Rectification Under Section 154 Cannot Override Finality of Orders Passed Under Direct Tax Vivad se Vishwas Act, 2020 – Delhi High Court
Case Reference
Gail (India) Limited Vs ACIT (Delhi High Court)
Background and Context
The Delhi High Court recently adjudicated upon a significant writ petition that raised fundamental questions about the jurisdictional limits of rectification powers under the Income Tax Act, 1961, particularly in the context of orders passed under the Direct Tax Vivad se Vishwas Act, 2020. The case brought to the fore a critical legal issue — whether an Assessing Officer could invoke Section 154 of the Income Tax Act, 1961 to rectify an order that had originally been issued by the Principal Commissioner of Income Tax under the Vivad se Vishwas framework.
The impugned order dated 05.01.2026 had been passed by the Assessing Officer purportedly in exercise of rectification powers under Section 154 of the Income Tax Act, 1961. The petitioner challenged this order by way of a writ petition before the Delhi High Court, contending that it was wholly without jurisdiction and legally untenable on multiple grounds.
Facts of the Case
The core factual matrix revolved around an order dated 01.11.2021 that had been issued by the Principal Commissioner of Income Tax under Section 5(2) of the Direct Tax Vivad se Vishwas Act, 2020. This order had been passed as part of the settlement mechanism under the 2020 Act, which was specifically designed to resolve pending income tax disputes.
Subsequently, the Assessing Officer received an audit objection indicating that the amount payable under the Vivad se Vishwas Scheme had allegedly been incorrectly computed at the time of issuance of the original certificate under the Direct Tax Vivad se Vishwas Act, 2020. Citing this audit objection as the basis, the Assessing Officer proceeded to pass an order dated 05.01.2026 under Section 154 of the Income Tax Act, 1961, seeking to rectify the earlier order of the Principal Commissioner of Income Tax.
It is this order of 05.01.2026 that was challenged before the Delhi High Court.
Contentions Raised by the Petitioner (Assessee)
The learned counsel appearing on behalf of the assessee put forth the following multi-pronged legal arguments:
Jurisdictional Incompetence of the Assessing Officer
- The order that was sought to be rectified had been passed by the Principal Commissioner of Income Tax, a higher authority than the Assessing Officer.
- Even if any rectification were at all permissible in law, only the Principal Commissioner of Income Tax — being the authority who had passed the original order — would have had the competence to undertake such rectification.
- The Assessing Officer, therefore, had no jurisdiction whatsoever to assume the power of rectifying an order passed by a superior authority.