Karnataka HC allows petition challenging erroneous interest calculation under Direct Tax Vivad Se Vishwas Act Section 3

Karnataka HC allowed petition challenging erroneous interest calculation under Direct Tax Vivad Se Vishwas Act. Court held that Section 3 makes no distinction between waiver of interest on disputed versus undisputed taxes, entitling petitioner to complete interest waiver on assessment orders passed pursuant to search proceedings. Respondent authorities' Forms requiring interest payment were deemed illegal and without jurisdiction. Court directed acceptance of petitioner's Forms 1 and 2 and issuance of fresh Form 3 certificate within four weeks, despite CBDT's September 2024 deadline having passed.

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Issues:
1. Challenge to the issuance of Form No. 3 under the Direct Tax Vivad Se Vishwas Act, 2020 for multiple assessment years.
2. Interpretation of provisions under the Direct Tax Vivad Se Vishwas Act, 2020 regarding waiver of interest on disputed taxes.
3. Allegations of erroneous calculation of interest by the tax authorities.
4. Compliance with CBDT standing order directing completion of process under the DTVSV Act.

Detailed Analysis:
1. The petitioner sought writs of certiorari to quash digitally signed Form No. 3 issued by the tax authority for assessment years 2006-07 to 2009-10 under the Direct Tax Vivad Se Vishwas Act, 2020. The petitioner contended that the forms determined liabilities higher than declared and requested fresh forms for correct payment under the scheme.
2. The court examined the provisions of Section 3 of the DTVSV Act, emphasizing that the Act does not differentiate between waiver of interest on disputed and undisputed taxes in cases arising from search proceedings. It concluded that the petitioner was entitled to the full benefit of the scheme, including waiver of interest on the entire amount as per the assessment orders.
3. The judgment highlighted that the DTVSV Act was enacted for the benefit of taxpayers and the petitioner should receive the intended benefits. It criticized the tax authorities for demanding interest contrary to the Act's provisions, deeming their actions illegal and arbitrary. The court ordered the quashing of the impugned certificates and directed the issuance of fresh certificates in line with the petitioner's declarations.
4. Regarding the CBDT standing order setting a deadline for the process under the DTVSV Act, the court directed compliance with its order despite the deadline passing, emphasizing the importance of following the court's directions. The judgment allowed the petition, quashed the certificates, and instructed the tax authorities to issue fresh certificates within a specified timeframe.

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