2022 (7) TMI 1089 - HC - Income Tax

Court rejects revised declaration under Direct Tax Vivad Se Vishwas Act as non-est. Compliance order issued.

M/s. Value Added Futuristic Management Private Limited Versus The Union of India, Deputy Commissioner of Income Tax

The court held that the revised declaration under the Direct Tax Vivad Se Vishwas Act, 2020 was rejected as it was non-est in the eyes of the law. The ... Deceleration under Direct Tax Vivad Se Vishwas Act, 2020 - Revival of original declaration / order - validity of second and revised declaration - - Treatment to appeal pending before ITAT or Commissioner (Appeals) in respect of the disputed amount and/or tax arrears - HELD THAT:- As after going through the documents available on record including the provisions of ‘The Direct Tax Vivad Se Vishwas Act, 2020’ i.e. the Scheme, we are of the considered opinion that revised/fresh declaration filed by Petitioner/declarant dated 23.01.2021 is non-est in the eyes of law and any consequential order passed thereto is of no significance for the reasons stated hereunder. Once a certificate under sub-section (1) of Section 5 is issued by the Designated Authority, any appeal pending before ITAT or Commissioner (Appeals) in respect of the disputed amount and/or tax arrears shall be deemed to have been withdrawn. Meaning thereby, in the instant case, after the declaration of the Petitioner-declarant was accepted by issuance of certificate under Section 5(1) of the Act, dated 20.01.2021 (Annexure-14), appeal pending before ITAT, Ranchi filed on 13.03.2019 (Annexure-9) and the appeal pending before the CIT (Appeals), Ranchi filed on 24.02.2020 pertaining to Assessment Year 2012-13 were deemed to have been withdrawn. Once the said appeals are deemed to have been withdrawn by operation of law, the same cannot be revived or restored merely because a declarant, under mistaken notion, has filed a fresh declaration, which was, subsequently, rejected by the Designated Authority. If the said situation is allowed to operate, the same would have devastating effects and would prejudice the entire Scheme framed by the Parliament. If filing of one declaration after another is permitted, then even the provisions of Section 7 of the Scheme would be rendered futile which provides, inter alia, that any amount paid in pursuance of a declaration, shall not be refundable under any circumstances. An assessee, taking advantage of filing second declaration and its rejection by the Authority, can contend, inter alia, that its original declaration has lost its force in the eyes of law and can claim refund of the amount paid pursuant to the original declaration, which is clearly not the mandate of the Scheme. We have no hesitation in observing that the revised fresh declaration dated 23.01.2021 filed by the petitioner was not maintainable in the eye of law and consequently the order passed thereto is non est in the eye of law. An alternative contention has been raised on behalf of the petitioner it is entitled to the benefit of original declaration filed by it. Since we have held that the second declaration filed by the petitioner was not maintainable and non est in the eye of law, we refrain ourselves from observing further on the others issues raised by the parties including the issue as to whether revised declaration of the petitioner company could have been rejected due to initiation of the criminal prosecution against one of the Directors of the company. Since, admittedly, Respondents, pursuant to filing of revised/fresh declaration by the Petitioner dated 23rd January, 2021, entertained the said declaration and examined the same on merits and, thereafter, rejected it vide order dated 15.03.2021 which is our opinion has no legal effect, we are of the opinion that equities would be balanced if we direct the parties to comply with the certificate dated 20.01.2021 issued in favour of the petitioner pursuant to original declaration as per section 5(2) of the scheme i.e. within a period of fifteen days from today. If petitioner makes deposit of an amount of Rs.9,08,075/- being the amount determined as payable by the petitioner under the certificate dated 20.01.2021 within fifteen days from today, the same shall be accepted by Respondent-authorities and the declaration filed by the petitioner would be deemed to have been satisfied in terms of provisions of the Direct Tax Vivad Se Vishwas Act, 2020. Issues Involved:1. Rejection of the revised declaration under the Direct Tax Vivad Se Vishwas Act, 2020.2. Entitlement to the benefit of the original declaration under the Scheme.3. Applicability of Section 9(c) of the Scheme due to prosecution against a director of the petitioner company.4. Adjustment of tax already paid by the petitioner.5. Refund and interest on the refundable amount.Issue-Wise Detailed Analysis:1. Rejection of the revised declaration under the Direct Tax Vivad Se Vishwas Act, 2020:The petitioner filed a revised declaration on 23.01.2021 after the original declaration was accepted on 20.01.2021. The revised declaration was rejected based on Section 9(c) of the Scheme, citing the prosecution of a director under the Prevention of Corruption Act, 1988. The court noted that the Scheme only allowed for one declaration in respect of tax arrears, and once a certificate was issued under Section 5(1), no further declarations could be filed. The court held that the revised declaration was non-est in the eyes of the law and any consequential order passed was of no significance.2. Entitlement to the benefit of the original declaration under the Scheme:The court observed that the original declaration filed by the petitioner on 24.12.2020 was accepted, and a certificate was issued on 20.01.2021. The Scheme provided that once a certificate was issued, it was conclusive and no matter covered by it could be reopened. The court directed the parties to comply with the certificate dated 20.01.2021, and the petitioner was required to deposit the amount determined within fifteen days.3. Applicability of Section 9(c) of the Scheme due to prosecution against a director of the petitioner company:The petitioner argued that the term 'person' under Section 9(c) should be read as 'declarant,' and since the prosecution was against a director and not the company, the benefit of the Scheme should not be denied. The respondent contended that the prosecution against the director was sufficient to invoke Section 9(c). The court refrained from making further observations on this issue, given its finding that the revised declaration was non-est.4. Adjustment of tax already paid by the petitioner:The petitioner claimed that an amount of Rs. 23,26,380/- already paid was not adjusted at the time of acceptance of the original declaration, leading to a mismatch. The court noted that the petitioner was verbally informed to file a revised declaration to rectify the mismatch, but this was subsequently rejected. The court directed compliance with the original certificate, implying that the issue of adjustment should be addressed within that framework.5. Refund and interest on the refundable amount:The petitioner sought a refund of Rs. 20,95,633/- with interest. The court did not specifically address the issue of interest but directed that the amount determined in the original certificate should be complied with. This implies that the refund issue would be resolved upon compliance with the certificate dated 20.01.2021.Conclusion:The court concluded that the revised declaration filed by the petitioner was not maintainable and directed the parties to comply with the original certificate issued on 20.01.2021. The petitioner was required to deposit the amount determined within fifteen days, and the declaration would be deemed satisfied under the Scheme. The court refrained from making further observations on the applicability of Section 9(c) due to the prosecution against a director.