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2021 (4) TMI 549 - HC - Income TaxDeclaration filed under section 4(1) of the DTVSV Act - Petitioner seeking remedy of waiver of interest by way of an application under Section 264 of the Income Tax Act - HELD THAT - Petitioner filed applications under the DTVSV Act and Rules vide declarations in Form-1 dated 18th November, 2020 and waiver undertakings in Form-2 for each of the 11 years for the period 1988-89 to 1998-99 to avail of beneficial tax payments to end the litigation with the Revenue-Authorities. Pursuant to the filing of these applications, on 3rd December, 2020, Respondent No.1 called upon the Petitioner to submit working of disputed tax in relation to undisputed income for A.Y 1987-88 to 1998-99, stating that, Petitioner had mentioned disputed tax in the Form-1 despite the disputed income shown as Nil in the 154 proceedings, tax having been calculated correctly for Assessment Years 1987 to 1998 and there being no dispute in income tax calculation and despite that, the Petitioner had calculated disputed tax and filed the declarations under the DTVSV Act. The main purpose of the application under section 264 of the Income Tax Act being only to considerably reduce the interest under Sections 234-B and 220(2) of the Income Tax Act by seeking to adjust the credit of regular tax paid challans for Assessment Year 1987-88 of ₹ 12,43,000/- to various years i.e. to Assessment Years 1988-89 to 1998-99 even though Petitioner would be liable to pay a total demand of ₹ 88,90,180/- including a large interest component if the revision application under section 264 was to be rejected. Whether Petitioner satisfies the definition of disputed tax as contained in the DTVSV Act and Rules so as to be considered to have filed a valid declaration in Form-1 and waiver undertaking in Form-2? - Going by the submission and the definition of disputed tax as contained in section 2(1)(j)(F) of the DTVSV Act as contended by the Petitioner, it appears from the facts that the Petitioner would fall within the said definition. We find merit in the submissions made on behalf of the Petitioner. It would, therefore be apposite to refer to the legislative background of the DTVSV Act -what was intended by the Hon ble Finance Minister was to bring a scheme similar to the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 which pertained to indirect taxes. The object of the Vivad se Vishwas Scheme is to reduce litigations in direct taxes, where the tax payer would have to pay disputed tax. It therefore emerges that the DTVSV Act has been enacted to address the urgent need to provide for resolution of pending tax disputes where a huge amount of disputed tax arrears of over ₹ 9.32 lakh crores is locked-up. The DTVSV Act is aimed not only to benefit the Government by generating timely revenue but also to benefit the taxpayers by providing them peace of mind, certainty and saving time and resources rather than spending the same otherwise, enabling the taxpayers to be able to deploy the time, energy and resources saved, by opting for such dispute resolution, towards their business activities. The Act confers benefit on the tax payers who can put an end to tax litigation by paying specified percentage of tax and obtain immunity from penalty and prosecution and waiver of interest. In the context of the issue at hand, it would be pertinent to refer to the preamble to the DTVSV Act. The preamble clearly provides that this is an Act to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The emphasis is on disputed tax and not on disputed income. For a declarant to file a valid declaration, there should be disputed tax in the case of such a declarant. As can be seen from the aforesaid undisputed fact that Petitioner having filed revision application under Section 264 of the Income Tax Act for the Assessment Years 1988-89 to 1998-99 for credit/ adjustment of ₹ 12,43,000/- which application is pending before the Commissioner. Petitioner, admittedly being an eligible Appellant, squarely satisfies the definition of disputed tax as contained in Section 2(1) (j)(F) of the DTVSV Act, 2020. This is because, if the revision application under Section 264 of the Income Tax Act is rejected, then the Petitioner would purportedly be liable to pay a demand of ₹ 88,90,180/including income tax, interest. Petitioner as eligible Appellant has filed declaration under section 4 with the designated authority under the provisions of Section 4 of the DTVSV Act in respect of tax arrears which include the disputed tax which will become payable as may be determined by designated authority under Section 3. A look at definition of tax arrears clearly refers to an aggregate of the amount of disputed tax, interest chargeable or charged on such disputed tax etc. determined under the provisions of Income Tax Act. This is not only a case where there is a disputed tax but also tax arrears as referred to in section 3 of the DTVSV Act. The respondents have