes revision order for exceeding jurisdiction under Income Tax Act

The Tribunal allowed the appeal against the revision order under Section 263 of the Income Tax Act, 1961, finding that the Principal Commissioner of Income Tax exceeded jurisdiction by initiating proceedings on a matter already settled under the Direct Tax Vivad Se Vishwas Scheme, 2020. The Tribunal emphasized the finality of settlements under the VSVS Act, stating that authorities cannot revisit accepted declarations or initiate revisionary proceedings on resolved matters. Consequently, the revision order was quashed, highlighting the limitations on the powers of authorities in such cases.

---

---

Issues:
Appeal against revision order under Section 263 of the Income Tax Act, 1961.

Analysis:
1. The appeal challenges the revision order by the Principal Commissioner of Income Tax, Chennai-3 under Section 263 of the Income Tax Act, 1961, concerning an assessment for the Assessment Year 2017-18. The appellant asserts that the issue in question was already resolved and closed under the Direct Tax Vivad Se Vishwas Scheme, 2020, through Form No. 5 issued by the Revenue Department on 23.04.2021.

2. The appellant argues that the PCIT erred in not considering the provisions of Section 5(3) of the VSVS Act 2020, which states that orders passed under the Act shall be conclusive, and no matter covered by such order shall be reopened in any other proceeding. Additionally, the appellant highlights that an appeal was filed before the CIT(A) against the impugned order, further supporting the contention that the issue was already addressed and closed.

3. The Tribunal reviewed the facts and contentions presented by both parties. The Assessing Officer had disallowed expenses related to exempt income under Section 14A of the Act, and the PCIT set aside the assessment order for a correct re-computation of the disallowance under Rule 8D of the Rules. However, the PCIT's order lacked detailed findings on the erroneous aspects of the assessment or how the expenses were related to exempt income.

4. The Tribunal referred to a High Court case where it was held that once a matter is settled under the VSVS Act, proceedings under Section 263 of the Income Tax Act cannot be initiated on the same issue. Similarly, the Calcutta High Court emphasized that once an authority accepts a declaration under the scheme, it cannot revisit or revise that decision, as it would defeat the purpose of encouraging disclosures of undisclosed income.

5. Considering the above precedents and the lack of detailed findings in the PCIT's order, the Tribunal concluded that the PCIT exceeded jurisdiction in initiating proceedings under Section 263. Consequently, the revision order was quashed, and the appeal of the assessee was allowed.

In conclusion, the Tribunal's decision highlighted the importance of finality in settlements under the VSVS Act and emphasized that authorities cannot revisit accepted declarations or initiate revisionary proceedings on resolved matters. The judgment serves as a reminder of the limitations on the powers of authorities in such cases.

---