Assessing Officer Has No Jurisdiction To Reopen Assessment If Dispute Is Settled Under Kar Vivad Samadhan Scheme: Bombay High Court

The Bombay High Court has held that there is no jurisdiction for an assessing officer to reopen an assessment if a dispute is settled under the Kar Vivad Samadhan Scheme (KVSS).

The bench of Justice K. R. Shriram and Justice M. M. Sathaye has observed that upon a declaration being made, tax arrears being determined, and paid, and a certificate issued under the KVSS, there is no jurisdiction for the Assessing Officer to reopen the assessment by a notice except where it is found that any material particular furnished in the declaration is found to be false.

The petitioner has challenged the action of the respondent or department seeking to reopen the petitioner's completed assessment for the assessment year 1992-1993. Despite repeated requests to provide reasons to believe, the petitioner was not provided with them.

While the three appeals were pending, the Finance Act of 1998 introduced the Kar Vivad Samadhan Scheme. The object of the KVSS was to de-clog the system of litigation by giving assessees an opportunity to finally settle all the tax issues relating to an assessment year upon payment of certain amounts.

The KVSS enabled assessees who had tax arrears and whose appeals were pending to make a full and final settlement by following the procedure set out in the KVSS. The period of operation of the scheme was also extended from December 31, 1998, to January 31, 1999.

The petitioner, as per the requirements of the KVSS, filed a declaration in prescribed Form 1A under Section 89 read with Section 88 of the Finance Act.

The petitioner submitted that the assessment for the entire year was settled by following the provisions of the KVSS, and the Designated Authority, after application of mind, had made an order under Section 90, which has been complied with by making payment of the tax computed under the KVSS. There was no question of reopening any issue that was the subject matter of the order of the designated authority.

The respondent contended that there was a misdeclaration. Under Section 90(1) of the KVSS, the proviso provides that if there is any misdeclaration, then the declaration shall be presumed to have never been made.

The court held that the reopening of the assessment was merely on the basis of a change of opinion by the Assessing Officer, and that does not constitute justification or reasons to believe that income chargeable to tax has escaped assessment.

Case Title: Citibank N.A. Versus S.K. Ojha

Case No.: Writ Petition No.2189 Of 2000

Date: 09/06/2023

Counsel For Appellant: Percy Pardiwalla

Counsel For Respondent: Suresh Kumar

Click Here To Read The Order