Two years after Form 5 the Assessing Officer has issued a section 154 notice saying the tax on my settled additions was computed at the wrong rate. Can he reopen a completed Vivad se Vishwas settlement?
No. Section 154(1)(a) allows an income-tax authority to amend an order passed by it under the Income-tax Act, 1961; the certificate issued by the designated authority under section 5 of the Direct Tax Vivad se Vishwas Act, 2020 is not such an order. The Patna High Court set aside both the rectification order and the section 264 revision order upholding it, and directed the refund to be paid within four weeks with statutory interest.
Decided by the High Court (Rajeev Ranjan Prasad J and Ashok Kumar Pandey J (oral judgment per Rajeev Ranjan Prasad J)) on 2025-07-07, reported as Direct Tax Vivad se Vishwas Act, 2020; Civil Writ Jurisdiction Case No.215 of 2025 (Patna High Court). It bears on section DTVSV 2020, section 154, section 264 of the Income Tax Act 1961, in Appeals, Refunds, Interest & Condonation and How Tax Law Is Read matters.
Section 5(3) makes the order determining the amount payable conclusive as to the matters stated in it, and says no matter covered by it shall be reopened in any other proceeding under the Income-tax Act or any other law. This decision is what gives that sentence teeth against the Assessing Officer, who is not the designated authority and whose rectification power is textually confined to orders passed by him. The department's fallback — that an answer to an FAQ in Circular 9/2020 empowers it to rectify an apparent mistake in a section 5 order — was rejected outright: the scope of section 154 cannot be enlarged by a circular. The a fortiori reasoning is worth carrying: the Delhi High Court in SAN Garments had already held that even the designated authority cannot reopen its own concluded Form 3 by issuing a fresh one, so the Assessing Officer plainly cannot. Note the practical trigger here — a revenue audit objection, which is how most of these notices originate.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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Following the seizure of Rs 19.10 lakh from a collection agent, a warrant under s.132(1A) was issued on 28 October 2016. By order dated 19 December 2018 under s.143(3) read with s.153B the assessee's income was assessed at Rs 18,08,450 against a returned Rs 2,88,577, with unexplained income of Rs 12 lakh and unexplained investment of Rs 2,23,339, and a net demand of Rs 5,88,457. While his appeal was pending the 2020 Act came into force; he applied to the designated authority, which concluded the proceeding and issued a certificate in Form 5 on 5 November 2021. He had paid more than Rs 5,88,457, so a refund of Rs 4,81,087 was ordered. For about eighteen months the refund was not paid. The Assessing Officer then registered a proceeding under s.154, on the basis of revenue audit objections raised in October 2022, claiming that despite the settlement there were two further additions totalling Rs 14,77,200 under s.69/69A chargeable at sixty per cent under s.115BBE rather than the thirty per cent applied in the assessment, and raised a fresh demand of Rs 8,87,283. The rectification order was passed on 30 November 2023 after overruling objections, and a revision under s.264 failed. The Revenue relied on the answer to Question No.46 of CBDT Circular No.9 of 2020 as empowering rectification of an apparent mistake in a s.5 order.
The rectification order and the revisional order were set aside and the assessee held entitled to the refund within four weeks with statutory interest (para 29). An assessment order of 19 December 2018 could not be reopened by a s.154 proceeding registered on 22 December 2022 when the Department had been a party before the designated authority and the certificate of closure had issued on 5 November 2021 (para 25). The scope of s.154, limited to amending an order passed by the Assessing Officer under the 1961 Act, cannot be extended to sit over the order passed and the declaration issued by the designated authority under s.5 of the 2020 Act (para 26). The scope of s.154 cannot be enlarged by an answer to an FAQ in a CBDT circular (para 24).
The Court set out s.154 of the 1961 Act and ss.4, 5 and 6 of the 2020 Act (paras 20 and 21), noting that s.4(2) deems a pending appeal withdrawn from the date of the s.5(1) certificate and that s.5(3) makes the determination conclusive and bars reopening in any other proceeding. Pressed on how s.154(1)(a) could support a proceeding whose effect would be to reopen an order of the designated authority, Departmental counsel conceded at the Bar that the Assessing Officer cannot amend an order passed by the designated authority under s.5, but maintained that the circular's FAQ permitted it (paras 22 and 23). The Court rejected that: the scope of s.154 cannot be extended by an FAQ, and the two Acts must be construed on their own terms (para 24). It then applied the Delhi High Court's decision in SAN Garments, where a fresh Form 3 issued by the designated authority itself to reopen a concluded settlement was set aside, reasoning a fortiori that if the designated authority could not reopen its own order, the Assessing Officer certainly could not unsettle it or render it redundant under s.154(1)(a) (paras 11 and 27). The revisional authority had failed to consider this and had simply endorsed the Assessing Officer (para 28).
