2022 (2) TMI 985 - HC - Income Tax

Business owner wins appeal under Direct Tax Vivad se Vishwas Act, 2020

Rishab Steel House Versus Assistant Commissioner of Income-Tax-15 (2), Mumbai, Dy. Commissioner of Income-Tax-15 (2), Mumbai, Pr. Commissioner of Income-tax-19, Mumbai, Central Board of Direct Taxes (CBDT), Income-tax Officer-19 (3) (1) Mumbai,

The Court ruled in favor of the petitioner, a business owner, in a case involving the interpretation of the Direct Tax Vivad se Vishwas Act, 2020. The ... Benefit of the DTVSTV Scheme - there was an Appeal which Department had filed and was pending in this Court in which the Department has impugned the same order passed by the Income Tax Appellate Tribunal which Petitioner had impugned in its Appeal - according to Respondent, if a declarant wishes to avail the benefit of DTVSV Act and if there is more than one issue pending at Appellate Forum and both the Appeals are against the same Order of ITAT, Petitioner does not have a choice only to offer to settle the Appeal filed by Petitioner but Petitioner has to settle both the Appeals - HELD THAT:- It is clear from the answer to Question No. 40 that Petitioner has an option to settle only the Appeal filed by Petitioner or Appeal filed by the department or both. Only requirement is that the declaration form has to be filed Assessment Year wise and for different Assessment Years separate declarations have to be filed. This is further clarified in the answer because it states “the declarant in the declaration Form No.1 needs to specify whether he wants to settle his appeal, or department’s appeal or both for a particular assessment year”. Therefore, option is available to the declarant to decide which matter the declarant wants to settle. Nowhere does the Circular mention or even indicate the interpretation given in the Affidavit-in-Reply to the Question No. 40 and Answer thereto. We have also to note that in the rejoinder Petitioner has annexed a copy of Order dated 21st July, 2019 passed by Prothonotary and Senior Master by which the department’s Appeal has been rejected under Rule 986. Mr. Walve has no instructions as to whether any restoration application has been filed. At the same time, we would hasten to add that even if department’s Appeal was pending, our view expressed above will not be any different. We are, therefore, of the view that Petitioner is entitled to file declaration in respect of his appeal and avail of the benefit of the DTVSTV Scheme without being obliged to include the Department’s appeal on the same issue. In the circumstances, this Court’s interference is called for. Form 3 issued by designated authority is set aside. The Designated Authority is directed to consider the Declaration made by Petitioner in Form 1 and to issue and upload revised Form No.3 in terms of this Order within a period of two weeks from the date of uploading of this order and within two weeks thereafter Petitioner shall pay the amount as mentioned in the revised Form No.3.The Designated Authority shall issue revised Form No.3 for Assessment Years 2007-2008 and 2010-2011 also in view of the order passed above. Issues involved:Interpretation of Direct Tax Vivad se Vishwas Act, 2020 (DTVSV Act) regarding settlement of tax arrears, calculation of disputed tax, and options available to declarants under the Act.Analysis:1. The petitioner, a business owner, sought to settle an appeal related to Assessment Year 2006-2007 under the DTVSV Act. The Department issued Form No.3 demanding a higher amount than declared by the petitioner in Form No.1, citing a 62.5% disputed tax calculation based on a search action. However, the Department later acknowledged the error and clarified that only 50% should be calculated, as per a court order. The petitioner contended that they intended to settle only their appeal, not the Department's appeal, as clarified in the CBDT Circular No.9 of 2020.2. The Circular clarified that declarants have the option to settle their own appeal, the Department's appeal, or both for a specific assessment year. It emphasized that separate declarations must be filed for different assessment years and the declarant must specify in Form No.1 which appeal they intend to settle. The Circular's provisions are binding on the Department, and any conflicting interpretations are not permissible. Therefore, the petitioner had the right to choose which appeal to settle, as per the Circular's guidelines.3. The petitioner provided additional evidence showing the rejection of the Department's appeal, further supporting their argument that they should not be compelled to settle the Department's appeal along with their own. The Court agreed with the petitioner's interpretation of the Act and Circular, ruling that the petitioner is entitled to file a declaration only for their appeal without including the Department's appeal on the same issue. Consequently, the Court set aside Form No.3 issued by the Department and directed them to revise the form based on the petitioner's declaration within a specified timeline.4. Additionally, the Court instructed the Designated Authority to issue revised Form No.3 for other assessment years mentioned in the petitions. The Department was granted the liberty to pursue its appeals independently for those assessment years, with the Court reserving the right to consider the Department's actions on their own merits. The petitions were ultimately disposed of with no orders as to costs, bringing the matter to a conclusion based on the interpretation of the DTVSV Act and relevant Circular guidelines.