TaxTMI 
TaxTMI 
2024 (5) TMI 836
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....f the present case would be helpful to appreciate the controversy at hand. The assessee is an Indonesian-based entity and for the Assessment Year ['AY'] 2010-11, filed its Income Tax Return ['ITR'] on 27.08.2011, declaring a total income of Rs.6,27,250/-. Thereafter, the assessee's case was picked up for scrutiny and notice under Section 143(2) of the Income Tax Act, 1961 ['Act'] was issued on 28.09.2011. 3. Subsequently, on 28.03.2013 a draft assessment order was passed under Section 144C (1) of the Act, whereby, the Assessing Officer ['AO'] proposed to assess the income of the assessee at Rs.1,69,68,213/-. Thereafter, the final assessment order was passed on 24.05.2013, whereby, the income of the assessee was assessed at Rs.1,69,68,210/-. 4. Aggrieved by the aforenoted assessment order, the assessee preferred an appeal before the CIT(A) which came to be dismissed on 01.01.2020 on the ground of four years delay. This order of CIT(A) however, is under challenge before the ITAT. 5. In the interregnum, on 17.03.2020, the DTVSV Act came into force and on 23.12.2020, the assessee filed Forms 1 and 2 as per the provisions of the DTVSV Act. The said application was rejected by t....
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....have no bearing over the rejection of Forms 1 and 2 as the disputed tax arrears still existed as on 31.01.2020. In support of his contentions, he placed reliance on the decisions of Raja Kulkarni v. State of Bombay (1953) 2 SCC 552., MUFG Bank Ltd. v. CIT 2022 SCC OnLine Del 4096., Medeor Hospital Ltd. v. Pr. CIT 2022 SCC OnLine Del 3553., Commissioner of Income Tax v. Shatrusailya Digvijaysingh Jadeja (2005) 7 SCC 294. Mela Ram & Sons v. CIT 1956 SCC OnLine SC 8., Sadruddin Tejani v. ITO 2021 SCC OnLine Bom 567. 10. Per contra, Mr. Indruj Rai, learned senior standing counsel appearing on behalf of Revenue vehemently opposed the submissions. He argued that as per the provisions of the DTVSV Act, in order to avail the benefit of the "Vivaad se Vishwas" scheme, the appeal had to remain pending as on the specified date i.e. on 31.01.2020. However, according to him, no appeal was pending in the assessee's case as the CIT(A) disposed of the condonation of delay application on 01.01.2020. He further argued that as on the specified date as per the provisions of Section 2 (1) (j) (B) of the DTVSV Act, no disputed tax arrears existed as CIT(A) decided only the question of delay and not t....
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.... country, the Union of India in order to ensure the conduct of responsible litigation framed what is today known as the National Litigation Policy, to bring down the pendency of cases and get meaningful issues decided from the judicial forums rather than multiple tiers of scrutiny just for the sake of it. The Government, being a litigant in well over 50 per cent of the cases, has to take a lead in not being a compulsive litigant." Objectives of the DTVSV Act 15. The DTVSV Act, which came to be passed on 17.03.2020, aimed at putting an end to the never-ending litigation process and putting disputed tax arrears into the coffers of the Government. As the name "Vivaad se Vishwas" signifies, the cardinal objective that the legislature intended to achieve was to put a quietus to litigation misery with the help of an amicable settlement. While introducing the Bill in the Parliament, the Finance Minister made the following speech, which lucidly captures the legislative intent behind the introduction of the DTVSV Act. The relevant extracts of the Finance Minister's speech read as under:- "Sir, in the past our Government has taken several measures to reduce tax litigations....
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....to provide for resolution of pending tax disputes. This will not only benefit the Government by generating timely revenue but also the taxpayers who will be able to deploy the time, energy and resources saved by opting for such dispute resolution towards their business activities. 3. It is, therefore, proposed to introduce Direct Tax Vivad Se Vishwas Bill, 2020 for dispute resolution related to direct taxes, which, inter alia, provides for the following, namely : (a) the provisions of the Bill shall be applicable to appeals filed by taxpayers or the Government, which are pending with the Commissioner (Appeals), Income-tax Appellate Tribunal, High Court or Supreme Court as on January 31, 2020 irrespective of whether demand in such cases is pending 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 declaran....
