TaxTMI 
TaxTMI 
2024 (9) TMI 1133
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....ed depreciation had not been claimed in Schedule D of the application which had been made by the petitioner for settlement under the VSV Act. However, Form 3, it was pointed out to us, had itself noted that the set off and carry forward would be open to be claimed as permissible in law. 3. It is the case of the writ petitioner that since the order of assessment had itself provisioned for the carry forward of unabsorbed depreciation as well as business loss, the same could have neither been ignored nor refused acknowledgment while drawing up the Form 3. It is asserted that the action of the respondents goes against the very grain of the VSV Act and which is concerned with settlement of disputes pertaining to a tax liability and according closure thereto. 4. For the purposes of examining the challenge which stands raised it would be appropriate to take notice of the following salient facts. The writ petition is concerned with the settlement of a tax dispute pertaining to Assessment Year [AY] 2012-13. The Return of Income as furnished for that AY was originally processed under Section 143(3) of the Income Tax Act, 1961 [Act] pursuant to an order dated 31 March 2015 in terms of w....
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....3.17 During the year, the assessee company has received share application money of Rs. 3,00,00,000/- from two companies, which has been credited in the books of account of the assesee company. It has been discussed on foregoing paragraphs that the share application money so received is not a genuine investment and it is a form of accommodation entries. No evidence of creditworthiness and genuineness of transactions with regard to these amounts have been furnished by the assessee. Even the activities of the investor companies with regard to the investment made do not appear to be genuine as observed in various paragraphs herein above. During the course of assessment proceedings, none of such entities could be produced by the assessee company. Even, the director of the assessee company didn't appear to explain the nature & sources of share application money. Further, the ratio of the case laws cited herein above is squarely applicable in case of the assessee company. The assessee has not been able to offer any satisfactory explanation about nature and sources of the said sum of Rs. 3,00,00,000/-. In view of the detailed discussions made herein above and considering all the facts and ....
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....copy of this order. Credit of prepaid taxes after verification is given. Calculation of the tax and other statutory liabilities consequent upon this order of assessment is appended to the notice of demand u/s 156. Penalty u/s 27 (1) (c) is also initiated on the additions made in Para 3.17, since I am satisfied that the assessee company has concealed the particulars of its income." 10. Ms. Malhotra contended that the VSV Act itself is concerned with the settlement of disputes with respect to tax which is asserted to be payable and, consequently, the respondents have taken a wholly untenable and erroneous view in the matter. Learned counsel drew our attention firstly to Section 2 (o) which defines the expression "tax arrear" as follows:- "(o) "tax arrear" 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; or (ii) disputed interest; or (iii) disputed penalty; or (iv) disputed fee, as determined under the provisions of the Income-tax Act. [Explanation.-For the removal of doubts, it is hereby clarified that the express....
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..... 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 per cent. of disputed interest or disputed penalty or disputed fee: Provided that in a case where an appeal or writ petition or special leave petition is filed by the income-tax authority on any issue before the appellate forum, the amount payable shall be one-half of the amount in the Table above calculated on such issue, in such manner as may be prescribed: Provided further that in a case where an appeal is filed before the Commissioner (Appeals) or objections is filed before the Dispute Resolution Panel by the appellant on any issue on which he has already got a decision in his favour from the Income Tax Appellate Tribunal (where the decision on such issue is not reversed by the Hi....
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....ice 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 by India with any country or territory outside India whether for protection of investment or otherwise and the undertaking shall be made in such form and manner as may be prescribed. (6) The declaration under sub-section (1) shall be presumed never to have been made if,- (a) any material particular furnished in the declaration is found to be false at any stage; (b) the declarant violates any of the conditions referred to in this Act; (c) the declarant acts in any manner which is not in accordance with the undertaking given by him under sub-section (5), and in such cases, all the proceedings and claims which were withdrawn under Section 4 and all the consequences under the Income-tax Act against the declarant shall be deemed to have been revived. (7) No appellate forum or arbitrator,....
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....nded that an applicant under the VSV Act cannot be placed in a position more disadvantageous than where it would have stood if the original orders of adjudication had prevailed. It was her submission that the benefits otherwise extended to an assessee cannot possibly be denied nor can an assessee be deprived of those parts of the assessment which were in its favour. This since according to learned counsel, that part of the assessment cannot be viewed or construed to be "disputed". 13. Ms. Malhotra also invited our attention to the clarifications issued by the Central Board of Direct Taxes [CBDT] in terms of a Circular dated 22 April 2020 and where Question 46 was answered in the following terms:- "Whether DA can amend his order to rectify any patent errors? Yes, the DA shall be able to amend his order under section 5 to rectify any apparent errors." It was in light of the above that Ms. Malhotra submitted that nothing fettered the power of the Designated Authority to rectify the Form 3 which had been framed. 14. Appearing for the respondents, Mr. Pathak learned counsel, contended that the petitioner admittedly failed to provide any particulars and make ap....
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...., the amount of disputed direct tax arrears is Rs. 9.32 lakh crores. Considering that the actual direct tax collection in the financial year 2018-19 was Rs.11.37 lakh crores, the disputed tax arrears constitute nearly one year direct tax collection. 2. Tax disputes consume copious amount of time, energy and resources both on the part of the Government as well as taxpayers. Moreover, they also deprive the Government of the timely collection of revenue. Therefore, there is an urgent need 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 The 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 ....
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....legislation defined "disputed tax" in Section 2 (j) in the following terms:- "(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 date, and the time for filing appeal against such order has not ex....
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....ging the attention of an appellate forum, a Dispute Resolution Panel or even where a dispute be pending before a Commissioner in revision. The VSV Act defined the expression "tax arrears" to mean the aggregate amount of disputed tax, interest, penalty or fee together with interest chargeable or charged on the same. Both the concept of "disputed tax" and "tax arrears" as embodied in the legislation are of critical importance as would be evident from the discussion which ensues. 19. In terms of Section 3, an applicant desirous of resolution of a tax dispute stands enabled to submit a declaration before the Designated Authority setting out the nature of the tax arrears as well as the amount payable in connection therewith. In terms of Section 4 the moment an applicant comes to submit a declaration, all appeals pending either before the Income Tax Appellate Tribunal [Tribunal] or the Commissioner of Income Tax (Appeals) at its behest are deemed to have been withdrawn from the date when a certificate under Section 5 (1) comes to be issued by the Designated Authority. A declarant is also enjoined to withdraw all appeals pending either before any appellate forum as well as any writ pet....
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....ing 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 assessee, but any ambiguity in the amnesty act or exemption clause in an exemption notification has to be construed in f....
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....e of legislation enacted by 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." 23. It is the aforenoted principles which would thus govern the interpretation that is liable to be accorded to the VSV Act. When tested on the aforesaid precepts, we come to the firm conclusion that the respondents have not only taken an extremely narrow and pedantic view while refusing to accord relief to the petitioner, their action goes against....