not raised any objection under any provision of the DTVSV Act or DTVSV Rules with respect to the declarations or undertakings furnished by the Petitioner nor have they passed any order let alone a reasoned or speaking order rejecting the said declarations. The Respondents have summarily rejected the declarations without their being any such provision in the DTVSV Act or the Rules. There also does not appear to be any fetter on the Designated Authority to determine disputed tax of an amount other than that declared by the petitioner. From a plain reading of the provisions of the DTVSV Act and the Rules it emerges that the Respondent- Designated Authority would have to issue Form-3 as referred to in Section 5 (1) specifying the amount payable in accordance with section 3 of the DTVSV Act in the case of declarant who is an eligible appellant not falling under section 4(6) nor within the exceptions in section 9 of the DTVSV Act, which fact appears to be undisputed. As also observed by us earlier, the case of the Petitioner would be covered by the definition of disputed tax as per Section 2(1)(j)(F) of the DTVSV Act. It has to be kept in mind in view of what has been observed by us earlier, that the DTVSV Act is a beneficial legislation for both the Revenue and the tax payer. We are of the view that the Designated Authority under the DTVSV Act viz Respondent No.2 in this case is not justified in rejecting the declarations filed by the Petitioner. Accordingly, we set aside the rejections. We direct the Respondent No.2 to consider the applications made by Petitioner by way of declarations dated 18th November, 2020 in Form-1 as per law and proceed with according to the scheme of the DTVSV Act and Rules in the light of above discussion within a period of two weeks from the date of this order.
Issues Involved:
1. Rejection of declarations under Section 4(1) of the Direct Tax Vivad-Se-Vishwas Act, 2020 (DTVSV Act) for multiple assessment years. 2. Determination of whether the petitioner qualifies as an "appellant" under the DTVSV Act. 3. Interpretation of "disputed tax" under the DTVSV Act. 4. The procedural and substantive compliance with the DTVSV Act and Rules by the petitioner. 5. The validity and legality of the rejection of the petitioner’s declarations by the designated authority. Detailed Analysis: 1. Rejection of Declarations under Section 4(1) of the DTVSV Act: The petitioner challenged the rejection of its declarations filed on 18th November 2020 under Section 4(1) of the DTVSV Act for eleven assessment years from 1988-89 to 1998-99. The declarations were rejected by updating the status on the e-filing portal on 30th January 2021, without passing any order or assigning reasons. 2. Determination of Whether the Petitioner Qualifies as an "Appellant": The petitioner argued that he qualifies as an "appellant" under Section 2(1)(a)(v) of the DTVSV Act because he had filed an application for revision under Section 264 of the Income Tax Act, which was pending on the specified date (31st January 2020). The court agreed, noting that the Revenue also admitted that the petitioner is an appellant as per the DTVSV Act. 3. Interpretation of "Disputed Tax": The petitioner contended that the term "disputed tax" under Section 2(1)(j)(F) of the DTVSV Act includes the tax payable if the revision application under Section 264 was not accepted. The court found merit in this argument, stating that the definition of "disputed tax" is relevant and applicable in the petitioner’s case, as the petitioner would be liable to pay a substantial amount if the revision application was rejected. 4. Procedural and Substantive Compliance with the DTVSV Act and Rules: The petitioner had filed declarations in Form-1 and undertakings in Form-2 as per Rule 3 of the DTVSV Rules. The court noted that the petitioner had complied with the procedural requirements and that the Revenue had not raised any objections under any provision of the DTVSV Act or Rules regarding the declarations or undertakings. 5. Validity and Legality of the Rejection of the Petitioner’s Declarations: The court observed that the Revenue had rejected the declarations without passing a reasoned or speaking order, which is not contemplated under the DTVSV Act or Rules. The court emphasized that the DTVSV Act is a beneficial legislation aimed at reducing litigation and providing certainty to taxpayers. The court concluded that the rejection of the declarations was unjustified and directed the designated authority to consider the applications in accordance with the DTVSV Act and Rules. Judgment: The court set aside the rejections of the declarations and directed the designated authority to consider the applications made by the petitioner within two weeks from the date of the order. The petition was allowed, and no order as to costs was made. The parties were instructed to act on an ordinary copy of the order duly authenticated by the Associate of the court.
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