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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether prosecution had been instituted against the assessee on or before the filing of the declaration for the purpose of section 9(c) of the Direct Tax Vivad Se Vishwas Act, 2020. (ii) Whether pendency of proceedings alleging conspiracy to commit offences under the Prevention of Corruption Act, 1988, including against a private person, attracts the disqualification under section 9(c) of the Direct Tax Vivad Se Vishwas Act, 2020.
Issue (i): Whether prosecution had been instituted against the assessee on or before the filing of the declaration for the purpose of section 9(c) of the Direct Tax Vivad Se Vishwas Act, 2020.
Analysis: Section 9(c) excludes persons against whom prosecution for specified offences has been instituted on or before filing of the declaration. The Court held that, on the facts pleaded, both criminal proceedings were pending when the declaration was filed. In one matter, the FIR and investigation were already in existence. In the other, charge-sheet had been filed and cognizance had been taken. The term "prosecution instituted" was treated as satisfied on these facts, and the tax authority was not required to conduct a mini-trial on the criminal allegations.
Conclusion: The assessee was held to be covered by the disqualification under section 9(c) on this ground.
Issue (ii): Whether pendency of proceedings alleging conspiracy to commit offences under the Prevention of Corruption Act, 1988, including against a private person, attracts the disqualification under section 9(c) of the Direct Tax Vivad Se Vishwas Act, 2020.
Analysis: The Court held that the criminal charge had to be read as a composite whole and could not be split to isolate the Indian Penal Code allegations from the Prevention of Corruption Act allegations. It further held that offences under the Prevention of Corruption Act can involve private persons as abettors or conspirators, and that the relevant enquiry under section 9(c) is whether the prosecution concerns offences punishable under the specified Acts. Since the materials showed allegations of conspiracy in relation to offences under the Prevention of Corruption Act, the exclusion applied.
Conclusion: The assessee was held ineligible to claim the benefit of the Direct Tax Vivad Se Vishwas Act, 2020.
Final Conclusion: The writ petition failed because the assessee fell within the statutory exclusion for persons against whom prosecution for specified socio-economic offences had already been instituted, and the tax authority's rejection of the declarations was sustained.
Ratio Decidendi: For the purposes of section 9(c) of the Direct Tax Vivad Se Vishwas Act, 2020, prosecution is treated as instituted once criminal proceedings are commenced in a manner showing a live prosecution against the applicant, and the exclusion applies where the prosecution on its face relates to offences punishable under the specified statutes, without requiring the tax authority to adjudicate the criminal merits.
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