TaxTMI 
TaxTMI 
2024 (9) TMI 1133
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 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 which an addition of INR 3,00,00,000/- came to be made. That liability....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0,000/- 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 circumstances of the case, I hold that sum of Rs. 3,00,00,000/- shall be charged to income ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....56. 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 expression "tax arrear" 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.]" 11. Ms. Malhotra ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (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 High Court or the Supreme Court) or the High Court (where the decision on such issue is not reversed by the Supreme Court), 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 also that in a case where an appeal is filed by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o 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, conciliator or mediator shall proceed to decide any issue relating to the tax arrear mentioned in the declaration in respect of which an order has been made under sub-section (1) of Section 5 by the designated authority or the payment of sum determined under that section. 5. Time and manner of payment.-(1) The designated authority shall, within a period of fifteen days from the date of rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 appropriate declarations in Schedule D. Taking us through the disclosures and declarations made in Form 1, learned counsel sought to highlight the fact that the prayer for a set off and carry forward of unabsorbed depreciation and business loss was never sought. In view of the aforesaid, it was contended that Form 3 suffered from no manifest or patent error which could have been rectified. It was further submitted that the determination of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re 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 as on the 31st day of January, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fied 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 Dispute Resolution Panel under Section 144-C of the Income-tax Act as on the specified date, the amount of tax payable by the appellant if the Dispute Resolution Panel was to confirm the variation proposed in the draft order; (E) in a case where Dispute Resolution Panel has issued any direction under sub-section (5) of Section 144-C of the Income-tax Act and the Assessing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ration 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 petitions pending before the High Court or the Supreme Court in respect of the tax arrears immediately after the issuance of a certification under Section 5 (1) and furnish proof of withdrawal thereof along with the intimation of payment spoken of in Section 5 (2). 20. Upon the submission of that application, the Designated Authority proceeds to examine and evaluate the same and on a culmination of that exercise determine the amount payable by the declarant. At the end of that determination, the Designated Authority grants a certificate to the declarant as per Form 3. Immediately upon issuanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 favour of the Revenue and amnesty/exemption has to be given only to those assesses who demonstrate that they satisfy all the conditions precedent for availing the amnesty/exemption. (See: Commr. of Customs case[Commr. of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1]). 29. For determining whether the DTVSV Act is a taxing statute or an amnesty act or a beneficial/remedial act, one has to examine what is the objective and intent behind enacting the statute. The relevant portion of the Statement of Objects and Reasons of the DTVSV Act reads as under: "...Over the years, the pendency of appeals filed by taxpayers as w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 the fundamental grain of the legislation itself. 24. The VSV Act enables an assessee to seek resolution of disputes pending at various stages of the appellate and review tiers created under the Act on the prescribed date. Those proceedings would undoubtedly be concerned with challenges which an assessee may have instituted to an original order of assessment and would be logically confined to parts which would have been adverse to it. Those appeals and challenges would necessarily be in respect of either adverse findings or decisions made by the AO and which would have constrained the asssessee to adopt remedial measures. This is further fortified by the manner in w....