The scope of Section 154 which talks of rectification of mistake is limited to amend any order passed by the Assessing Officer under the provisions of the Act of 1961 but in no way in the garb of exercise of its power under clause (a) of sub-section (1) of Section 154 of the Act of 1961, it may be extended to sit over the order passed and the declaration issued by the designated authority under Section 5 of the Act of 2020.
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Handle my notice → Ask a CA on WhatsAppNo. Section 154(1)(a) allows an income-tax authority to amend an order passed by it under the Income-tax Act, 1961; the certificate issued by the designated authority under section 5 of the Direct Tax Vivad se Vishwas Act, 2020 is not such an order. The Patna High Court set aside both the rectification order and the section 264 revision order upholding it, and directed the refund to be paid within four weeks with statutory interest. This was decided by the High Court (Rajeev Ranjan Prasad J and Ashok Kumar Pandey J (oral judgment per Rajeev Ranjan Prasad J)) and bears on section DTVSV 2020, section 154, section 264 of the Income Tax Act 1961. It is reported as Direct Tax Vivad se Vishwas Act, 2020; Civil Writ Jurisdiction Case No.215 of 2025 (Patna High Court). Section 5(3) makes the order determining the amount payable conclusive as to the matters stated in it, and says no matter covered by it shall be reopened in any other proceeding under the Income-tax Act or any other law. This decision is what gives that sentence teeth against the Assessing Officer, who is not the designated authority and whose rectification power is textually confined to orders passed by him. The department's fallback — that an answer to an FAQ in Circular 9/2020 empowers it to rectify an apparent mistake in a section 5 order — was rejected outright: the scope of section 154 cannot be enlarged by a circular. The a fortiori reasoning is worth carrying: the Delhi High Court in SAN Garments had already held that even the designated authority cannot reopen its own concluded Form 3 by issuing a fresh one, so the Assessing Officer plainly cannot. Note the practical trigger here — a revenue audit objection, which is how most of these notices originate. If it applies to you, the first step is this: Answer the s.154 notice on jurisdiction first: identify the order the officer proposes to amend, and show it is the designated authority's certificate and not an order passed by him under the 1961 Act.
Following the seizure of Rs 19.10 lakh from a collection agent, a warrant under s.132(1A) was issued on 28 October 2016. By order dated 19 December 2018 under s.143(3) read with s.153B the assessee's income was assessed at Rs 18,08,450 against a returned Rs 2,88,577, with unexplained income of Rs 12 lakh and unexplained investment of Rs 2,23,339, and a net demand of Rs 5,88,457. While his appeal was pending the 2020 Act came into force; he applied to the designated authority, which concluded the proceeding and issued a certificate in Form 5 on 5 November 2021. He had paid more than Rs 5,88,457, so a refund of Rs 4,81,087 was ordered. For about eighteen months the refund was not paid. The Assessing Officer then registered a proceeding under s.154, on the basis of revenue audit objections raised in October 2022, claiming that despite the settlement there were two further additions totalling Rs 14,77,200 under s.69/69A chargeable at sixty per cent under s.115BBE rather than the thirty per cent applied in the assessment, and raised a fresh demand of Rs 8,87,283. The rectification order was passed on 30 November 2023 after overruling objections, and a revision under s.264 failed. The Revenue relied on the answer to Question No.46 of CBDT Circular No.9 of 2020 as empowering rectification of an apparent mistake in a s.5 order. The matter was decided on 2025-07-07 by the High Court (Rajeev Ranjan Prasad J and Ashok Kumar Pandey J (oral judgment per Rajeev Ranjan Prasad J)). On those facts the High Court held as follows. The rectification order and the revisional order were set aside and the assessee held entitled to the refund within four weeks with statutory interest (para 29). An assessment order of 19 December 2018 could not be reopened by a s.154 proceeding registered on 22 December 2022 when the Department had been a party before the designated authority and the certificate of closure had issued on 5 November 2021 (para 25). The scope of s.154, limited to amending an order passed by the Assessing Officer under the 1961 Act, cannot be extended to sit over the order passed and the declaration issued by the designated authority under s.5 of the 2020 Act (para 26). The scope of s.154 cannot be enlarged by an answer to an FAQ in a CBDT circular (para 24).
