TaxTMI 
TaxTMI 
2021 (4) TMI 549
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.... of the Constitution of India an appropriate direction order or a writ including a writ in the nature of 'Certiorari' to call for the records and verify the declaration filed under section 4(1) of the DTVSV Act and direct the Respondent No.2 to accept the same; (b) That the Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India appropriate writ or order or direction including a writ in the nature of 'Mandamus' directing the Respondent No.2 to accept the declaration made by the Petitioner on 18th November, 2020 under section 4(1) of the DTVSV Act; (c) That this Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate writ or order or direction including a writ in the nature of 'Prohibition' restraining the Respondent No.2 disposing off the application filed under section 264 of the Act and recover the outstanding disputed demand thereunder". 3. A sojourn into the facts will be helpful to appreciate the controversy. Petitioner who is stated to be engaged in the business of retail footwear under the shop name "Jolly Shoes", has filed declarations in Form-1 and undertaking in Form-2 in respect....
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....rom time to time to the TRO, which appears to be pursuant to an order of stay of demand by the ITAT. 8. Petitioner submits that the said amount of Rs. 12,43,000/was adjusted only against the demand for Assessment Year 1987-88 and not for demands for the various Assessment Years 1987-88 to 1998-99. This, according to the Petitioner, was despite the fact that, the original demand for the Assessment Year 1987-88 was only Rs. 19,170/- and, therefore the entire amount of Rs. 12,43,000/- could not have been adjusted for the tax liability for that year alone. 9. It is submitted that, pursuant to the order dated 20th August, 2004, passed by the ITAT, Respondent No.1 passed the Assessment Order on 13th March, 2006 under Section 143(3) of the Income Tax Act for the Assessment Years 1987-88 to 1998-99 against which, Petitioner filed appeals before CIT(A). Vide order dated 23rd November, 2006, the CIT(A) granted partial relief to the Petitioner, pursuant to which, Respondent No.1 passed order on 23rd January, 2007, giving effect to the order passed by the CIT(A). However, it is submitted that no credit for taxes paid on regular assessment of Rs. 15,86,151/- including Rs. 12,43,000/- was ....
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....er Section 264 of the Income Tax Act, the Direct Tax Vivad Se Vishwas Act, 2020 came to be enacted on 17th March, 2020 to reduce pending income tax litigations, generate timely revenue for the Government and benefit tax payers by providing for peace of mind, certainty and saving time and resources that would otherwise be spent on the long drawn and vexatious litigation process. The Direct Tax Vivad Se Vishwas Rules, 2020 (the "DTVSV Rules") were notified on 19th March, 2020, pursuant to which, Petitioner has filed declaration in Form - 1 and undertaking in Form-2 as per Rule 3 of the DTVSV Rules with the Designated Authority viz: Respondent No.2 on 18th November, 2020. Petitioner claims that he is an Appellant as per Section 2(1)(a)(v) of the DTVSV Act, inasmuch as he is a person who has filed an application for revision under Section 264 of the Income Tax Act and the said application is pending on the specified date viz: 31st January, 2020 as defined in Section 2(1)(m) of the DTVSV Act. It is submitted that as such he is an eligible Appellant as his application under Section 264 of the Income Tax Act is pending on the specified date. He further submits that in the Petitioner's cas....
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....ax against undisputed income in Form-1. In view of the above, you are hereby given an opportunity to submit your working of disputed tax in relation to undisputed income for A. Y. 1987-88 to 1998-99 within 3 days from receipt of the mail. If no reply is received within 3 days, your application for DTVsV scheme will be processed accordingly considering the disputed tax in relation to disputed income at Rs.Nil." 16. In reply, Petitioner has filed a detailed submission dated 5th December, 2020, which for the sake of convenience, is reproduced as under:- "Submissions of the Applicant: 9. For the sake of convenience, the Applicant divides his submissions into two parts as under:- 9.1 Submissions on the claims made by the Applicant in the said application (Paragraph 10) 9.2 Submissions dealing with the specific queries raised by Your Honour in the mail/ notice dated 03.12.2020 under consideration (Paragraph 11) 10. The Applicant at the outset draws Your Honour's attention to the following definitions as mentioned u/s. 2 of the "the Act, 2020" and submits as under:- 10.1. Section 2(1)(a)(v):- Section 2(1)(a) defines the ter....
