TaxTMI 
TaxTMI 
2022 (11) TMI 1304
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.... scrutiny assessment and a final assessment order dated 29th October, 2010 under Section 143 read with Section 144C of the Income Tax Act, 1961 (for short 'Act') was passed by the Assessing Officer for the Assessment Year 2007-08 making various adjustments to the total income of the Petitioner. 3. The Petitioner challenged the assessment order by filing an appeal before the Tribunal which was disposed of vide order dated 19th September, 2014 deciding the various issues as under: a. Salary to expatriate employees - allowed in favour of petitioner-assessee. b. Deferred Guarantee Commission - allowed in favour of petitioner-assessee. c. Interest received by HO/overseas branches - allowed in favour of petitioner-assessee. d. Deduction for interest paid to HO/overseas branches - allowed in favour of petitioner-assessee. e. Interest received from HO/overseas branches - decided against the petitioner-assessee. f. Applicability of Section 115JB to foreign banks - allowed in favour of petitioner-assessee. g. Taxability of ECB Interest - remanded back. h. Rate of tax - decided against the petitioner-assessee 4. The Petitioner challenged the order of the Tribunal on issues (....
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....sary to settle all the appeals for a particular assessment year. 11. On 29th January, 2021, the application was rejected by the Respondent-Department on the ground that the Petitioner is settling part of the appeal and ought to have also settled the Respondent-Department's SLP pending in the Supreme Court for the same assessment year. In this regard, the Respondents relied on FAQ Nos.7, 11, 14 and 36 issued by the CBDT vide Circular No.7/2020 dated 22nd April, 2020 which are reproduced hereinbelow:- "Question No. 7. If assessment has been set aside for giving proper opportunity to an assessee on the additions carried out by the AO. Can he avail the Vivad se Vishwas with respect to such additions? Answer: If an appellate authority has set aside an order (except where assessment is cancelled with a direction that assessment is to be framed de novo) to the file of the AO for giving proper opportunity or to carry out fresh examination of the issue with specific direction, the assessee would be eligible to avail Vivad se Vishwas. However, the appellant shall also be required to settle other issues, if any, which have not been set aside in that assessment and in respect of which eit....
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....inition of "dispute" under Rule - 2(b) of the Direct Tax Vivad se Vishwas Rules, 2020 (for short 'DTVSV Rules') considers an appeal or an SLP as a separate dispute for the purpose of Rules 9, 10 and 11 in relation to computation of disputed tax in certain situations. He also emphasised that Sections 3 and 4 of the DTVSV Act allows an assessee to file a declaration for any appeal or an SLP which is pending before an appellate authority and does not require the assessee to file a declaration for all the appeals pending for an assessment year and after the settlement of the dispute, only such appeal is to be withdrawn for which the application was made by an assessee. In support of his contention, he relied on Circular No.9/2020 dated 22nd April, 2020 issued by CBDT. The relevant portion of the said Sections, Rules and Circular referred to hereinabove are reproduced hereinbelow:- "2. Definitions.-(1) In this Act, unless the context otherwise requires,- xxx xxx xxx (j) "disputed tax" in relation to an assessment year or financial year, as the case may be, means, the income-tax, including surcharge and cess (hereafter in this clause referred to as the amount of tax) payable by the....
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.... and confirming three issues. Time to file appeal has not expired as on specified date. The taxpayer wishes to file declaration for the three issues which have gone against him. What about the other two issues as the taxpayer is not sure if the department will file appeal or not? Answer: The Vivad se Vishwas allow declaration to be filed even when time to file appeal has not expired considering them to be a deemed appeal. Vivad se Vishwas also envisages option to assessee to file declaration for only his appeal or declaration for department appeal or declaration for both. Thus, in a given situation the appellant has a choice, he can only settle his deemed appeal on three issues, or he can settle department deemed appeal on two issues or he can settle both. If he decides to settle only his deemed appeal, then department would be free to file appeal on the two issues (where the assessee has got relief) as per the extant procedure laid down and directions issued by the CBDT. FAQ No.40 Question No.40. Where there are two appeals filed for an assessment year - one by the appellant and one by the tax department, whether the appellant can opt for only one appeal? If yes, how would t....
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....ise out of one assessment year, then the assessee is required to settle all such issues relating to such assessment year which cannot be dissected at the choice of the assessee. He submitted that the unit for settlement of dispute under the DTVSV Act is an assessment year and not an appeal or writ petition or a special leave petition. He emphasised that the submissions of the Department were based on the jurisdictional requirement of Section 2(j) of the DTVSV Act that there must be disputed tax qua an assessment year and not qua the issues relating to an assessment year. 16. He submitted that in terms of FAQ 11 of the Circular No. 9 of 2020, an assessee cannot settle part of a pending dispute for a single assessment year. Further, according to him FAQ 14 of Circular 9 of 2020 stipulated that the Petitioner must settle all the issues arising out of an assessment and picking and choosing of issues was impermissible. The only exception was that when one appeal is filed by the assessee and other by the revenue, the assessee can settle his appeal/deemed appeal or departments' appeal/deemed appeal, in terms of FAQ 36 and 40 of the aforesaid Circular. 17. He submitted that when the matt....
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....e an option to the assessee in a specific situation wherein two assessment orders are passed, one under Section 143(3) of the Act and the other under Section 147/143(3).He pointed out that in the present batch of matters, the appeals pending at different forums originated from the same first assessment order dated 29th October, 2010 that was subsequently set aside by the ITAT vide order dated 19th September, 2014. 21. He further submitted that FAQ 36, provided for deemed appeals, and allows an assessee to seek settlement of either his appeal or the department's appeal or both, when actual appeals may not have been filed. 22. He also submitted that FAQ 40 applied to cases where one appeal was filed by revenue and another by the assessee. He stated that the same was not applicable to the present case where both the pending appeals had been filed by the revenue. REJOINDER ARGUMENTS 23. In rejoinder, learned senior counsel for the Petitioner submitted that the interpretation of the Department that the assessee was required to settle all the Departmental appeals for an assessment year was wholly incorrect and not supported by any provision of the DTVSV Act. He stated that the absurd....
