Income Tax: PCIT cannot rectify order passed under Vivad se Vishwas Scheme u/s 154

The Delhi High Court, with a bench comprising Justice Dinesh Mehta and Justice Vinod Kumar, delivered its judgement in W.P.(C) 1883/2026 filed by GAIL (India) Limited. The case arose when GAIL challenged an order dated 5 January 2026 passed by the Assistant Commissioner of Income Tax under Section 154 of the Income Tax Act, 1961. The rectification order sought to alter an earlier order dated 1 November 2021 issued by the Principal Commissioner of Income Tax under the Direct Tax Vivad se Vishwas Act, 2020.

GAIL’s lawyers didn’t hold back. They said the Assistant Commissioner had no business messing with that order only the Principal Commissioner could touch it, if anyone could at all. They also said Section 154 of the Income Tax Act, 1961 should not be used here because the Vivad se Vishwas Act is its own thing and doesn’t say anything about rectification. To back this up, they pointed to another Delhi High Court judgement from 2024—Satish Kumar Dhingra v. Commissioner of Income Tax—which pretty much said that orders under the Vivad se Vishwas Act are supposed to be final and conclusive. That should be the end of it.

The tax department, of course, had a different story. They argued that the whole rectification exercise started because of an audit objection—someone said the calculation under the scheme was off. Their lawyer tried to dismiss GAIL’s precedent, claiming the situation here was different.

After listening to both sides, “The Court unpacked the language of the 2020 Act itself. It made things clear: the Vivad se Vishwas Act doesn’t give anybody, the Principal Commissioner included, any rectification power. Section 5(3) says straight out that once an order is passed and the amount determined, it’s final. Plus, the Income Tax Act’s provisions don’t just spill over into the Vivad se Vishwas Act. So, trying to use Section 154 was just off the mark.” The judges had no trouble saying the Assistant Commissioner acted outside his jurisdiction, and the rectification order from 05.01.2026 just did not stand up.

So, the High Court quashed and set aside the rectification order. Orders under the Vivad se Vishwas Act, the court reminded everyone, are final. You do not get to reopen them using Section 154 of the Income Tax Act.