2021 (5) TMI 289 - HC - Income Tax

Court orders processing of petitioner's declaration under Direct Tax Vivad Se Vishwas Act, emphasizing natural justice principles.

The court allowed the petition, setting aside the rejection of the petitioner's declaration under the Direct Tax Vivad Se Vishwas Act, 2020. It directed ... DTVSV Act - declaration of the petitioner under the Direct Tax Vivad Se Vishwas rejected - HELD THAT:- Having regard to the provisions and the scheme of the DTVSV Act, it appears that the submissions on behalf of the petitioner carry lot of weight and it is difficult to consider the authority under the DTVSV Act would be able to go into the merits/grounds or legality of the appeal filed by the declarant. The Petition is allowed. The rejection of declaration of the Petitioner is set aside. The declaration of petitioner be processed in accordance with the DTVSV Act and the rules thereunder. Issues Involved:1. Rejection of the petitioner's declaration under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act).2. Compliance with the rules of natural justice.3. Definition and scope of 'disputed tax' under the DTVSV Act.4. Applicability of the DTVSV Act to the petitioner's case.Detailed Analysis:1. Rejection of the Petitioner's Declaration:The petitioner filed a declaration under the DTVSV Act, which was rejected by the Designated Authority (Principal Commissioner of Income Tax, Mumbai) on the grounds that there was no disputed tax in the case. The authority reasoned that since the petitioner had declared the income in his return, the addition made by the AO was not disputed in the appeal filed. The court found this rejection unsustainable and against the provisions of the DTVSV Act.2. Compliance with the Rules of Natural Justice:The petitioner argued that the rejection of the declaration without an opportunity for a hearing violated the principles of natural justice. The court agreed, stating that the petitioner should have been heard before the declaration was rejected. The court emphasized that the object of the DTVSV Act is to resolve disputes and provide relief to taxpayers, which would be defeated if declarations were rejected without a hearing.3. Definition and Scope of 'Disputed Tax':The court examined the definition of 'disputed tax' under Section 2(1)(j) of the DTVSV Act, which refers to the tax payable if an appeal, writ petition, or special leave petition were to be decided against the appellant. The court clarified that 'disputed tax' means the income tax payable on the income assessed by the authority where an appeal is pending. The court rejected the revenue's argument that the petitioner's declared income could not be considered disputed tax, emphasizing that the DTVSV Act does not limit or restrict the definition of disputed tax based on the grounds of appeal or the contents of the return.4. Applicability of the DTVSV Act:The court noted that the DTVSV Act aims to expedite the realization of locked-up revenue and provide relief to taxpayers. The Act does not exclude cases like the petitioner's unless they fall under specific exclusions listed in Section 9 of the Act, which did not apply to the petitioner. The court found that the reasons given for rejecting the declaration were incompatible with the provisions and the object of the DTVSV Act.Conclusion:The court allowed the petition, setting aside the rejection of the petitioner's declaration. It directed that the petitioner's declaration be processed in accordance with the DTVSV Act and the rules thereunder. The court emphasized the importance of adhering to the principles of natural justice and the object of the DTVSV Act in resolving tax disputes.