2021 (7) TMI 336 - HC - Income Tax

Direct Tax Vivad Se Vishwas Scheme, 2020 - DTVSV Act - in a case where the Appeal is filed by the Income Tax authority, the amount payable shall be one-half of the amount calculated - whether Petitioner is eligible for payment of 50% of disputed tax or 100%? - HELD THAT - In this case, assessing officer had made addition with respect to permanent establishment in the case of Petitioner and consequently denied it benefits of the double taxation avoidance agreement. The entire income was taxed at 40% instead of 10% as declared by Petitioner. Then the matter was appealed to CIT(A). The additions were deleted. Against the said deletions, the Department filed an Appeal before the ITAT 2015 (5) TMI 760 - ITAT MUMBAI against the order of CIT(A). The Tribunal restored the matter back to the assessing officer for fresh examination. It is stated that the Department had accepted this order of the ITAT. However, Petitioner challenged this order before this Court by way of an Appeal Having observed that the pending Appeal is a Revenue Appeal, the first proviso of Section 3 of the DTVSV Act would become applicable and, accordingly, the amount payable by the Petitioner would be 50% of the amount, viz., 50% of the disputed tax.

Summary

Issues Involved:
1. Validity of Form-3 under Section 5 of the Direct Tax Vivad Se Vishwas Scheme, 2020 (DTVSV Act).
2. Determination of whether the pending appeal before the ITAT is a Revenue Appeal or an Assessee Appeal.
3. Amount payable under the DTVSV Act based on the nature of the pending appeal.

Issue-wise Detailed Analysis:

1. Validity of Form-3 under Section 5 of the DTVSV Act:
The Petitioner challenged the validity of Form-3 dated 28th January 2021 and 26th March 2021, issued by the Designated Authority under Section 5 of the DTVSV Act for the Assessment Year 2002-2003. The Petitioner argued that the forms incorrectly determined the amount payable as 100% of the tax arrears instead of 50%, which should apply if the appeal is a Revenue Appeal.

2. Determination of whether the pending appeal before the ITAT is a Revenue Appeal or an Assessee Appeal:
The core issue was whether the appeal pending before the ITAT, referenced as Appeal No. 4632/MUM/2006, was a Revenue Appeal or an Assessee Appeal. The Petitioner contended that this appeal was filed by the Revenue against the CIT(A)'s order, which deleted the additions made by the assessing officer. The Tribunal had remanded the matter back to the assessing officer, and this remand order was challenged by the Petitioner before the High Court. The High Court set aside the Tribunal's order and restored the Revenue's appeal to the ITAT for fresh adjudication. The High Court concluded that the pending appeal was indeed a Revenue Appeal, as it was originally filed by the Revenue against the CIT(A)'s decision.

3. Amount payable under the DTVSV Act based on the nature of the pending appeal:
The DTVSV Act stipulates different amounts payable based on whether the pending appeal is filed by the Revenue or the Assessee. According to Section 3 of the DTVSV Act, if the pending appeal is a Revenue Appeal, the amount payable is 50% of the disputed tax. Conversely, if it is an Assessee Appeal, the amount payable is 100% of the disputed tax. Given the High Court's determination that the pending appeal was a Revenue Appeal, the Petitioner was eligible to pay 50% of the disputed tax.

Conclusion:
The High Court quashed and set aside the impugned Form-3 dated 26th March 2021 and directed the Designated Authority to issue a fresh Form-3, determining the amount payable as 50% of the disputed tax. The Court emphasized that the pending appeal before the ITAT was a Revenue Appeal, thus making the Petitioner eligible for the reduced payment under the DTVSV Act. The petition was allowed, and there was no order as to costs.