Declaration Under Vivad Se Vishwas Scheme Covers Only Original

Declaration Under Vivad Se Vishwas Scheme Covers Only Original Assessment, While Reassessment Addition Made Without Details Is Void

Issue

Whether a settlement declaration filed under the Direct Tax Vivad Se Vishwas Act, 2020 with respect to an original assessment order under Section 143(3) also covers additions made in subsequent reassessment proceedings under Section 147?
Whether an addition of unexplained investment under Section 69 read with Section 115BBE made during reassessment can be sustained when the Assessing Officer fails to disclose the basic particulars and identity of alleged accommodation entry providers despite specific requests from the assessee?

Facts

Original Assessment & VSV Scheme Declaration: For Assessment Year 2014-15, an original assessment order was passed under Section 143(3) involving a disputed income of ₹68.23 lakhs. The assessee filed a declaration under the Direct Tax Vivad Se Vishwas (VSV) Scheme, 2020 specifically covering this original assessment order and disputed amount.
Initiation of Reassessment: The Assessing Officer (AO) subsequently initiated reassessment proceedings under Section 147 based on allegations that the assessee made purchases from accommodation entry providers.
Denial of Natural Justice: The AO referred to alleged total purchases of about ₹6.47 crores and a proposed under-assessment of ₹1.01 crores. The assessee repeatedly and specifically requested the AO to provide basic particulars and details of the parties/transactions forming the basis of the allegation, noting that the notices lacked these details.
Addition Made: The AO ignored the request and made an addition of ₹1.01 crores as unexplained investment under Section 69 read with Section 115BBE.

Decision

Scope of VSV Scheme Settlement: The settlement under the Direct Tax Vivad Se Vishwas Act, 2020 was strictly confined to the original assessment order under Section 143(3) and the disputed income of ₹68.23 lakhs. The subsequent reassessment proceedings and the consequential addition of ₹1.01 crores were not covered under that declaration.
Violation of Natural Justice: An assessee cannot be expected to explain allegations regarding accommodation entry providers without being furnished with the fundamental particulars, names, and transaction details forming the bedrock of such allegations.
Addition Deleted: Due to the failure to supply essential material and details to the assessee despite specific requests, the addition of ₹1.01 crores under Section 69 read with Section 115BBE could not be legally sustained and was deleted.

Key Takeaways

Scope of VSV Settlement is Limited: Settlement under tax amnesty or dispute resolution schemes like VSV 2020 is strictly confined to the specific order and disputed income declared; it does not automatically grant immunity to separate or subsequent reassessment proceedings.
Mandatory Disclosure of Evidence: Revenue cannot make additions based on third-party accommodation entry allegations without confronting the assessee with exact transaction details and party identities.
Natural Justice Premise: Failure to provide the foundation material on which an addition is proposed violates natural justice principles, rendering the resulting assessment addition unsustainable in law.

IN THE ITAT MUMBAI BENCH ‘B’

Shine Star

Deputy Commissioner of Income-tax

SAKTIJIT DEY, Vice President
and G. M. DOSS, Accountant Member

IT Appeal No. 813 (Mum) of 2026
[Assessment year 2014-15]

SEPTEMBER 22, 2026

Ajay R. Singh and Akshay A. Pawar for the Appellant. Ms. Kakoli Ghosh, Sr. AR for the Respondent.

ORDER

G.M. Doss, Accountant Member. – This appeal by the assessee is directed against the order dated 14.11.2025 passed by the learned Commissioner of Income-tax (Appeals), whereby the appeal of the assessee arising from the reassessment proceedings was dismissed on the ground that the dispute stood settled under the Direct Tax Vivad Se Vishwas Scheme, 2020.

2. At the time of hearing, the learned Authorised Representative (Id.AR) submitted that the reassessment proceedings giving rise to the impugned addition of Rs.1,01,09,911/- were separate and distinct from the original assessment proceedings completed under section 143(3) of the Act vide order dated 27.12.2016, wherein an addition of Rs.68,23,155/- had been made. It was submitted that the declaration under the Direct Tax Vivad Se Vishwas Scheme, 2020 related only to the original assessment proceedings and that the subsequent reassessment proceedings were never the subject matter of settlement under the said Scheme. The Id.AR further submitted that, on merits also, the addition could not be sustained since, during the course of reassessment proceedings, the assessee had specifically requested the Assessing Officer to furnish the particulars of the parties from whom the alleged purchases were stated to have been made, but no such particulars or corresponding details were furnished. It was submitted that the assessee had thus been denied the basic information necessary to effectively explain the allegation made against it. The learned Departmental Representative (Id.DR), on the other hand, relied upon the remand report submitted by the Assessing Officer.

