Statutory exclusion for assessments based on incriminating search material bars DTVSV relief for those taxpayers.

Section 96 of the Finance Act, 2024 excludes from the DTVSV Scheme tax arrears arising from assessments or reassessments that are made on the basis of incriminating material discovered in searches under the Income-tax Act; where reassessments under the reassessment provisions are founded on such search-originated material (including material from third-party searches), those tax arrears fall within the statutory exclusion and are ineligible for the Scheme. Clarificatory circulars explain which assessments are treated as made on the basis of search but do not expand eligibility or override the plain statutory bar; petitioners therefore are not entitled to Scheme relief.

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Issues: Whether Section 96 of the Direct Tax Vivad Se Vishwas Scheme, 2024 (Finance Act, 2024) bars eligibility for the DTVSV Scheme of assessees whose reassessments under Section 147/148 of the Income-tax Act, 1961 emanate from incriminating material discovered during searches under Section 132/132A of the Income-tax Act, 1961, and whether clarificatory Circulars No. 12 of 2024 dated 15.10.2024 and No. 19 of 2024 dated 16.12.2024 permit such assessees to avail the Scheme.

Analysis: Section 96 of the Finance Act, 2024 excludes from the Scheme tax arrears relating to assessment years in respect of which assessments have been made under Section 143(3), Section 144, Section 147, Section 153A or Section 153C of the Income-tax Act, 1961 on the basis of search initiated under Section 132 or Section 132A of the Income-tax Act, 1961. The clarificatory entries in Circular No. 12 of 2024 (Item 6) and Circular No. 19 of 2024 (Item 40) explain which assessments are to be treated as made on the basis of search and state that such cases are barred under Section 96; they do not expand eligibility beyond the statutory bar. Where reassessment under Section 147/148 is founded on incriminating material discovered in searches of third parties under Section 132/132A and results in tax arrears, those tax arrears fall within the exclusion stipulated by Section 96. The absence of an express temporal cut-off for searches in Section 96 does not permit reading into the statute an entitlement to the Scheme when the plain statutory exclusion applies; the circulars clarify but do not override the statutory exclusion.

Conclusion: Section 96 of the Finance Act, 2024 excludes from the DTVSV Scheme tax arrears arising from assessments (including reassessments under Section 147/148) that are based on incriminating material found during searches under Section 132/132A of the Income-tax Act, 1961; the clarificatory circulars do not render such cases eligible. The writ petitions are dismissed and the petitioners are not entitled to the benefit of the DTVSV Scheme.

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