VSV Act allows rectification of Form 3 for carry forward losses already granted in assessment

The Delhi HC allowed a writ petition challenging refusal to rectify Form 3 under the Direct Tax Vivad Se Vishwas Act, 2020. The petitioner failed to claim set-off/carry forward of losses and unabsorbed depreciation in Schedule D of the settlement application. The HC held that the VSV Act aims to settle only disputed portions of assessments, not undisputed reliefs already granted by the Assessing Officer. Since the original assessment order had allowed carry forward and set-off of losses, the Designated Authority should have rectified the apparent mistake in Form 3. The court quashed the impugned order refusing rectification.

---

---

Issues Involved:
1. Jurisdiction under Article 226 of the Constitution.
2. Rectification of Form 3 under the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act).
3. Set off and carry forward of losses and unabsorbed depreciation.
4. Finality and conclusivity of determinations under Section 5 of the VSV Act.
5. Interpretation of the VSV Act as a beneficial/remedial statute.

Issue-wise Detailed Analysis:

1. Jurisdiction under Article 226 of the Constitution:
The writ petitioner approached the Court under Article 226 challenging the order dated 30 September 2021, which negated their request for rectification of Form 3 issued under the VSV Act. The Court's jurisdiction was invoked to address whether there was an apparent mistake warranting rectification.

2. Rectification of Form 3 under the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act):
The petitioner sought revision of Form 3, which did not include the set off/carry forward of losses and unabsorbed depreciation in Schedule D. The petitioner argued that this omission was due to an inadvertent mistake and oversight. The respondents contended that no particulars were provided in Schedule D, and thus, Form 3 had no patent error that could be rectified. However, the Court noted that Form 3 itself preserved the right to claim set off and carry forward losses as per law, indicating an apparent error that warranted rectification.

3. Set off and carry forward of losses and unabsorbed depreciation:
The petitioner argued that the assessment order had provisioned for the carry forward of unabsorbed depreciation and business loss, which should not have been ignored in Form 3. The Court examined the assessment order and found that it indeed accepted the set off and carry forward of unabsorbed depreciation and business losses. The Court concluded that the failure to include these details in Schedule D was an inadvertent mistake and should not deprive the petitioner of the benefits accorded by the VSV Act.

4. Finality and conclusivity of determinations under Section 5 of the VSV Act:
The respondents argued that the determination of the amount payable by a declarant under Section 5(1) is conclusive and cannot be rectified once Form 3 is issued. The Court, however, noted that the Designated Authority had the power to rectify apparent errors as per the clarifications issued by the CBDT. The Court held that the Designated Authority should have rectified the mistake in Form 3 to reflect the reliefs already granted in the original assessment order.

5. Interpretation of the VSV Act as a beneficial/remedial statute:
The Court emphasized that the VSV Act is a beneficial/remedial statute aimed at resolving tax disputes and providing relief to taxpayers. The Court referred to the legislative intent and the principles of interpretation applicable to such statutes. It concluded that the VSV Act should not be interpreted in a manner that places the petitioner in a worse position than under the original assessment order. The Court held that the petitioner should not be compelled to pay an amount exceeding the liability determined in the original assessment proceedings.

Conclusion:
The Court allowed the writ petition, quashed the impugned order dated 30 September 2021, and directed the Designated Authority to issue a fresh Form 3, considering the observations made. The matter was to be disposed of in accordance with the law, subject to the petitioner complying with the requirements stipulated in Section 5 of the VSV Act.

---