3. We have carefully considered the rival submissions and perused the material available on record. The original assessment for the assessment year 2014-15 was completed under section 143(3) of the Act vide order dated 27.12.2016, wherein an addition of Rs.68,23,155/- was made, being 5% of the disputed purchases of Rs.13,64,63,096/-. The assessee preferred an appeal against the said assessment order. During the pendency of that appeal, the assessee opted for settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020. The declaration filed by the assessee specifically related to Assessment Year 2014-15, section 143(3), order dated 27.12.2016 and disputed income of Rs.68,23,155/-. Form No.5 was thereafter issued on 16.02.2022. The learned CIT(A), vide order dated 24.08.2022, dismissed the appeal arising from the original assessment as withdrawn in view of the settlement under the Scheme.

4. The reassessment proceedings, however, were initiated independently and subsequently. Notice under section 148 was issued on 12.04.2021 in respect of alleged escapement of income on account of purchases from alleged accommodation entry providers. Thereafter, proceedings under section 148A were undertaken and a fresh notice under section 148 dated 28.07.2022 was issued. The reassessment proceedings culminated in an order dated 26.05.2023 passed under section 147 read with section 144B of the Act, whereby an addition of Rs.1,01,09,911/- was made under section 69 read with section 115BBE of the Act. Thus, the reassessment proceedings were distinct proceedings initiated subsequent to the original assessment and resulted in a separate addition of Rs.1,01,09,911/-. The question which arises at the threshold, therefore, is whether this subsequent reassessment proceeding and the addition made therein were also covered by the settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020.

5. On this aspect, the remand report submitted by the Assessing Officer pursuant to the directions of the Tribunal assumes significance. The Assessing Officer, upon examination records, has categorically verified that the declaration under the Direct Tax Vivad Se Vishwas Scheme was made with reference to the original assessment order dated 27.12.2016 passed under section 143(3) of the Act and the disputed income of Rs.68,23,155/- arising therefrom. The Assessing Officer has further specifically reported that the subsequent reassessment proceedings under section 147 and the consequential addition of Rs.1,01,09,911/- under section 69 did not form part of the declaration under the Scheme. The remand report also records that Form No.5 issued on 16.02.2022 pertained to the original assessment proceedings and did not extend to the subsequent reassessment proceedings. Thus, the factual verification made by the Assessing Officer himself leaves no ambiguity that the settlement under the Direct Tax Vivad Se Vishwas Scheme was confined to the original assessment dispute involving the addition of Rs.68,23,155/- and did not cover the subsequent reassessment proceedings or the addition of Rs.1,01,09,911/- made therein.

6. We find that this factual distinction had already been specifically noticed by the Tribunal in its earlier order dated 09.05.2024 passed in Shine Star v. ACIT [IT Appeal No.4742 (Mum) of 2023, dated 9-5-2024]. The Tribunal had observed that the dispute arising from the original assessment order under section 143(3) alone had been settled under the Direct Tax Vivad Se Vishwas Scheme and that the reassessment dispute had not been so settled. On that basis, the order of the learned CIT(A) was set aside and the issues relating to the reassessment proceedings were restored to the file of the learned CIT(A) for adjudication on merits. Despite the aforesaid specific direction, the learned CIT(A), vide the impugned order dated 14.11.2025, once again dismissed the appeal on the premise that the reassessment dispute also stood settled under the Direct Tax Vivad Se Vishwas Scheme. The said premise is contrary not only to the earlier finding of the Tribunal but also to the factual verification subsequently made by the Assessing Officer in the remand proceedings. In these circumstances, the impugned order of the learned CIT(A), insofar as it proceeds on the basis that the reassessment dispute stood settled under the Scheme, cannot be sustained and is liable to be treated as non est.

7. We now turn to the merits of the addition of Rs.1,01,09,911/-. From the reassessment order dated 26.05.2023, it is evident that the Assessing Officer proceeded on the allegation that the assessee had made purchases from alleged accommodation entry providers. The assessee, during the course of the reassessment proceedings, had specifically sought the particulars of the parties from whom the alleged purchases were stated to have been made and the material forming the basis of the allegation. In particular, in response to the show-cause notice dated 11.05.2023, the assessee, vide letter dated 15.05.2023, referred to the alleged purchases of Rs.6,47,16,711/- and the alleged under-assessment of income of Rs.1,01,09,911/-. The assessee specifically pointed out that nowhere in the order or notices was it mentioned to which party the alleged amount related. The assessee further referred to its earlier submissions and requested the Assessing Officer to furnish the details of the parties and the amounts pertaining to such parties.

