Delhi HC rules assessee can settle individual appeals under VSV scheme without settling all pending matters

The Delhi HC allowed a writ petition challenging revenue's rejection of a settlement application under the VSV scheme. Revenue rejected the application because the assessee sought to settle only one pending matter rather than all appeals. Following the precedent in MUFG Bank Ltd, the court held that an assessee has discretion to settle any single appeal under the VSV Act without being required to settle all pending appeals. The unit of settlement is individual appeals, not assessment years. The rejection order was set aside.

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Issues Involved:
The judgment concerns the rejection of declaration made under Form 1 and undertaking made under Form 2 of The Direct Tax Vivad Se Vishwas Rules, 2020 for Assessment Year 2010-11.

Details of the Judgment:

Issue 1: Rejection of Forms under VSV Act
The petitioner sought to challenge the rejection of Forms under the Direct Tax Vivad Se Vishwas Act, 2020. The respondent rejected the Forms on the basis that the petitioner sought to settle only one matter pending adjudication, which was not permissible under the Act. The rejection communication cited a circular and stated that settling only one appeal without considering all appeals was not allowed.

Issue 2: Background of Assessment
The petitioner filed the return of income for A.Y. 2010-11, which was selected for scrutiny. The Assessing Officer issued a draft assessment order, which was later finalized after objections before the Dispute Resolution Panel. The final assessment order was challenged before the Income Tax Appellate Tribunal, which partly allowed the appeal. Subsequent cross-appeals were filed before the Delhi High Court.

Issue 3: Interpretation of VSV Act
The main question was whether an applicant under the VSV Act could settle one or more appeals while continuing to contest others. Reference was made to a previous judgment which concluded that each appeal, writ petition, or SLP was treated as a separate dispute under the Act. The judgment clarified that the unit for settlement of disputes under the Act was an appeal, writ petition, or SLP, not the assessment year as contended by the revenue.

Conclusion:
The Court allowed the writ petition, setting aside the rejection of Forms and the communication. The authority under the VSV Act was directed to process the Forms filed by the petitioner. The decision was based on the interpretation that the unit for settlement under the Act was an appeal, writ petition, or SLP, not the assessment year.

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