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....1996-97 75,555/- 1997-98 2,79,116/- 1998-99 17,432/- 10.1. Section 2(1)(a)(v):- Section 2(1)(a) defines the terms "appellant" and Section 2(1)(a)(v) as under:- "person who has filed an application for revision under section 264 of the Income Tax Act and such application is pending on specified date" The Applicant submits that since his applications for revision for the years under consideration are pending on specified date (i.e. 31.01.2020), the Applicant is an "appellant" as per the aforesaid definition. 10.5 Section 2(1)(o) of "the Act, 2020" defines tax arrears as under:- "(o) Tax arrears means, (i) "The aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, and penalty leviable or levied on such disputed tax". The Applicant submits that from the aforesaid table, it is discernible that the amount / quantum of disputed tax is pending for all the years under consideration and thus, the definition of "disputed tax" duly gets satisfied in the present facts. 10.6 Now, proceeding further the Applicant draws Your Honour's attention to section 3 and section 4 of the Ac....
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.... I.T. N.S150 for A. Y, 1987 to 1998 dated 16.04.2018 it is seen that Income tax is correctly calculated, there is no dispute in income tax calculation however you have mentioned disputed tax against undisputed income in Form-I." 11.1 The Applicant at the outset submits that the aforesaid objection is factually incorrect. From the facts narrated in the applications filed u/s. 264 of the Act as well as the present correspondence, it is clear that the Applicant has challenged the inaction on the part of the learned AO, with regard to granting credit of taxes of Rs. 12,43,000/- paid by the Applicant. Thus, the main dispute under consideration is "non-allowance of tax credit of Rs. 12,43,000/- for the relevant years." The Applicant draws Your Honour's attention tot he specific prayers sought in his revision applications which are self-explanatory and factually support the aforesaid contention of the Applicant. "Thus, the Applicant prays that your honours may be pleased to: A. The Ld. A. O. may be directed to compute the tax demand for A Y 1987-88 to A Y 1998-99 and demand may be raised after giving credit of the taxes paid amounting to Rs. 12,43,000/- which ha....
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....s the same. 12. Before closing the present submission, the Applicant clarifies that he has not made any elaborate submissions on the merits of the applications filed by him u/s. 264 of the Act and the present submission is limited only to the aspect of the validity/ eligibility of the Applicant's application filed for the respective years under the scheme. Further, the Applicant in order to avoid unnecessary repetition of the documents which have already been attached to his revision applications prefer not to submit the same one more time with the present submission. However, the Applicant mentions that if Your Honour seeks any document/ clarification, the Applicant shall be pleased to provide. In the view of the above, the Applicant requests shall be pleased to provide. In the view of the above, the Applicant requests Your Honour to accept his all applications and process the same under the scheme." 17. Thereafter, admittedly, an opportunity of personal hearing was given to the Petitioner, wherein the aforesaid submissions were reiterated. However, Respondent No.2 has rejected the applications by updating the status on the e-filing portal of the Petitioner on 30th Jan....
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.... mean the amount of income tax including surcharge and cess payable by the Appellant under the Income Tax Act, if the application for revision u/s. 264 of the Act was not to be accepted. According to him, if the Petitioner's Revision Application for the Assessment Years 1988-89 to 1998-99, which are pending before the PCIT as on 31st January, 2020 are rejected i.e. if the main contention of granting credit/ adjustment of taxes of Rs. 12,43,000/- against revised demands of subsequent years (i.e. not including Assessment Year 1987-88) were not accepted, then Petitioner would be liable to pay a total demand of Rs. 88,90,180/- including income tax, interest. Learned Counsel also draws our attention to Section 2(1)(o) of the DTVSV Act, which defines tax arrear as under:- "(o) Tax arrears means, - (i) "The aggregate amount of disputed tax, interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax.". 22. He submits that considering that since the total amount of demand upon rejection will have a substantial interest component u/s. 234B and 220(2) of the Income Tax Act, the definition of 'tax arrears' as above also gets sat....
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....nd the enactment is to settle tax disputes and to reduce litigation. The Act confers benefits upon tax payers, who can put an end to the litigation by paying specified percentages of tax and obtain immunity from penalty and prosecution and when Petitioner has come forward and filed valid declarations, the Designated Authority instead of issuing Form 3 u/s. 5 of the DTVSV Act has simply updated the portal on 30th January, 2021 with the remark "Rejected" which is not contemplated in the scheme of the DTVSV Act. 27. He would, therefore, submit that this is a fit case for interference by this Court and accordingly submits that the Petition as prayed for, be allowed. 28. Per contra, the Revenue has filed its affidavit in reply where it is admitted that Petitioner is an Appellant as per Section 2(1)(a)(v) of the DTVSV Act. Further stating that the applications of the Petitioner have not been rejected on that ground but on the ground that there is no disputed tax. 29. Mr. Sham Walve, learned standing counsel for the Revenue seeks to rely upon and takes us through paragraphs 5, 8, 10, 11, 12 and 23 of the said reply. For the sake of convenience, the said paragraphs are reproduced ....
