The Bombay High Court has directed the income tax department to compute the tax at the rate of 100% and not 125% in ‘non-search’ cases.

The bench of Justice M.S. Sonak and Justice Jitendra Jain has directed the income tax department to issue the revised Form-3 within 30 (thirty) days along with all consequential benefits.

The bench noted that the Petitioner’s case was not a “search case”, or that it was a “non- search case”, and therefore, the computation at the rate of 125% as also FAQ 70 of Circular dated 04 December 2020 could be adopted. The record shows, and in fact, it was conceded by the Respondents, that the Petitioner’s case was a “non-search case”. Therefore, the computation could not be at the rate of 125% but had to be at the rate of only 100%.

The petitioner/assessee submitted that the calculation of the amount at the rate of 125% by relying upon the circular dated 04 December 2020 was entirely illegal and ultra-vires. 

The calculation is based on the premise that a search was executed in some other taxpayer’s case and that this was not a case of voluntary disclosure by the Petitioner or that this was not a “non-search” case. It was a “non-search case”. Therefore, the calculation should have been based on the rate of 100% of the disputed tax, not 125%.

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The petitioner contended that it did raise additional grounds challenging the addition of Rs.2,02,50,919/- on account of Long-Term Capital Gains (LTCG) under Section 68 of the Income Tax Act, 1961. However, the Respondents have not considered these grounds for determining the disputed tax under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act).

The court held that the claim for including Rs.2,02,50,919/- for benefits under the DTVSV Act/Scheme was rejected. However, the Petitioner’s contention about determining the amount payable at the rate of 100% of the disputed tax for the Assessment Year 2014-15 is allowed, and the Respondents are directed to issue the revised Form-3 as undertaken by them in their Affidavit within 30 days from today along with all consequential benefits.

Case Details

Case Title: Umesh Navnitlal Shah HUF Versus ITO

Case No.: Writ Petition No.1090 Of 2021

Date: 08/01/2025

Counsel For Petitioner: K. Gopal and Neha Paranjape

Counsel For Respondent: Siddharth Chandrashekhar