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....by the Department on the aforesaid FAQs was incorrect and bad in law. COURT'S REASONING RULE OF INTERPRETATION TO BE APPLIED 26. Having heard learned counsel for the parties, this Court is of the view that the primary question that needs to be answered is what is the rule of interpretation that the Court must apply while interpreting the DTVSV Act. 27. Every modern legislation is actuated with some policy. While the intent of taxing statutes is to collect taxes, the intent of amnesty acts like Voluntary Disclosure of Income Scheme (for short 'VDI Scheme') is to provide an opportunity to the assesses to declare their undisclosed income on fulfilling certain terms and conditions. There are also legislations which are directed to cure some mischief and bring into effect some type of reform by improving the system or by relaxing the rigour of the law or by ameliorating the condition of certain class of persons who according to present-day notions may not have been treated fairly in the past. Such welfare, beneficent or social justice oriented legislation are also known as Remedial statutes. 28. It is settled law that any ambiguity in a taxing statute enures to the benefit of the ....
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....on process..." From the aforesaid, it is apparent that DTVSV Act, 2020 is a beneficial/remedial piece of legislation enacted by the Parliament to reduce pendency of cases, generate timely revenue for the government and provide certainty and savings of resources that would be spent on the long drawn litigation process. It is a statute which provides benefit as it recovers the taxes for the Department upfront without having to wait to succeed in the litigation which itself is uncertain. DTVSV Act also provides a sop to an assessee, as it puts an end to the litigation and the assessee is relieved of payment of interest and penalty if the same were to imposed. The DTVSV Act also benefits the society as it reduces litigation, acrimony, decongests the Courts and relieves the system of unnecessary burden. Consequently, this Court is of the view that DTVSV Act is neither a taxing statute nor an amnesty act. It is a remedial/beneficial statute. 31. In construing a remedial/beneficial statute, it has been held that the Courts ought to give to it "the widest operation" which its language will permit. The Courts have only to see that the particular case is within the mischief to be remedied ....
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.... scheme though it was nomenclatured as a "litigation settlement scheme" and was not similar to the earlier VDI Scheme. It further held that the object of "Kar Vivad Samadhan Scheme" was to put an end to all pending matters in the form of appeals, reference, revisions and writ petitions under the IT Act/Wealth Tax Act and the object was to put an end to litigation in various forms and at various stages under the IT Act/Wealth Tax Act and therefore the rulings on the scope of appeals and revisions under the IT Act or VDI Scheme will not apply. Consequently, the judgment of the Supreme Court in Dilip Kumar (supra) which deals with interpretation of exemption notification, has no application to the present case. THE UNIT FOR SETTLEMENT OF DISPUTE UNDER THE DTVSV ACT, 2020 IS AN APPEAL, WRIT PETITION OR SLP AND NOT THE ASSESSMENT YEAR. 34. This Court is further of the view that under the DTVSV Act, 2020 each appeal, writ petition or SLP is treated as a separate dispute which is evident from Section 2(1)(j) read with Section 2(1)(a) of the Act. The said Sections provide that disputed tax for each appeal, writ petition or SLP is to be computed and, the disputed tax payable by the declar....
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....long with the deemed appeal of the Department is incorrect and bad in law. THE RESPONDENTS RELIANCE ON FAQ-7, 27, 11 AND 14 IS MISCONCEIVED AND UNTENABLE IN LAW. 38. The respondents'-revenue reliance on FAQ-7, 27, 11 and 14 is misconceived and untenable in law. The DTVSV Act permits the settlement of a dispute which is pending either in appeal, writ petition or SLP. The assessee cannot settle any issue which may arise in the assessment proceeding pending before the AO. However, FAQ-7 of the Circular dilutes the rigour and by a concession, enables the assessee to make an application under DTVSV Act for the issues remanded to the AO by an appellate authority; the only condition being that the assessee must also settle the issues which are not remanded back by the appellate authority as the assessee is not allowed to pick and choose the issues for settlement. This cannot be regarded as laying down a principle that the declarant is required to settle all the appeals for an assessment year. 39. FAQ - 27 is consequential to FAQ - 7, as it provides for the manner of computing disputed tax when the declarant files a declaration for settlement of issues which are remanded by an appellate....
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....s case would be the aggregate amount of disputed tax in both appeals. (emphasis supplied) 44. Consequently, the contention of the respondents-revenue that the option is available to the petitioner only in a case where there are cross appeals arising from the same order is incorrect as FAQ-19 in unequivocal terms indicates that the assessee has an option to choose the appeals to be settled under the DTVSV Act and there is no obligation on the petitioner to settle all the appeals filed by the assessee for a particular assessment year. CONCLUSION 45. Keeping in view the aforesaid, this Court is of the view that an assessee is free to settle any appeal under the DTVSV Act and is not required to settle all the pending appeals filed by the respondent-revenue for an assessment year. RELIEF 46. Consequently, the impugned order and the impugned reasons being Annexures P-27 and P-30 to the present writ petition are set aside and the respondents-revenue are directed to reconsider the declaration dated 08th December, 2020 filed by the Petitioner for the assessment year 2007-08 under the provisions of DTVSV Act 2020 and issue refund, if any, in accordance with law within eight weeks. &nb....