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....ed directions but the Assessing Officer ['AO'] has not passed the order and lastly v) where the revision has been preferred under Section 264 of the Act and such revision is pending as on the specified date. 20. Furthermore, the definition of 'disputed income' as per Section 2 (1) (g) of the DTVSV Act means a whole or part of the total income as is relatable to 'disputed tax' for the relevant AY. In addition to that, Section 2 (1) (j) of the DTVSV Act is of elementary importance, whereby, the term 'disputed tax' is defined. As per Section 2 (1) (j) of the DTVSV Act, disputed tax in relation to a relevant AY, means income tax as payable under the Act, shall be computed in the following manner namely- i) where an appeal is pending as on specified date, the tax would be the amount as determined if the appeal would be decided against the appellant, ii) where an order has been passed and time limit for filing an appeal against that order was not expired, then the tax amount shall be the amount as determined after giving effect to order so passed, iii) where the order has been passed by the AO and time limit for filing the appeal was not expired, then tax pa....
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.... whose case a writ petition or special leave petition or any other proceeding has been filed either by him or by the income-tax authority or by both before an appellate forum, arising out of an order of the Settlement Commission under Chapter XIX-A of the Income Tax Act, and such petition or appeal is either pending or is disposed of.] *** g) "disputed income", in relation to an assessment year, means the whole or so much of the total income as is relatable to the disputed tax *** (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 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....
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....sment year or financial year, as the case may be, shall not include and shall be deemed never to have been included any sum payable either by way of tax, penalty or interest pursuant to an order passed by the Settlement Commission under Chapter XIX-A of the Income Tax Act.] 22. Furthermore, once the declaration is filed under Section 3 of the DTVSV Act, the designated authority shall decide the application of the assessee within 15 days and determine the amount so payable as per the provisions of the DTVSV Act. As per the DTVSV Act, the designated authority shall grant certificate to the assessee containing particulars of the tax arrears and the amount payable after such determination. Once the certificate is granted, the assessee shall pay the tax arrears and intimate the details of such payment to the designated authority and consequently file Form 4, Thereafter, the designated authority shall pass an order declaring that the assessee has paid the amount. Once the order has been passed then as per Section 5 (3) of the DTVSV Act, pending disputes as covered by such an order shall be conclusive and shall not be reopened. Moreover, Section 6 of the DTVSV Act also gives immunity t....
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.... 2. Mr. Ved Jain, who appears on behalf of the petitioner/assessee, affirms that he has received a copy of the counter affidavit. 3. The counter affidavit is, however, not on record. Mr. Hossain will ensure that the counter affidavit is placed on record. Liberty is granted to Mr. Jain to file a rejoinder qua the same. 4. Since the matter requires consideration, the petitioner/assessee is given liberty to file Form-4, as prescribed, under the provisions of the Direct Tax Vivad Se Vishwas Act, 2020 [in short the "2020 Act"]. The filing of Form-4 will, however, be without prejudice to the rights and contentions of the respondent/revenue. 4.1 Furthermore, the fact that the petitioner/assessee has been permitted to file Form-4, will not create any equity in its favour, if it is otherwise not able to persuade us, to grant the final relief(s), as sought for, in the petition. 4.2 To facilitate the filing of Form-4, the respondent/revenue will issue Form-3, as prescribed under the provisions of the 2020 Act, albeit, without prejudice to its rights and contentions, as noted above. 4.3 The respondent/revenue will ensure that Form-3 is uploaded o....
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....V 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. 32. 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 and falls within the language of the enactment [Sayad Mir Ujmudin Khan v. Zia-ul-nissa Begam, 1879 SCC OnLine PC 10 : ILR (1879) 3 Bom 422]. The words of such a statute must be so construed as 'to give the most complete remedy which the phraseology will permit,' ...." 29. The Supreme Court in the case of CST v. Mangal Sen Shyam Lal (1975) 4 SCC 35., noticed the cardinal importance of the legislative will while interpreting the statutes by the Court and held as under:- "2....
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....template the condition of appeal being pending in order to avail the settlement benefits, then there is no requirement to add the qualifications to the pending appeal. The relevant paragraphs of the said decision are reproduced herein for reference:- "12...Court's reasoning It is settled law that when a section contemplates pendency of an appeal there is no need to introduce the qualification that it should be valid or competent. *** 14. Section 2 (1) (a) and section 2 (1) (n) of the Vivad Se Vishwas Act are reproduced hereinbelow : "2(1) In this Act, unless the context otherwise requires- (a) 'appellant' means- (i) a person in whose case an appeal or a writ petition or special leave petition has been filed either by him or by the Income-tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date ; (n) 'specified date' means the 31st day of January, 2020 ; 15. In the opinion of this court, when a section contemplates pendency of an appeal, what is required is that an appeal should be pending and in such a case there is no need ....