The Court set out s.154 of the 1961 Act and ss.4, 5 and 6 of the 2020 Act (paras 20 and 21), noting that s.4(2) deems a pending appeal withdrawn from the date of the s.5(1) certificate and that s.5(3) makes the determination conclusive and bars reopening in any other proceeding. Pressed on how s.154(1)(a) could support a proceeding whose effect would be to reopen an order of the designated authority, Departmental counsel conceded at the Bar that the Assessing Officer cannot amend an order passed by the designated authority under s.5, but maintained that the circular's FAQ permitted it (paras 22 and 23). The Court rejected that: the scope of s.154 cannot be extended by an FAQ, and the two Acts must be construed on their own terms (para 24). It then applied the Delhi High Court's decision in SAN Garments, where a fresh Form 3 issued by the designated authority itself to reopen a concluded settlement was set aside, reasoning a fortiori that if the designated authority could not reopen its own order, the Assessing Officer certainly could not unsettle it or render it redundant under s.154(1)(a) (paras 11 and 27). The revisional authority had failed to consider this and had simply endorsed the Assessing Officer (para 28). In the words reproduced by the source cited on this page: "The scope of Section 154 which talks of rectification of mistake is limited to amend any order passed by the Assessing Officer under the provisions of the Act of 1961 but in no way in the garb of exercise of its power under clause (a) of sub-section (1) of Section 154 of the Act of 1961, it may be extended to sit over the order passed and the declaration issued by the designated authority under Section 5 of the Act of 2020." The decision followed or applied SAN Garments Manufacturing Private Limited v. Pr. Commissioner of Income Tax and Another, 2024 SCC OnLine Del 9066 — relied upon (not independently retrieved).
It was decided by the High Court on 2025-07-07 and is reported as Direct Tax Vivad se Vishwas Act, 2020; Civil Writ Jurisdiction Case No.215 of 2025 (Patna High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section DTVSV 2020, section 154, section 264, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The rectification order and the revisional order were set aside and the assessee held entitled to the refund within four weeks with statutory interest (para 29). An assessment order of 19 December 2018 could not be reopened by a s.154 proceeding registered on 22 December 2022 when the Department had been a party before the designated authority and the certificate of closure had issued on 5 November 2021 (para 25). The scope of s.154, limited to amending an order passed by the Assessing Officer under the 1961 Act, cannot be extended to sit over the order passed and the declaration issued by the designated authority under s.5 of the 2020 Act (para 26). The scope of s.154 cannot be enlarged by an answer to an FAQ in a CBDT circular (para 24). It arises in Appeals, Refunds, Interest & Condonation and How Tax Law Is Read matters, on section DTVSV 2020, section 154, section 264 of the Income Tax Act 1961, and was decided by Rajeev Ranjan Prasad J and Ashok Kumar Pandey J (oral judgment per Rajeev Ranjan Prasad J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Plead s.5(3) of the 2020 Act as a bar on reopening any matter covered by the certificate in any other proceeding, and annex the Form 5. Meet any reliance on an FAQ answer head-on: a circular cannot enlarge the scope of s.154, and the Court refused to let it. If a s.264 revision has already failed, take both orders in one writ; the revisional authority here was faulted for simply endorsing the Assessing Officer. Where a refund flowing from the settlement is being withheld while the rectification is pursued, claim it in the same petition with statutory interest — that is the relief granted.