8. Significantly, the aforesaid request of the assessee is not a matter which emerges merely from the submissions made before us. The reassessment order itself takes note of the submissions made by the assessee during the course of the proceedings. The assessee had thus placed before the Assessing Officer a specific and unequivocal request for the particulars of the parties and the transactions forming the basis of the proposed addition. However, the assessment order does not demonstrate that the particulars so sought, namely, the identity of the parties, the corresponding purchase transactions, the dates of purchases, the invoices or other transaction-wise material relied upon by the Assessing Officer, were furnished to the assessee before the addition was made. On the contrary, the Assessing Officer proceeded to hold that the assessee had not provided information regarding the alleged bogus purchases and made the addition of Rs.1,01,09,911/- under section 69 of the Act.

9. In our considered view, such approach cannot be sustained on the facts available on record. The assessee cannot be expected to satisfactorily explain an allegation relating to purchases from particular accommodation entry providers when the basic particulars of those very parties and transactions, which constituted the foundation of the allegation, were not furnished to the assessee despite a specific request. The assessee had specifically stated that the notices and proceedings did not disclose the parties to whom the alleged purchases related and had repeatedly requested the Assessing Officer to furnish such particulars. In such circumstances, the Assessing Officer could not reasonably proceed on the basis that the assessee had failed to furnish information regarding the alleged bogus purchases without first furnishing to the assessee the particulars and material on the basis of which such purchases were alleged to be bogus. The deficiency is therefore not merely one of the assessee failing to discharge an evidentiary burden; rather, the assessee was not furnished the basic particulars necessary for effectively responding to the allegation itself.

10. We further find that the reassessment order does not set out with sufficient clarity the transaction-wise basis for arriving at the figure of Rs.1,01,09,911/-. There is no proper identification in the assessment order of the parties from whom the alleged purchases were made, the corresponding dates and invoices, and the manner in which the disputed purchases were linked with the alleged accommodation entry providers. The assessee had specifically sought these particulars during the assessment proceedings. The Assessing Officer, instead of furnishing the particulars and thereafter examining the explanation of the assessee with reference to the specific transactions, proceeded to make the addition on the general observation that the assessee had not furnished sufficient documentary evidence. Such an approach, in the facts of the present case, does not provide a sustainable basis for the addition.

11. We have also taken into consideration the remand report relied upon by the Id.DR. The said report, as noted hereinabove, conclusively supports the assessee’s contention on the separate and distinct nature of the reassessment proceedings and establishes that the subsequent reassessment and the addition of Rs.1,01,09,911/- were not covered by the declaration under the Direct Tax Vivad Se Vishwas Scheme. The factual verification contained in the remand report therefore reinforces the conclusion that the learned CIT(A) proceeded on an erroneous factual premise while dismissing the appeal. However, on the merits of the addition, our conclusion is based upon the assessment record itself, particularly the specific requests made by the assessee during the reassessment proceedings and the failure to furnish the particulars sought by the assessee. The remand report merely confirms the factual distinction between the original assessment dispute settled under the Scheme and the subsequent reassessment dispute which remained to be adjudicated on merits.

12. In view of the foregoing discussion, we hold that the settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020 was confined to the original assessment proceedings under section 143(3) of the Act dated 27.12.2016 and the addition of Rs.68,23,155/- arising therefrom. The subsequent reassessment proceedings and the consequential addition of Rs.1,01,09,911/- were not covered by the said settlement. The order of the learned CIT(A), insofar as it dismissed the appeal on the contrary premise, is therefore unsustainable and is set aside.

13. On examination of the reassessment proceedings on merits, we find that the assessee had persistently sought the particulars of the parties from whom the alleged purchases were stated to have been made and the corresponding details necessary to meet the allegation. The assessee’s request is itself referred to in the reassessment order. Yet, without furnishing such particulars, the Assessing Officer proceeded to make the addition on the ground that the assessee had not furnished sufficient information and documentary evidence. In the absence of the basic particulars of the alleged transactions having been furnished to the assessee, the addition of Rs.1,01,09,911/- cannot be sustained. Accordingly, the same is deleted.