2024 (11) TMI 86 - HC - Income Tax

Petitioner eligible for Direct Tax Vivad Se Vishwas Act settlement despite filing writ petition instead of formal appeal

The Madras HC held that a petitioner was eligible to settle disputes under the Direct Tax Vivad Se Vishwas Act, 2020. The court ruled that while 'appeal' ... Benefit of the Direct Tax Vivad Se Vishwas Act, 2020 - Interpretation of 'appeal' under the DTVSV Act - claim of the petitioner for waiver of interest under Circular No.400/29/2002-IT(B) - HELD THAT:- One of the condition for availing the benefit of the Direct Tax Vivad Se Vishwas Act, 2020 is that an assessee should be in arrears of tax including interest. The expression “tax arrears” in Section 2(1)(o) of the Direct Tax Vivad Se Vishwas Act, 2020 also includes “interest charged” on such “disputed tax” under Section 2(l)(n) of the Direct Tax Vivad Se Vishwas Act, 2020. The expression “appeal” has not been defined under the Direct Tax Vivad Se Vishwas Act, 2020. The Hon'ble Supreme Court in State of Gujarat v. Salimbhai Abdulgaffar Shaikh [2003 (9) TMI 777 - SUPREME COURT] held that broadly speaking, an appeal is a proceeding taken to rectify an erroneous decision of a court by submitting the question to a higher court. Similarly, in James Joseph v. State of Kerala [2010 (8) TMI 959 - SUPREME COURT] the Hon'ble Supreme Court while giving its ruling in the context of Kerala Forest Act, 1961, observed that the word 'appeal' is not defined either under the Kerala Forest Act, 1961 or under CPC. Hon’ble Supreme Court further held that an appeal is a proceeding where an higher forum reconsiders the decision of a lower forum, on questions of fact and questions of law, with jurisdiction to confirm, reverse, modify the decision or remand the matter to the lower forum for fresh decision in terms of its directions. The expression appeal is defined in the Oxford Dictionary, Vol. 1, p. 398, as the transference of a case from an inferior to a higher court or tribunal in the hope of reversing or modifying the decision of the former. In the Law Dictionary by Sweet, the term 'appeal' is defined as a proceeding taken to rectify an erroneous decision of a court by submitting the question to a higher court or Court of Appeal. Thus, under peculiar circumstances, a writ proceeding before a Writ Court may partake the character of an appeal in its revisional jurisdiction under Article 226 of the Indian Constitution. Therefore, though the expression “appeal” has not been defined in Direct Tax Vivad Se Vishwas Act, 2020, it has to be construed that [2020 (2) TMI 1182 - MADRAS HIGH COURT] W.P.No.12500 of 2010 was in the nature of an “appeal” as the writ petitioner had questioned the order dated 16.03.2010 of the Chief Commissioner of Income Tax in the said writ petition as the petitioner had taken a stand that the petitioner was eligible for waiver of interest under Circular No. 400/29/2002-IT(B) dated 26.06.2006. Therefore, the petitioner was eligible to settle the dispute under Vivad Se Vishwas Act, 2020. As stated elsewhere there is no embargo in Section 3 and Section 4 of the said Act for the petitioner to file a declaration. Even otherwise, the answer to the Question No.13 of the FAQ is not relevant to facts of the present case. In any event, such clarifications are not binding on the Court. The definition of “appellant” under clause (a)(i) of sub-section (1) of Section 2 expressly includes, inter alia, filing of a writ petition. Therefore, the Court is in agreement with the views of the Bombay High Court in Mrs. Premalatha Mohan Agarwal [2021 (9) TMI 1280 - BOMBAY HIGH COURT] and Kapri International (P.) Ltd [2022 (8) TMI 805 - DELHI HIGH COURT] on these aspects. Direct Tax Vivad Se Vishwas Act, 2020 was intended to allow person(s) like the petitioner also to settle the dispute under it. The speech of the Finance Minister during the presentation of the Budget also gives an indication that the intention of the Parliament was to provide an amnesty to the assessee(s) to settle the dispute in respect of “tax arrears”. The statement of the objects and reasons to the Act also seem to indicate the above position. These writ petitions deserve to be allowed. Consequently, the respondents are directed to process the application of the petitioner filed on 29.01.2021 in accordance with law as per Sections 3 and 5 of the Direct Tax Vivad Se Vishwas Act, 2020, as expeditiously as possible, preferably, within a period of six months from the date of receipt of a copy of this order and close the file against the petitioner. Issues Involved:1. Challenge to the rejection of the declaration under the Direct Tax Vivad Se Vishwas Act, 2020.2. Eligibility of the petitioner to file a declaration under the Direct Tax Vivad Se Vishwas Act, 2020.3. Interpretation of 'appeal' under the Direct Tax Vivad Se Vishwas Act, 2020.4. Applicability of FAQ clarifications issued by the Central Board of Direct Taxes.Issue-wise Detailed Analysis:1. Challenge to the Rejection of the Declaration:The petitioner challenged the rejection order dated 03.02.2021, issued by the designated authority under the Direct Tax Vivad Se Vishwas Act, 2020. The rejection was primarily on the grounds that the petitioner's case did not fall within the purview of the said Act as no appeal was pending on the 'specified date' as defined in Section 2(1)(n) of the Act.2. Eligibility of the Petitioner to File a Declaration:The petitioner contended that they were eligible to file a declaration under the Direct Tax Vivad Se Vishwas Act, 2020, for the disputed interest charged under Sections 234A, 234B, and 234C of the Income Tax Act, 1961. The petitioner had previously filed a writ petition (W.P.No.12500 of 2010) challenging the denial of interest waiver, which was pending on the 'specified date.' The court observed that the definition of 'tax arrears' under Section 2(1)(o) of the Act includes 'disputed interest,' and thus, the petitioner was indeed entitled to file a declaration to settle their tax arrears.3. Interpretation of 'Appeal' under the Act:The court examined the interpretation of 'appeal' within the context of the Direct Tax Vivad Se Vishwas Act, 2020. It was noted that the term 'appeal' is not explicitly defined in the Act. However, the court referred to precedents and legal interpretations, concluding that the writ petition filed by the petitioner could be considered akin to an 'appeal' as it sought to rectify an erroneous decision by a lower authority. The court emphasized that the expression 'appeal' should be construed broadly to include proceedings like writ petitions challenging departmental decisions.4. Applicability of FAQ Clarifications:The respondents relied on FAQ No.13 issued by the Central Board of Direct Taxes, which stated that waiver applications pending as of 31 January 2020 are not covered under the Vivad Se Vishwas scheme. However, the court held that such clarifications are not binding and do not override the statutory provisions of the Act. The court agreed with the interpretations of the Bombay and Delhi High Courts, which emphasized that the Act's purpose is to provide a resolution mechanism for tax disputes, including disputes over interest.Conclusion:The court concluded that the petitioner was eligible to settle the dispute under the Direct Tax Vivad Se Vishwas Act, 2020, and directed the respondents to process the petitioner's application filed on 29.01.2021 in accordance with the law. The writ petitions were allowed, granting consequential relief to the petitioner. No costs were imposed, and connected miscellaneous petitions were closed.