An Assessment Order Kept in Abeyance by a Court Interim Order Still Legally Exists for the Vivad Se Vishwas Scheme

By | June 18, 2026
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An Assessment Order Kept in Abeyance by a Court Interim Order Still Legally Exists for the Vivad Se Vishwas Scheme

Issue

Whether an assessment order that has been passed but is temporarily held from being implemented due to a High Court’s interim direction can be considered “non-existent,” thereby disqualifying the assessee from opting for the Direct Tax Vivad Se Vishwas Scheme, 2024.

Facts

  • The petitioner filed an application to settle a tax dispute under the Direct Tax Vivad Se Vishwas Scheme, 2024.

  • The Income Tax Department rejected the petitioner’s application via an intimation/order dated March 19, 2025, on the sole ground that no valid assessment order was legally in existence on the date the application was filed.

  • Historically, the High Court had issued an interim order on February 24, 2023, permitting the Assessing Officer (AO) to continue the reassessment proceedings but explicitly directing that any adverse assessment order passed “shall not be given effect to.”

  • In compliance with this direction, the AO had completed the assessment and passed an order, but kept its execution and recovery in abeyance.

Decision

  • Decided partly in favor of the assessee. The High Court set aside the rejection order and granted the petitioner the liberty to apply under the Vivad Se Vishwas Scheme, 2024.

  • The court held that on the date the application was filed, the assessment order had already been physically and legally passed by the AO. It was not implemented solely because of the High Court’s restrictive interim order.

  • The expression “shall not be given effect to” simply means that recovery or penalty proceedings cannot be initiated by the department; it does not wipe out the physical or legal existence of the order itself.

  • There is a subtle yet substantial legal difference between the enforceability of an order and its existence. An order can exist without being immediately enforceable.

Key Takeaways

  • Existence vs. Enforceability: A judicial stay or interim block on a tax order merely suspends its operational enforcement (such as demand recovery). It does not erase the order from the record or invalidate its existence.

  • Liberal Interpretation of Settlement Schemes: Beneficial amnesty and dispute resolution frameworks like the Vivad Se Vishwas Scheme must be interpreted to advance settlement. The revenue cannot use technicalities—such as a court-mandated freeze on an order’s enforcement—to deny a taxpayer entry into the scheme.

HIGH COURT OF DELHI
Tarik Handa
v.
ITO*
Dinesh Mehta and Vinod Kumar, JJ.
W.P. (C) No. 7256 OF 2025
CM APPL. No. 32671 OF 2025-STAY
MAY  22, 2026
Ruchesh Sinha and Ms. Monalisa Maity, Advs. for the Petitioner. Gaurav Gupta, SSC, Shivendra Singh and Yojit Pareek, JSCs for the Respondent.
ORDER
1. By way of the present writ petition, the petitioner has challenged the intimation/order dated 19.03.2025 (Annexure-1 being a screenshot), which reflected that the petitioner’s application under Direct Tax Vivad se Vishwas Scheme, 2024 (hereinafter referred to as ‘the Scheme of 2024’) has been rejected.
2. The petitioner has asserted that though no copy of order etc. was supplied/served to him, but it was only pursuant to queries raised by the petitioner, he was informed that the Competent Authority had rejected his application because, on the date of filing of the application, no assessment order was in existence.
3. Learned counsel for the petitioner submitted, that on previous occasion the petitioner had preferred a writ petition being W.P.(C) 2370/2023, wherein an interim order dated 24.02.2023 was passed by the High Court to the effect that the Assessing Officer shall be at liberty to continue with the reassessment proceedings, but in case any assessment order being adverse to the interest of the petitioner is passed, it shall not be given effect to.
4. Learned counsel submitted that such stipulation made in the order passed by this Court, led the Competent Authority to form an opinion that, on the date when the application was filed, no assessment order was in existence.
5. There is no gainsaying the fact that subsequently, the petitioner had withdrawn the said application. Hence, technically, rather hyper technically speaking, the Competent Authority might be correct, but legally and purposively, it was not. Because, on the date when the application was filed, an assessment order had already been passed and it was only because of the interim order (dated 24.02.2023) passed by this Court, the same was not given effect to.
6. The expression ‘not be given effect to’ means that the recovery proceedings and penalty proceedings, if any, shall not be initiated. But the existence of the order cannot be denied – there is a subtle yet substantial difference between enforceability of an order vis-a-vis existence. Be that as it may.
7. Learned counsel for the petitioner at this juncture informed that the right of the petitioner to apply under the Scheme of 2024 has since expired, hence, he cannot apply afresh. He also submitted that since the petitioner’s application has been rejected, his second application will not be entertained.
8. Having regard to the facts noted above, we allow the petitioner a liberty to apply under the Scheme of 2024. The application be filed latest by 15.06.2026. In case, the facility or option of filing the application form electronically, is not prevalent, the concerned PCIT shall allow the petitioner to file an application physically.
9. Writ petition stands allowed partly.