Broad construction of Vivad Se Vishwas dispute enables relief for community income under Section 5A

Section 5A of the Income-tax Act, 1961 treats income of spouses governed by the Portuguese Civil Code in Goa as community income, requiring the dispute to be considered on that footing. A pending appeal against the penalty order was treated as a pending dispute under the Direct Tax Vivad Se Vishwas Scheme, and "dispute" was construed broadly in line with the Scheme's beneficial object. The absence of a separate appeal against the assessment order did not defeat eligibility where the spouse's appeal on the same community income had already been entertained and Scheme relief had been extended to the spouse. The rejection was unsustainable, and the assessee was entitled to consideration under the Scheme.

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Issues: Whether rejection of the assessee's application under the Direct Tax Vivad Se Vishwas Scheme was justified when a penalty appeal was pending and the assessee and her spouse were governed by Section 5A of the Income-tax Act, 1961.

Analysis: Section 5A creates a statutory fiction in respect of spouses governed by the Portuguese Civil Code in Goa, under which income is treated as community income and the assessment dispute is apportioned accordingly. The pending appeal against the penalty order constituted a pending dispute within the meaning of the Scheme, and the expression "dispute" was required to receive a broad construction consistent with the Scheme's beneficial object. The fact that no separate appeal had been filed against the assessment order did not defeat entitlement where the spouse's appeal on the same community income had already been entertained and the Scheme benefit had been extended to the spouse. The objections based on delay and lapse of the Scheme were also rejected because the application had been filed when the Scheme was in force.

Conclusion: The rejection order was unsustainable, and the assessee was entitled to consideration under the Scheme.

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