2020 (10) TMI 1158 - HC - Income Tax

Benefit of Vivad Se Vishwas Scheme ('VVS Scheme') - resolution of disputed tax and for matters connected therewith - HELD THAT - We are informed by the learned counsel for the appellant/assessee that the assessee has already filed the declaration under Section 4 of the Act on 25.09.2020 and has also remitted the tax in terms of the computation to be done under the said Act and they are awaiting the orders from the Department. In the light of the fact that the assessee has already availed the benefit under the Act, no useful purpose would be served in keeping this appeal pending. At the same time, safeguarding the interest of the assessee in the event the order to be passed by the Department under the Act is not in favour of the assessee. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already filed a declaration and remitted the tax and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee.

Summary

Issues:
1. Interpretation of Section 2(22)(e) of the Income Tax Act, 1961.
2. Whether an entry in the books of a company can constitute payment by way of advance or loan.
3. Whether an entry in the books of a company can constitute payment of dividend to a shareholder.
4. Impact of a company's admission that no actual loan was extended to its shareholder on the finding of payment under Section 2(22)(e).

The judgment involves an appeal filed under Section 260 A of the Income Tax Act, 1961, challenging an order of the Income Tax Appellate Tribunal for the Assessment Year 2007-08. The substantial questions of law raised include the interpretation of Section 2(22)(e) regarding the transfer of amounts from a company to its shareholder, the consideration of entries in a company's books as payment by way of advance or loan, and whether such entries can constitute payment of dividend to a shareholder. The court noted subsequent developments related to the Direct Tax Vivad Se Vishwas Act, 2020, which provides for the resolution of tax disputes. The Act allows declarants to resolve pending tax disputes at various levels, offering provisions for determining the amount payable and granting immunity from penalties in certain cases.

The court highlighted the provisions of the Direct Tax Vivad Se Vishwas Act, 2020, which allows declarants to resolve tax disputes pending at different levels. The Act defines "disputed tax" and outlines the procedure for filing declarations and determining the amount payable by declarants. It also specifies provisions for cases where appeals or petitions are filed by tax authorities, granting immunity from penalties in certain circumstances. The court acknowledged that the appellant had filed a declaration under the Act and remitted the tax, awaiting the department's decision. Consequently, the court disposed of the appeal, considering that the appellant had already availed benefits under the Act.

The court, recognizing that the appellant had already taken steps under the Direct Tax Vivad Se Vishwas Act, 2020, decided to dispose of the appeal. It emphasized that the department should process the application promptly and communicate the decision to the appellant. The court granted the appellant the liberty to restore the appeal if the department's decision was unfavorable. It specified that the registry should entertain such a request without requiring a formal application for condonation of delay, allowing the appellant to file a Miscellaneous Petition for Restoration directly. The judgment concluded by disposing of the Tax Case Appeal with the mentioned liberty and without imposing any costs.