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

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 petitioner was allowed to settle only their appeal under the Act, excluding the Department's appeal, as clarified in Circular No.9 of 2020. The Court set aside the Department's demand for a higher amount and directed them to revise the form based on the petitioner's declaration. The Designated Authority was instructed to issue revised forms for other assessment years, allowing the Department to pursue its appeals independently. The matter was concluded without costs, based on the Act and Circular guidelines.

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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.

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