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.... 15. In the case of Dr. Mrs. Renuka Delta (supra), this Court has held on interpretation of section 95 (i) (c) that if the appeal or revision is pending on the date of the filing of the declaration under section 88 of the Scheme, it is not for the DA to hold that the appeal/revision was "sham", "ineffective" or "infructuous" as it has. 16. In the case of Raja Kulkarni v. The State of Bombay reported in MANU/SC/0132/1953 : AIR 1954 SC 73, this Court laid down that when a section contemplates pendency of an appeal, what is required for its application is that an appeal should be pending and in such a case there is no need to introduce the qualification that it should be valid or competent. Whether an appeal is valid or competent is a question entirely for the appellate court before whom the appeal is filed to decide and this determination is possible only after the appeal is heard but there is nothing to prevent a party from filing an appeal which may ultimately be found to be incompetent, e.g., when it is held to be barred by limitation. From the mere fact that such an appeal is held to be unmaintainable on any ground whatsoever, it does not follow that there was no a....
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....those appeals having not come to an end prior to the specified date. 10. Undisputedly, the period of limitation for the preferment of a revision could not be said to have come to an end on 31 January 2020 bearing in mind the provisions of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and the orders passed on Suo Moto 3/2020. The limitation for filing a revision in terms of the aforesaid thus travelled beyond the specified date of 31 January 2020. 11. In our considered opinion, once the respondents had taken the principled position that the VSV Act would apply even in those matters where the limitation period for filing of appeals had not expired on the specified date, there can be no valid justification to either countenance or draw a distinction between an appeal and a revision. The acceptance of such a distinction would be wholly illogical quite apart from being manifestly arbitrary and violative of Article 14 of the Constitution. The respondents, having accepted the directive of the CBDT insofar as appeals are concerned, cannot be permitted to justifiably take the position that the same would not extend to revisions. Once the CB....
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....s not within the section. That was the view taken in Dewan Chand v. CIT [(1951) 20 ITR 621]. But there is practically a unanimity of opinion among all the other High Courts that to fall within the section it is not necessary that the order should expressly address itself to and decide on the merits of the assessment, and that it is sufficient that the effect of the order is to confirm assessment as when the appeal is dismissed on a preliminary point. In CIT v. Shahzadi Begum [(1952) 21 ITR 1,] Satyanarayana Rao, J. said: "If the appeal is dismissed as incompetent or is rejected as it was filed out of time and no sufficient cause was established, it results in an affirmation of the order appealed against." 11. In Gour Mohan Mullick v. Commissioner of Agricultural Income Tax [(1952) 22 ITR 131, 144] construing Sections 34, 35 and 36 of the Bengal Agricultural Income Tax Act which are in terms identical with those of Sections 30, 31 and 33 of the Indian Income Tax Act, Chakravarti, J. observed: "I would base that view on the ground that the order, in effect, confirmed the assessment or, at any rate, disposed of the appeal and was thus an order under Secti....
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....n account of any exclusion contained in Section 9 of the DTVSV Act. 41. Taking a cue from the principles mentioned above, it cannot be gainsaid that once the CIT(A) has rejected the appeal of the assessee on the ground of being barred by limitation, the resultant effect of such an order would be confirmation of the assessment order so passed, unless and until such position is changed by the appellate forum. Therefore, upon a conjoint reading of Section 2 (1) (a) (ii) and Section 2 (1) (j) (B) of the DTVSV Act and applying the provisions in facts of the present case particularly in light of the objectives of the DTVSV Act, it is distinct to point out that the time limit for filing the appeal against the CIT(A) order dated 01.01.2020 was not expired as on specified date and the disputed tax arrears existed on the specified date as resultant effect of the CIT(A) order dated 01.01.2020 leads to confirmation of the assessment order thereby resulting in the disputed tax arrears. 42. Furthermore, the reliance placed by the Revenue on the cases of Raja Mechanical Co. (P) Ltd. (supra) and Glaxo Smith Kline Consumer Health Care Ltd. (supra) is of no relevance in the present factual sce....