2020 (10) TMI 1207 - HC - Income Tax

Benefit of Vivad Se Vishwas Scheme ('VVS Scheme') - Substantial Questions of Law framed for consideration on account of certain subsequent developments - Option to appeal in case application for settlement is rejected - HELD THAT - It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India. The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. We direct the appellant / assessee to file the Form No.I on or before 09.11.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form.

Summary

Issues:
1. Challenge to order dated 05.10.2018 passed by the Income Tax Appellate Tribunal for Assessment Years 2009-10 and 2015-16.
2. Deletion of penalty under Section 271(1)(c) of ? 22,75,34,990.
3. Interpretation of 'inaccurate particulars of income' as per Dilip N.Shroff vs. JCIT.
4. Applicability of penalty under Section 271(1)(c) for non-bona fide deductions.
5. Deletion of penalty of ? 15 Crores under Section 271AAB for 'additional income' vs. 'undisclosed income'.
6. Application of Section 271AAB for income assessable under 'other sources' not recorded in books.
7. Interpretation of 'undisclosed income' under Section 271AAB.
8. Benefit of Vivad Se Vishwas Scheme for disputed tax resolution.

Analysis:
The High Court of Madras heard appeals filed by the Revenue challenging the Income Tax Appellate Tribunal's order for the Assessment Years 2009-10 and 2015-16. The substantial questions of law included the correctness of upholding penalty deletions under Section 271(1)(c) and 271AAB. The court considered whether inaccurate particulars were furnished deliberately, the relevance of previous court decisions, and the application of penalties for non-bona fide deductions. The court noted the assessee's intent to avail the Vivad Se Vishwas Scheme for tax dispute resolution, leading to the enactment of the Direct Tax Vivad Se Vishwas Act, 2020. This Act provided options for resolving tax disputes pending at various levels, offering declarants a chance to end disputes by filing declarations. The court detailed the provisions of the Act, including the determination of payable amounts, immunities, and exceptions. The assessee was directed to file the necessary form under the Act by a specified date, with the competent authority instructed to process the application promptly. The court disposed of the Tax Case Appeals with liberty for restoration based on the outcome of the declaration filed under the Act, leaving the substantial questions of law open and without costs.