Eligibility for settlement under tax dispute schemes is upheld even when a draft assessment order exists, provided a writ petition is pending, which confirms a disputed tax situation.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. Manish J. Shah for the petitioner, learned Senior Standing Counsel Ms. Maithili Mehta for respondent No.1 and learned Senior Standing Counsel Mr. Varun Patel for respondent No.2.

2. Rule returnable forthwith. Learned Senior Standing Counsels for the respondents waive service of notice of rule on behalf of the respective respondents.

3. Having regard to the controversy involved which is in narrow compass, with the consent of the learned advocates for the parties, the matter is taken up for hearing.

4. This petition is preferred to challenge the order rejecting the application filed by the petitioner under section 91 of the Finance (No.2)Act,2024 denying the benefit under the Direct Tax Vivad Se Vishwas Scheme,2024 [‘DTVSV Scheme’ for short].

5. The petitioner has also preferred Special Civil Application No. 6458/2022 challenging the notice issued under section 148 of the INCOME TAX ACT , 1961 [for short ‘the Act’] dated 31.03.2021 for the Assessment Year 2015-16. This Court, by order dated 30.03.2022, has stayed further proceedings pursuant to the notice under section 148 of the Act for reopening of the assessment.

6. However, the respondent-Assessing Officer passed a draft assessment order on 30.03.2022 and no final assessment order was passed in view of the interim order granted by this Court in Special Civil Application No. 6458/2022.

7. It is the case of the petitioner that for the Assessment Year 2015-16, the petitioner filed return of income on 18.09.2015 declaring total income of Rs. 1,19,413/- and thereafter, a notice under section 148 of the Act was issued on 31.03.2021. The petitioner filed the return in response to the said notice on 12.01.2022.

7.2 Thereafter, the petitioner filed objections on 01.03.2022 which were disposed of by order dated 10.03.2022.

7.3 The petitioner challenged the order disposing of the objections along with notice issued under section 148 of the Act by preferring Special Civil Application No. 6458 of 2022.

7.4 During the pendency of the petition before this Court, DTVSV Scheme,2024 was introduced by Finance (No.2) Act,2024. The petitioner therefore, filed declaration in Form No.1 on 29.01.2025 as required under section 91 of the Finance (No.2) Act,2024 in view of the pendency of the writ petition being Special Civil Application No. 6548 of 2022 accepting the draft assessment order as final assessment order.

7.5 However, the respondent No.1- Designated Authority, however, rejected the declaration filed by the petitioner by making the following remarks on 13.02.2025:

“not eligible in DTVSV,2024 as the matter is pending with Hon’ble High Court. The case not eligible for scheme VSVS 2024.”

Being aggrieved, the petitioner has preferred this petition.

8. Learned advocate Mr. Manish Shah for the petitioner submitted that as per the Direct Tax Vivad Se Vishwas Scheme, 2024, the disputed tax is defined in clause (j) of section 89(1) of the Finance (No.2) Act,2024. It was pointed out that as per sub-clause (A), “disputed tax” means in a case where the appeal, writ petition or special leave petition is pending before the appellate forum as on the specified date, the amount of tax that is payable by the appellant if such appeal or writ petition or special leave petition was to be decided against him.

8.1 It was submitted that the petitioner was eligible to file declaration as per section 91(3) of the Scheme as the petitioner has filed writ petition before this Court challenging notice issued under section 148 of the Act and the petitioner is willing to withdraw the said petition as provided in the said section.

8.2 It was submitted that the respondent-Assessing Officer has passed the draft assessment order on 30.03.2022 whereby, liability to pay tax was crystallized subject to the objections to be raised by the petitioner as provided under section 144C of the Act. Learned advocate Mr. Shah invited attention of the Court to the draft assessment order placed