Principal CIT cannot initiate section 263 revision after settlement under Direct Tax Vivad Se Vishwas Act

ITAT Raipur quashed the revision order passed by Principal CIT under section 263 regarding addition of bogus purchases. The assessee's case had been settled under the Direct Tax Vivad Se Vishwas Act with Form 5 certificate issued by appropriate authority. Following the precedent in Pavan Kankur case, the tribunal held that once assessment order under section 143(3) was opted for settlement under DTVSV Act, Principal CIT could not subsequently initiate revisional proceedings under section 263 to disturb the settled matter. Appeal decided in favor of assessee.

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Issues Involved:
1. Legality of invoking Section 263 of the Income Tax Act.
2. Impact of the Direct Tax Vivad Se Vishwas Act (DTVSV) on Section 263 proceedings.
3. Validity of the revision order passed by the Pr. CIT.

Issue-wise Detailed Analysis:

1. Legality of Invoking Section 263 of the Income Tax Act:
The assessee contested the invocation of Section 263 by the Pr. CIT, arguing that the assessment order passed under Section 143(3) was neither erroneous nor prejudicial to the interest of the Revenue. The Pr. CIT had set aside the assessment order for fresh enquiry, which the assessee claimed was unsustainable and passed without proper appreciation of facts and evidence on record.

2. Impact of the Direct Tax Vivad Se Vishwas Act (DTVSV) on Section 263 Proceedings:
The assessee had opted for the Direct Tax Vivad Se Vishwas Act and received Form 5, indicating the settlement of the dispute. The Pr. CIT, despite being aware of this settlement, initiated proceedings under Section 263. The Tribunal found that once the assessee had opted for the DTVSV and the issue was settled, the Pr. CIT had no jurisdiction to revise the order under Section 263. This view was supported by judicial precedents, including the ITAT Bangalore decision in Pavan Kankur Vs. Pr. CIT and the Hon'ble Madras High Court judgment in Gopalkrishnan Rajkumar Vs. Pr. CIT.

3. Validity of the Revision Order Passed by the Pr. CIT:
The Tribunal noted that the Pr. CIT had initiated Section 263 proceedings after the issuance of Form 5 under the DTVSV, which was inappropriate. The Tribunal emphasized that the intention of the DTVSV was to bring closure to disputes and reduce litigation. Thus, the revision order by the Pr. CIT was quashed, and the appeal was allowed in favor of the assessee.

Conclusion:
The Tribunal concluded that the Pr. CIT was not justified in initiating proceedings under Section 263 once the assessee had opted for the DTVSV scheme. The revision order dated 23.02.2022 was quashed, and the appeal was allowed. No costs were ordered.

Order Pronouncement:
The order was pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board.

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