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....tioned that disputed tax includes interest viz. 234A, B, C or 220(2) of the Act, etc. or credit of challans given or to be given etc. This definition of "disputed tax" as per Sec. 2(j)(F) of DTVSV Act, 2020 is emphasized upon solely for the reason that the declaration of petitioner's application under VSV Act, relates to the "disputed tax". There after, query was raised on account of "disputed tax" against the Petitioner. The Petitioner vide submission made on 05.12.2020 submitted that the revision application preferred u/s. 264 of the Act, is pending and the petitioner would be liable to pay the total demand of Rs. 88,90,180/- if the main contention of granting credit of taxes Rs. 12,43,000/- against the revised demand of subsequent years is not accepted and the revision application filed by the petitioner is rejected. Thus, the definition of "disputed tax" gets duly satisfied in the facts under consideration. 11:- Careful perusal of the revision application u/s. 264 of the Act, and the above reply of the assessee, revealed that the petitioner has never contested against the income tax demand raised in order u/s. 154 of the Act, tax (i.e. income tax, including su....
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....and cess-Tax Arrears - Disputed tax plus interest and penalty leviable or levied. Hence, the petitioner himself is contracting his statement made in Para 3.10(iv) that he has satisfied the definition of "disputed tax" as per Sec.2(1)(j)(F) of DTVSV Act, simply for the fact that the "disputed tax" which the petitioner has declared in application under DTVSV Act, is nothing but the "Tax Arrears" and this is clear from petitioner's explanations given in various submissions and in this Para as well." 30. The learned Counsel for the Revenue submits that there has been no challenge by the Petitioner to the income tax demand and, therefore, there is no disputed income nor disputed tax. Petitioner is only seeking remedy of waiver of interest which cannot be by way of an application under Section 264 of the Income Tax Act. He submits that Petitioner is, therefore, not entitled to the reliefs claimed as rejections by the designated authority are justified. 31. We have heard learned Counsel for the parties. We have also with their assistance, perused the papers and proceedings in the matter as well as the relevant provisions of the DTVSV Act as well as the DTVSV Rules. 32. The basic ....
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.... in section 2(1)(j)(F) of the DTVSV Act as contended by the Petitioner, it appears from the facts that the Petitioner would fall within the said definition. We find merit in the submissions made on behalf of the Petitioner. 34. It would, therefore be apposite to refer to the legislative background of the DTVSV Act. For this purpose, firstly, the relevant portion of the budget speech of the Hon'ble Finance Minister made on 1^st February, 2020 is quoted as under:- "Sir, in the past our government has taken several measures to reduce tax litigations. In the last budget, Sabka Vishwas Scheme was brought in to reduce litigation in indirect taxes. It resulted in settling over 1,89,000 cases. Currently, there are 4,83,000 direct tax cases pending in various appellate forms i.e. Commissioner (Appeals). ITAT, High Court and Supreme Court. This year, I propose to bring a scheme similar to the indirect tax Sabka Vishwas for reducing litigations even in the direct taxes. Under the proposed 'Vivad se Vishwas' scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided the pays by 31st March,....
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....nding or has been paid; (b) the pending appeal may be against disputed tax, interest or penalty in relation to an assessment or reassessment order or against disputed interest, disputed fees where there is no disputed tax. Further, the appeal may also be against the tax determined on defaults in respect of tax deducted at source or tax collected at source. (c) in appeals related to disputed tax, the declarant shall not pay the whole of the disputed tax if the payment is made before the 31st day of March, 2020 and for the payments made after the 31st day of March, 2020 but on or before the date notified by Central Government, the amount payable shall be increased by 10 per cent of disputed tax. (d) in appeals related to disputed penalty, disputed interest or disputed fee, the amount payable by the declarant shall be 25 per cent of the disputed penalty, disputed interest or disputed fee, as the case may be if the payment is made on or before the 31st day of March, 2020. If payment is made after 31st day of March, 2020 but on or before the date notified by Central Government, the amount payable shall be increased to 30 per cent of the disputed penalty, dispu....
