High Court Allows Petitioner's Tax Settlement Appeal Under Vivad Se Vishwas Act 2020

The High Court found the rejection of the petitioner's declaration under the Direct Tax Vivad Se Vishwas Act 2020 to be incorrect. The Court held that the petitioner was eligible to settle disputed interest amounts charged under Section 234A, 234B, and 234C of the Income Tax Act under the VSV Act. The rejection based on the appeal's admission status was deemed erroneous, and the Court directed the authorities to process the petitioner's declaration and undertake settlement of the disputed amount. The rejection orders were set aside, and the delay in filing the appeal was found to have been condoned before the declaration filing date.

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Issues:
1. Rejection of petitioner's declaration and undertaking under the Direct Tax Vivad Se Vishwas Act 2020.
2. Eligibility of the petitioner to settle disputed amount under the VSV Act.
3. Interpretation of provisions of the VSV Act regarding disputed interest and pending appeals.
4. Correctness of rejection orders and condonation of delay in filing appeals.

Issue 1: Rejection of petitioner's declaration and undertaking under the Direct Tax Vivad Se Vishwas Act 2020:

The petitioner filed a declaration and undertaking under the VSV Act to settle a disputed amount of Rs. 16,86,800. However, the declaration was rejected by the authorities citing that there was no disputed income as the return filed by the assessee had been accepted in assessment proceedings. The rejection was based on the grounds that interest charged under Section 234A, 234B, and 234C of the Income Tax Act was mandatory and not disputed. The petitioner filed a revised declaration after the delay in filing the appeal was condoned, but it was also rejected on similar grounds. The High Court held that the rejection was incorrect as the VSV Act allows for settlement of disputed interest amounts, including those charged under Section 234A, 234B, and 234C.

Issue 2: Eligibility of the petitioner to settle disputed amount under the VSV Act:

The VSV Act provides for the resolution of disputed tax matters, including disputed interest amounts. The petitioner, having filed an appeal challenging the disputed demand, was eligible to file a declaration under the VSV Act for the disputed interest charged under Section 234A, 234B, and 234C. The rejection of the petitioner's declaration by the authorities was found to be incorrect as the Act does not exclude interest charged under these sections from being settled under the VSV scheme.

Issue 3: Interpretation of provisions of the VSV Act regarding disputed interest and pending appeals:

The VSV Act defines tax arrears to include disputed interest amounts, and a declarant can settle such amounts under the Act. The Act does not restrict the settlement of interest charged under Section 234A, 234B, and 234C. The High Court emphasized that the pendency of an appeal is not contingent on its admission before a specified date, but on its filing and continuance until adjudication. The Court referred to a previous judgment where it was held that an appeal is considered pending from its filing until disposal, irrespective of its admission status. Therefore, the rejection of the petitioner's declaration based on the appeal's admission status was deemed incorrect.

Issue 4: Correctness of rejection orders and condonation of delay in filing appeals:

The rejection orders issued by the authorities were deemed incorrect in law by the High Court. The Court directed the concerned authorities to process the petitioner's declaration and pass orders accordingly under the provisions of the VSV Act. The Court also noted that the delay in filing the appeal had been condoned before the date of filing the declaration, as evidenced by communication to the petitioner. Therefore, the rejection of the petitioner's revised declaration on the grounds of delay was found to be unfounded. The Court set aside the rejection orders and directed the authorities to process the petitioner's forms under the VSV Act.

In conclusion, the High Court found the rejection of the petitioner's declaration under the VSV Act to be erroneous and directed the authorities to process the declaration and undertake settlement of the disputed amount. The Court emphasized the eligibility of the petitioner to settle disputed interest amounts under the Act and clarified the interpretation of provisions regarding pending appeals and disputed interest.

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