Still good law. Followed by the Jharkhand High Court in Sanjay Singh v. Income Tax Officer, W.P.(T) No. 7280 of 2023, neutral citation 2026:JHHC:9670-DB, decided 6 April 2026, which quashed a s.154 order passed after Form 5 by adopting the reasoning of this decision together with Satish Kumar Dhingra v. Assistant/Deputy Commissioner of Income-tax (2024) 467 ITR 574 (Delhi) and the Delhi High Court's decision in SAN Garments, at its paragraphs 7 to 10. No decision to the contrary has been found. Two qualifications go with that: no completed check of later citation has been made, and neither Satish Kumar Dhingra nor SAN Garments has been read at first hand for this entry - what is said about SAN Garments comes from this judgment's own description of it at paragraphs 11 and 27. The reasoning does not depend on later approval, and that is the better answer to the absence of a citator check. Section 154(1)(a) permits an income-tax authority to amend an order passed by it under the Income-tax Act, 1961. A certificate issued by the designated authority under s.5 of the Direct Tax Vivad se Vishwas Act, 2020 is not such an order, and s.5(3) makes the determination conclusive and bars reopening of any matter covered by it in any other proceeding. Departmental counsel conceded at the Bar that the Assessing Officer cannot amend an order passed by the designated authority. A Bench taking the opposite view would have to read s.154 as reaching an order of another authority under another Act. One limit. The judgment is of the Patna High Court, so it binds there and is persuasive elsewhere, and the corresponding provision under the 2024 Scheme is s.92, not s.5 of the 2020 Act; the argument has to be recast for a settlement made under the later scheme. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
DATE CONFLICTS IN THE REPORT. The judgment is not consistent about the rectification proceeding. Paragraph 7 says the Assessing Officer instituted the s.154 proceeding on 14.03.2023, while paragraphs 19 and 25 say 22.12.2022. Paragraph 8 gives the s.154 notice as issued on 24.03.2023 and paragraph 14 as 24.02.2023. Nothing turns on which is right, because every version post-dates the Form 5 of 5 November 2021, which is what the reasoning rests on - but do not take a date from this entry into a submission without checking it. ON THE STATUTORY EXTRACTS. The judgment sets out s.154 of the 1961 Act and ss.4, 5 and 6 of the 2020 Act at paragraphs 20 and 21, and those extracts are the source of the statutory wording used on this page. The s.4 extract is not established to be complete - sub-sections (6) and (7) do not appear in it - so it should not be relied on as a full reproduction of s.4. The text of s.5 with its Explanation is independently confirmed at paragraph 8 of ACIT v Satwashil Vasant Mane. ON SAN GARMENTS. The judgment describes the Delhi High Court's decision in SAN Garments at paragraphs 11 and 27, but that judgment has not been read at first hand for this entry. What is attributed to it here - that a fresh Form 3 issued by the designated authority itself to reopen a concluded settlement was set aside - comes from this Court's description of it, and the a fortiori step from there to the Assessing Officer is this Court's own. ON THE STRUCTURE. The order runs to paragraph 29. Paragraphs 8 to 16 are counsel's submissions and no locator has been taken from them on this page; the reasoning is at paragraphs 20 to 28 and the disposal at paragraph 29. ON THE CIRCULAR ARGUMENT, which is the one to expect. The Department's fallback was that an answer to a frequently asked question in the Board's circular permitted the rectification. The Court rejected it outright: the scope of s.154 cannot be enlarged by an answer to a frequently asked question, and the two Acts must be construed on their own terms. That is at paragraph 24. ONE PRACTICAL POINT THE JUDGMENT RECORDS. The trigger for the rectification was a revenue audit objection raised in October 2022, and the refund of Rs 4,81,087 had been withheld for about eighteen months before the s.154 proceeding began. Where a refund flowing from a settlement is being withheld while a rectification is pursued, claim it in the same petition with statutory interest; that is the relief the Court gave, payable within four weeks. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The rectification order and the revisional order were set aside and the assessee held entitled to the refund within four weeks with statutory interest (para 29). An assessment order of 19 December 2018 could not be reopened by a s.154 proceeding registered on 22 December 2022 when the Department had been a party before the designated authority and the certificate of closure had issued on 5 November 2021 (para 25). The scope of s.154, limited to amending an order passed by the Assessing Officer under the 1961 Act, cannot be extended to sit over the order passed and the declaration issued by the designated authority under s.5 of the 2020 Act (para 26). The scope of s.154 cannot be enlarged by an answer to an FAQ in a CBDT circular (para 24).
TaxSphere, “Manohar Lal Poddar v Union of India”, https://taxnotice.vittsphere.com/caselaw/case/manohar-lal-poddar-dtvsv-2020-form-5-is-conclusive-and-section-154-cannot-reopen-it/ (validity last checked 2026-09-08)
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Form 5 was issued and a refund became due to me, but the department sat on it for two years and now refuses interest, citing section 7 of the 2020 Act. Can I get interest?
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My Tribunal appeal was more than a year late and the delay was condoned only in February 2021, well after CBDT's 4 December 2020 circular. The designated authority says FAQ 59 therefore cannot help me. Is that right?
