2021 (10) TMI 70 - HC - Income Tax

Benefit of Vivad Se Vishwas Scheme - assessee had already been issued with Form-3 on 10.02.2021 - HELD THAT - Assessee has already availed the benefit under the Act, no useful purpose would be served in keeping the appeal pending. At the same time, 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, is to be safeguarded. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already been issued with Form-3 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 the appeal in the event the ultimate decision to be taken on the declaration filed by the assessee u/s 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.

Summary

Issues:
1. Disallowance of expenses by the Appellate Tribunal.
2. Disallowance without materials seized during search.
3. Assessing Officer's jurisdiction in making disallowances.
4. Disallowance on items not subject to deduction.
5. Interpretation of interest calculation under various sections.
6. Reliance on facts and cases in disallowing the appeal.

Analysis:
1. The appeal was filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal confirming a 2.5% disallowance on the appellant's appeal for the assessment year 2001-02. The substantial questions of law raised included discrepancies in grounds of appeal and relief sought, which the Tribunal upheld. The High Court noted subsequent developments related to the Direct Tax Vivad Se Vishwas Act, 2020, under which the appellant had availed benefits and been issued Form-3. Consequently, the appeal was disposed of, with the liberty for the appellant to restore it if the Department's decision under the Act is unfavorable.

2. The Court highlighted that the disallowance made by the Appellate Tribunal was not based on materials seized during a search and that the original assessment under Section 143 had been completed. The issue of jurisdiction was raised concerning the Assessing Officer's powers in complicating the assessment and making disallowances, along with resulting interests. The Court acknowledged the appellant's benefit under the Vivad Se Vishwas Scheme and ensured the appellant's interest would be safeguarded in case of an unfavorable decision by the Department.

3. The Tribunal's confirmation of disallowance on items not subject to deduction was questioned, especially when the same disallowance had already been made. The Court emphasized the need to protect the appellant's interests under the Vivad Se Vishwas Scheme and allowed the appellant to restore the appeal if necessary, without requiring an application for condonation of delay.

4. The interpretation of interest calculation under Sections 234A, 234B, and 234C, read with Section 153A of the Income Tax Act, 1961, was a key issue. The Court's decision to dispose of the appeal due to the appellant's availing of benefits under the Vivad Se Vishwas Scheme reflected the importance of safeguarding the appellant's interests in case of an unfavorable decision by the Department.

5. Lastly, the Court addressed the issue of the Appellate Tribunal's reliance on facts and cases in disallowing the appeal. The judgment emphasized the appellant's right to restore the appeal if the Department's decision under the Vivad Se Vishwas Scheme was not favorable, without the need for a formal application for condonation of delay. The disposal of the appeal with liberty for restoration underscored the significance of protecting the appellant's interests under the scheme.