TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 836
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....reciate 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 the Revenue on the pretext that as on the specifi....
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....rs 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 the question of tax arrears. In order to substantiate his arguments, he placed r....
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....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. In the last Budget, Sub Ka Vishwas Scheme was brought in to reduce litigation in indirect taxes. It resulted i....
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....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 declarant shall only pay the whole of the disputed tax, if the payment is made before 31st day of March, 2020 and for the payments made after 31st day of March, 2020, but on or before a....
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...., 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 payable shall be amount so determined by the AO, iv) where objections are pending before DRP, then the tax amount shall be the amount so determined if the DRP would have decided against the appellant, v) where DRP has passed the directions an....
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....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 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....
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....ation 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 to the appellant in certain cases from the initiation of proceedings against any offence under the Act with respect to tax arrears. Analysis 23. As the facts of the case would suggest that assailing the assessment order dated 24.05.2013, the assessee approached the CIT(A) on 23.02.2018. On 01.01.2020, the CIT(A) rejected the appeal for being beyond the prescribed limitation period. Thereafter, in order ....
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....rescribed, 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 on the petitioner's / assessee's electronic portal on or before 26.04.2021. 5. List the matter on 18.08.2021." 28. As it is evident from the legislative intent as well as the Statement of Objects and Reasons, the aim of the DTVSV Act is to finally put an end to the litigation and set free the tax arrears entangled in the litigation battle. Considering the nature of the legislation to be beneficial and remedial in its form, it should be interpreted in a liberal ....
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....e, 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:- "27. A statute is supposed to be an authentic repository of the legislative will and the function of a court is to interpret it "according to the intent of them that made it". From that function the Court is not to resile. It has to abide by the maxim ut res magis valiat quam pereat, lest the intention of the legislature may go in vain or be left to evaporate into thin air..." 30. On the touchstone of the principles as noted above, it is imperative to test the contention of the Revenue that since the CIT(A) had pass....
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....inbelow : "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 to introduce the qualification that it should be valid or competent. In Raja Kulkarni v. State of Bombay reported in AIR 1954 SC 73, the Supreme Court has held that "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 ....
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....here 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 appeal pending before the Court." 35. The Supreme Court in the case of Renuka Datla (Dr) v. CIT (2003) 2 SCC 19., again while dealing with the Kar Vivad Samadhan Scheme has also held that once the legislation contemplates the appeal to be pending, the authority cannot add qualifications to the appeal. The Court observed as under:- "19. However, not all "tax arrears" under Section 87 (m) are entitled to the benefit of the Scheme. If no appeal etc. is pending in respect of the tax arrears, the benefit of the Scheme is not available under Section 95 (i) (c). If an appeal etc. is pending, it is not for the designated auth....
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.... 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 CBDT had clarified that cases where the limitation for filing of appeals had not expired on 31 January 2020 would also be covered, it would be wholly unfair to hold that the same principle would not apply to a revision. 12. More importantly, the clarificatory directive of the Board must be interpreted and understood in light of the underlying legislative policy of the VSV Act of providing an avenue for settlement of disputes coupled with the insurmountable challenges which were faced by people during the pandemic. If the clarification were to be viewed in that light it becomes apparent that the core theme of the Board directive was to extend the benef....
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....rmation 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 Section 35, because what that section really contemplates is a disposal or conclusion of the appeal and the forms of orders specified in it are not exhaustive. An appellate order may not, directly and by itself, confirm, or reduce or enhance or annul an assessment and may yet dispose of the appeal. If it does so, it is immaterial whether the ground is a finding that the appeal is barred by limitation or a finding that the case is not a fit one for extension of time or both." This reasoning is also the basis of the decisions of the Bombay and Allahabad High Courts which hold that an order rejecting an appeal on the ground of limitation after it had been admitted is one under Section 31, though th....
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....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 scenario as the question before us is not with respect to the doctrine of merger rather it is limited only with respect to the resultant effect of the CIT(A) order, wherein, the appeal of the assessee was rejected on account of being barred by time. 43. Moreover, considering the nature of the legislation and the objective that the DTVSV Act strives to achieve, the contention of the Revenue falls flat as if such a view is taken, it would ultimately defeat the beneficial objectives as intended by the legislature. It is germane to point out that the Revenue's contention would have the propensity to deter the taxpayers from availing the benefits under the DTVSV Act, who are otherwise eligible and at the same time, tantam....