Petitioner's Tax Dispute Accepted under Vivad Se Vishwas Act, Rejection Overturned, Commissioner to Reassess

The court held that the petitioner's application under the Direct Tax Vivad Se Vishwas Act fell within the Act's scope. The rejection of the forms was set aside, and the Commissioner was directed to reassess the declaration on its merits. The writ petition was disposed of in favor of the petitioner.

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Issues Involved:
1. Rejection of Forms I and II under the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act).
2. Definition and scope of "appeal" and "disputed interest" under the VSV Act.
3. Applicability of FAQ-13 to the petitioner's case.
4. Interpretation of relevant provisions of the VSV Act and Income Tax Act.

Issue-wise Detailed Analysis:

1. Rejection of Forms I and II under the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act):
The petitioner, a company in liquidation, filed Forms I and II under the VSV Act on 20th March 2020 for AY 1984-85 and 1985-86. The Principal Commissioner of Income Tax-IV, Delhi (CIT) rejected these forms on 5th January 2021 without providing reasons on the portal. The petitioner sought inspection of the files and reiterated the request through emails but received no response, prompting the filing of this writ petition.

2. Definition and scope of "appeal" and "disputed interest" under the VSV Act:
The CIT contended that the petitioner's application did not qualify as an "appeal" within the meaning of the VSV Act and that the petitioner was not an "appellant" as defined under Section 2(1)(a) of the VSV Act. The CIT relied on FAQ-13, which states that waiver applications are not considered appeals for VSV purposes. The petitioner argued that the term "appeal" is not defined in the VSV Act and cited the Supreme Court's interpretation in 'State of Gujarat vs Salimbhai Abdulgaffar Shaikh & Ors.' which defines an appeal as a proceeding for reconsideration of a decision of a lower court.

3. Applicability of FAQ-13 to the petitioner's case:
The petitioner contended that FAQ-13 dealt with pending waiver applications and not with proceedings challenging the decision on a waiver application. The petitioner argued that the rejection of the waiver application and the subsequent filing of Co. Appl. 577/2019 constituted a "dispute" within the meaning of the VSV Act. The court agreed with the petitioner, stating that FAQ-13 relates to pending waiver applications and not to proceedings arising from a decision on such applications.

4. Interpretation of relevant provisions of the VSV Act and Income Tax Act:
The court analyzed the relevant provisions of the VSV Act, including Sections 2(1)(h), 2(1)(o), 3, and 4, as well as the Income Tax Act, particularly Sections 220(2) and 220(2A). The court noted that the VSV Act aims to resolve all nature of disputes relating to tax, penalty, interest, and fee. The court emphasized that the definition of "dispute" in the VSV Rules includes appeals, writs, special leave petitions, arbitration, conciliation, and mediation, indicating an expansive scope.

The court also highlighted the purposive construction principle, which requires statutes to be interpreted to give effect to their legislative purpose. The court cited the Supreme Court's decision in Tanna & Modi v. CIT, Mumbai XXV And Ors., which supports a purposive interpretation to achieve the legislative intent.

Conclusion:
The court found the CIT's contention inherently flawed and held that the petitioner's application fell within the scope of the VSV Act. The court set aside the rejection dated 5th January 2021 and directed the CIT to re-examine and reassess the petitioner's declaration under the VSV Act on its merits. The writ petition was accordingly disposed of.

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