Once DTVS Scheme declaration is accepted and Form 2 issued

Once DTVS Scheme declaration is accepted and Form 2 issued, CIT(A) must defer proceedings and dismiss appeal as withdrawn upon Form 4 issuance

Issue

Whether the CIT(A)/NFAC can adjudicate an appeal on merits and remand the matter to the Assessing Officer when the assessee has already settled the dispute under the Direct Tax Vivad se Vishwas Scheme, 2024, and Form No. 2/Form No. 4 have been issued.

Facts

Pendency of Appeal: For Assessment Year 2018-19, the assessee filed an appeal before the CIT(A)/NFAC against the assessment order passed by the Assessing Officer.
Opting for Settlement Scheme: During the pendency of the appeal, the assessee opted to settle the dispute under the Direct Tax Vivad se Vishwas Scheme, 2024 (Scheme).
Issuance of Forms and Payment: Pursuant to the declaration, Form No. 2 was issued by the designated authority, and the assessee duly deposited the determined tax amount.
Intimation to CIT(A): The assessee formally informed the CIT(A)/NFAC regarding the issuance of Form No. 2 and requested the authority to defer the appeal hearings until the final settlement (Form No. 4) was issued.
Order by CIT(A): Ignoring the pending settlement under the Scheme, the CIT(A)/NFAC proceeded to decide the appeal on merits, set aside the assessment order, and remanded the matter back to the Assessing Officer.
Appeal to Tribunal: Upon the issuance of Form No. 4, the assessee moved the ITAT seeking setting aside of the CIT(A)’s order on the grounds that the dispute stood fully satisfied. However, the Tribunal dismissed the appeal as withdrawn.

Decision

Lack of Jurisdiction Post-Settlement: Once a declaration under the Scheme is accepted and Form No. 2 is issued, the underlying dispute stands settled in principle, concluding the scope for further re-adjudication.
Duty of Appellate Authorities: Upon being informed of an application under the Scheme, the CIT(A)/NFAC ought to stay its hands and defer proceedings, disposing of the appeal as withdrawn once Form No. 4 is issued.
Quashing of Orders: The orders passed by both the Tribunal and the CIT(A)/NFAC, along with all consequential remand proceedings, were quashed and set aside.
Finality of Settlement: The settlement under Form No. 4 issued to the assessee was held to remain final and conclusive.

Key Takeaways

Binding Nature of Statutory Settlement: A valid settlement reached under the Direct Tax Vivad se Vishwas Scheme, 2024 takes precedence over regular appellate proceedings for the relevant assessment year.
Procedural Deferment: Appellate authorities (CIT(A)/NFAC/ITAT) are obligated to keep appeals in abeyance once informed of an active declaration under the Scheme until the final certificate (Form No. 4) is issued.
Protection Against Parallel Proceedings: Remanding an assessment or deciding an appeal on merits after full settlement and payment under the Scheme is bad in law, protecting taxpayers from double jeopardy or renewed litigation on settled matters.

HIGH COURT OF DELHI

High Profile Softech (P.) Ltd.

Income Tax Appellate Tribunal

Dinesh Mehta and Rajneesh Kumar Gupta, JJ.

W.P.(C) No. 9118 OF 2026
CM APPL. NOs.42759 and 42760 OF 2026

JULY 10, 2026

Ms. Rano Jain, Venketesh Chaurasia, Ms. Mansi Jain and Tanish Ahuja, Advs. for the Petitioner. Shlok Chandra, SSC, Ms. Naincy Jain, Ms. Madhavi Shukla, JSCs and Udit Dad, Adv. for the Respondent.

ORDER

1. Ms. Rano Jain, learned Counsel for the petitioner, informs the Court that for the Assessment Year 2018-19, the petitioner’s assessment order was made on 24.03.2023, whereagainst an appeal was preferred before the Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘CIT(A)’)/National Faceless Assessment Centre (hereinafter referred to as ‘NFAC’).

2. During the pendency of the above appeal, the petitioner applied under the Direct Tax Vivad se Vishwas Scheme, 2024 (hereinafter referred to as ‘VSV Scheme’) and paid the applicable amount determined by the competent authority after issuance of Form No.2 and Form No.4, in turn, was issued on 14.05.2025. She submitted that though such fact was duly brought to the notice of CIT(A)/NFAC yet, instead of deferring the hearing and disposing it of as per the provisions of the v. Scheme, he remanded the matter back to the Assessing Officer.

3. Against the aforesaid order of CIT(A)/NFAC, the petitioner preferred an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as ‘Tribunal’) with a prayer that the order of the CIT(A)/NFAC be set aside as the petitioner’s entire demand stands modified/satisfied in terms of the settlement under v. Scheme. She further submitted that to utter surprise of the petitioner, the Tribunal, instead of passing an order in accordance with law, has dismissed the petitioner’s appeal as withdrawn.

4. Learned Counsel for the petitioner further submitted that to the petitioner’s dismay, even the miscellaneous application, which it had filed, also came to be dismissed.

5. Learned Counsel argued that as a consequence of the order passed by the Tribunal and the CIT(A)/NFAC, the petitioner’s concluded assessment proceedings stands revived in spite of the fact that the same has attained finality by virtue of the order passed under the v. Scheme. She further submitted that the Tribunal has seriously erred in not setting aside the order dated 07.03.2025 passed by the CIT(A)/NFAC.

6. Mr. Shlok Chandra, learned Senior Standing Counsel for the Department, had no valid argument to support such an approach of the CIT(A)/NFAC and the Tribunal.

7. Having heard learned Counsel for the parties, we find that the fact that the petitioner’s application for settlement of the dues under v. Scheme had been accepted and the fact that due amount had been deposited and Form No.4 has been issued on 14.05.2025, the adjudication or assessment for that particular year became conclusive and final.

8. It is admitted case of the parties that once Form No.2 was issued to the petitioner, the Appellate Authority i.e., CIT(A)/NFAC was informed and it was prayed that hearing of the appeal be deferred until issuance of final settlement order and then the appeal be disposed of in terms of the settlement. However, the Assessing Authority did not do what was expected of him. As a result thereof, before the petitioner’s right could be crystallized under the v. Scheme, the CIT(A)/NFAC decided the petitioner’s appeal and set aside the assessment order and remanded the same back to the Assessing Officer.

9. Technically speaking, since the CIT(A)/NFAC’s order preceded the final order or issuance of Form No.4, the said order may not be said to be illegal. However, considering the mandate of law, we are of the view that the CIT(A)/NFAC, having learnt about the factum of filing of application under the v. Scheme and Form No.2 dated 16.01.2025 having been issued and produced, respondent ought to have stayed his hands off and rather than deciding the appeal, he should have disposed the appeal as withdrawn, once Form no.4 was issued.

10. The approach of the CIT(A)/NFAC has resulted in multiplicity of litigation and unwarranted proceedings to be taken up by the assessee.

11. The impugned order dated 07.03.2025 passed by the CIT(A)/NFAC and order of the Tribunal dated 29.09.2025 and 08.05.2026 are, therefore, quashed and set aside being contrary to the spirit of v. Scheme. Consequential proceedings and order, if any, in furtherance of order dated 07.03.2025 passed by the CIT(A)/NFAC are also hereby quashed and set aside.

12. It is held that the certificate/Form No.4 dated 14.05.2025 shall remain conclusive, albeit in terms of the Scheme.

13. The writ petition stands allowed accordingly. All pending applications are also disposed of.