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....after in this clause referred to as the amount of tax) payable by the appellant under the provisions of the Income tax Act, 1961 (43 of 1961), as computed hereunder:- (A) in a case where any appeal, writ petition or special leave petition is pending before the appellate forum as on the specified date, the amount of tax that is payable by the appellant if such appeal or writ petition or special leave petition was to be decided against him; (B) in a case where an order in an appeal or in writ petition has been passed by the appellate forum on or before the specified date, and the time for filing appeal or special leave petition against such order has not expired as on that date, the amount of tax payable by the appellant after giving effect to the order so passed; (C) in a case where the order has been passed by the Assessing Officer on or before the specified date, and the time for filing appeal against such order has not expired as on that date, the amount of tax payable by the appellant in accordance with such order; (D) in a case where objection filed by the appellant is pending before the Disputed Resolution Panel under section144C o the Incom....
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....s shall be ignored for the purpose of computation of amount payable under this Act. (b) Where the tax arrear includes the tax, interest or penalty determined in any assessment on the basis of search under section 132 or section 132A of the Income Tax Act, The aggregate of the amount of disputed tax, and twenty five per cent of the disputed tax; provided that where the twenty five per cent of disputed tax exceeds the aggregate amount of interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax, the excess shall be ignored for the purpose of computation of amount payable under this Act. The aggregate of the amount of disputed tax and thirty-five percent of disputed tax; provided that where the thirty-five per cent of disputed tax exceeds the aggregate amount of interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax, the excess shall be ignored for the purpose of computation of amount payable. (c) Where the tax arrear relates to disputed interest or disputed penalty or disputed fee Twenty-five per cent of disputed interest or disputed penalty or disputed fee. Thirty-f....
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....ver required after issuance of certificate under sub-section (1) of section 5 and furnish proof of such withdrawal along with the intimation of payment to the designated authority under subsection (2) of section 5. (4) Where the declarant has initiated any proceeding for arbitration, conciliation or mediation, or has given any notice thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India whether for protection of investment or otherwise, he shall withdraw the claim, if any, in such proceedings or notice after issuance of certificate under sub-section (1) of section 5 and furnish proof of such withdrawal along with the intimation of payment to the designated authority under sub-section (2) of section 5. (5) Without prejudice to the provisions of sub-sections (2), (3) and (4), the declarant shall furnish an undertaking waiving his right, whether direct or indirect, to seek or pursue any remedy or any claim in relation to the tax arrear which may otherwise be available to him under any law for the time being in force, in equity, under statute or under any agreement entered into ....
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.... making a declaration to designated authority and paying specified percentage of disputed tax as per section 3 of the DTVSV Act. 43. Section 3 of the DTVSV Act provides that where a declarant files a declaration to the designated authority in accordance with the provisions of section 4 in respect of tax arrears, the amount payable would be the amount of disputed tax as is applicable in the cases referred to in the table in the said section. Under section 4, the form of declaration and the particulars to be furnished before the designated authority are provided for. Rules stipulate that declaration has to be filed in Form-1 under section 4(1) of the Act read with Rule 3(1) of the Rules. Also an undertaking in Form-2 under section 4(5) of the Act read with Rule 3(2) of the Rules is to be filed by appellant under the Act, which admittedly has been filed by the petitioner. 44. It is stated in section 4 (5) that, declarant is to furnish an undertaking waiving his right to seek or pursue any remedy or claim in relation to the tax arrears which may be available to him in law or equity under statute or under any agreement. 45. It is also stated in section 4(6) that declaration und....
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....authority before the Appellate Forum, or arbitration, conciliation or mediation initiated or given notice thereof, or objections filed on or to be filed under Section 264 of the Income-tax Act." "3. Form of declaration and undertaking:- (1) The declaration under sub-section (1) of section 4 shall be made in Form-1 to the designated authority. (2) The undertaking referred to in sub-section (5) of section 4 shall be furnished in Form-2 along with the declaration. (3) The declaration under sub-rule (1) and the undertaking under sub-rule (2), as the case may be, shall be signed and verified by the declarant or any person competent to verify the return of income on his behalf in accordance with section 140 of the Income-tax Act,1961. (4) The designated authority on receipt of declaration shall issue a receipt electronically in acknowledgment thereof." "4. Form of certificate by designated authority:- The designated authority shall grant a certificate electronically referred to in subsection (1) of section 5 in Form 3. 7. Order by designated authority - the order by the designated authority under sub-section (2) of section 5,....