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2021 (9) TMI 1280 - HC - Income TaxBenefit of the VSV Act - Rejection of declaration and undertaking filed under the provisions of Direct Tax Vivad Se Vishwas Act 2020 (the VSV Act) as there is no disputed income as the return filed by assessee has been accepted in assessment proceedings and as assessee has disputed interest charged u/s 234A/B/C and interest charged is mandatory and there is disputed income - HELD THAT - The VSV Act was enacted to provide for resolution of disputed tax and for matters connected therewith and incidental thereto. In the VSV Act there is no provision to exclude interest charged under Section 234A 234B or 234C of the Act as stated in the order impugned. The disputed interest is defined under Sub Clause h (ii) of Sub Section 1 of Section 2 to mean the interest determined in any case under the provisions of the Income Tax Act 1961 where an appeal has been filed by the appellant in respect of such interest . Appellant means under Clause a (i) of Sub Section 1 of Section 2 a person in whose case an appeal or a writ petition or special leave petition has been filed either by him or by the Income Tax Authority or by both before an appellate forum and such appeal or petition is pending as on the specified date . Therefore petitioner was eligible to file this declaration under the VSV Act for the disputed interest that was charged under Section 234A or Section 234B or Section 234C. The concerned authority was therefore not correct in rejecting the declaration of petitioner for reasons quoted above. Thus the order of rejection issued by respondent no.1 is bad in law. Respondent no.1 is directed to process the declaration cum undertaking filed by petitioner under the provisions of VSV Act.
Issues:
1. Rejection of petitioner's declaration and undertaking under the Direct Tax Vivad Se Vishwas Act 2020. 2. Eligibility of the petitioner to settle disputed amount under the VSV Act. 3. Interpretation of provisions of the VSV Act regarding disputed interest and pending appeals. 4. Correctness of rejection orders and condonation of delay in filing appeals. Issue 1: Rejection of petitioner's declaration and undertaking under the Direct Tax Vivad Se Vishwas Act 2020: The petitioner filed a declaration and undertaking under the VSV Act to settle a disputed amount of ?16,86,800. However, the declaration was rejected by the authorities citing that there was no disputed income as the return filed by the assessee had been accepted in assessment proceedings. The rejection was based on the grounds that interest charged under Section 234A, 234B, and 234C of the Income Tax Act was mandatory and not disputed. The petitioner filed a revised declaration after the delay in filing the appeal was condoned, but it was also rejected on similar grounds. The High Court held that the rejection was incorrect as the VSV Act allows for settlement of disputed interest amounts, including those charged under Section 234A, 234B, and 234C. Issue 2: Eligibility of the petitioner to settle disputed amount under the VSV Act: The VSV Act provides for the resolution of disputed tax matters, including disputed interest amounts. The petitioner, having filed an appeal challenging the disputed demand, was eligible to file a declaration under the VSV Act for the disputed interest charged under Section 234A, 234B, and 234C. The rejection of the petitioner's declaration by the authorities was found to be incorrect as the Act does not exclude interest charged under these sections from being settled under the VSV scheme. Issue 3: Interpretation of provisions of the VSV Act regarding disputed interest and pending appeals: The VSV Act defines tax arrears to include disputed interest amounts, and a declarant can settle such amounts under the Act. The Act does not restrict the settlement of interest charged under Section 234A, 234B, and 234C. The High Court emphasized that the pendency of an appeal is not contingent on its admission before a specified date, but on its filing and continuance until adjudication. The Court referred to a previous judgment where it was held that an appeal is considered pending from its filing until disposal, irrespective of its admission status. Therefore, the rejection of the petitioner's declaration based on the appeal's admission status was deemed incorrect. Issue 4: Correctness of rejection orders and condonation of delay in filing appeals: The rejection orders issued by the authorities were deemed incorrect in law by the High Court. The Court directed the concerned authorities to process the petitioner's declaration and pass orders accordingly under the provisions of the VSV Act. The Court also noted that the delay in filing the appeal had been condoned before the date of filing the declaration, as evidenced by communication to the petitioner. Therefore, the rejection of the petitioner's revised declaration on the grounds of delay was found to be unfounded. The Court set aside the rejection orders and directed the authorities to process the petitioner's forms under the VSV Act. In conclusion, the High Court found the rejection of the petitioner's declaration under the VSV Act to be erroneous and directed the authorities to process the declaration and undertake settlement of the disputed amount. The Court emphasized the eligibility of the petitioner to settle disputed interest amounts under the Act and clarified the interpretation of provisions regarding pending appeals and disputed interest.
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