2023 (1) TMI 278 - HC - Income Tax

Applicability of provision of Section 119(2)(b) - timeline for making deposits inter alia, under the DVSV Act - An application was, thus, preferred with the CBDT/respondent seeking extension of time for allowing the petitioner to deposit the balance tax as quantified in Form No. 3 - As communicated by CBDT/respondent no. 1 timeline prescribed under the DVSV Act having expired, it was not possible to grant any extension. HELD THAT - The record shows that the petitioner did file an application with the respondent no.1/CBDT on 25.03.2022, followed by a reminder on 04.11.2022. The impugned order came to be passed on 25.08.2022, which was communicated to the petitioner only on 22.11.2022 via email sent by CBDT/respondent no.1. Therefore, had the CBDT/respondent no.1 immediately responded to the petitioner s application dated 25.03.2022 for extension of time, the intervening delay between March 2022 and today would not have occurred. If we were to take into account this aspect of the matter, one would have acknowledge that in certain circumstances, coordinate benches of this court have exercised powers under Article 226 of the Constitution and granted relief to those assessees who wanted to avail the beneficial provisions of DVSV Act. The overall conduct of the petitioner in this case, in the very least, shows that it had made substantial compliance, inasmuch as a major portion of the tax i.e., Rs 9 lakh was deposited even before the declarations were filed via Form Nos. 1 and 2. Thus, having regard to the overall facts and circumstances of the case, we are inclined to set aside the impugned order dated 25.08.2022 passed by CBDT/respondent no. 1, not on the ground that they were wrong in concluding that powers for extension of time cannot be exercised under Section 119(2)(b) of the Act, but for the reason that this court under Article 226 of the Constitution, as in the other cases, is inclined to exercise its powers to enable the petitioner to pay the balance tax. Therefore, paragraph 2 of the impugned order dated 25.08.2022 is set aside. This impediment having been removed, the consequential direction that needs to be passed is to direct the respondents to accept the balance amount payable by the petitioner, albeit, with interest at the rate of 9% on the amount shown in Form No.3 which is Rs 2,10,780/-, that is, the amount which was payable by the petitioner after 31.03.2021. This leeway will be available to the petitioner/assessee for four weeks from the date of receipt of a copy of the judgment. We are told that the designated portal is closed. The petitioner will pay Rs.2,10,780/-, along with interest at the rate of 9%, commencing from 01.04.2021 till the date of deposit.

Summary

Issues:
1. Interpretation of Section 119(2)(b) of the Income Tax Act, 1961 in relation to extension of time for tax deposit under the Direct Tax Vivad Se Vishvas Act, 2020.
2. Application of principles of natural justice in the context of timely communication of tax deposit requirements.
3. Exercise of powers under Article 226 of the Constitution to grant relief to the petitioner.

Analysis:
1. The judgment revolves around the petitioner seeking relief through a writ petition to quash an order passed by the Central Board of Direct Taxes (CBDT) under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner, invoking the Direct Tax Vivad Se Vishvas Act, 2020, aimed to deposit the balance tax amount after having paid a substantial part upfront. The court analyzed the timeline of events, including extensions granted by the CBDT and the Supreme Court, to determine the petitioner's entitlement to an extension for tax deposit.

2. The court considered the petitioner's contention that the delay in depositing the balance tax was due to the Chartered Accountant's oversight in not promptly communicating the tax deposit requirement received via Form No. 3. The judgment highlighted the importance of timely communication and the petitioner's proactive steps in seeking an extension from the CBDT, emphasizing the need for procedural fairness in tax matters.

3. In exercising its jurisdiction under Article 226 of the Constitution, the court balanced the CBDT's decision-making powers under Section 119(2)(b) with the petitioner's compliance efforts and the overarching objective of the DVSV Act. The court set aside the impugned order not on the grounds of legal interpretation but to enable the petitioner to fulfill its tax obligations, showcasing a nuanced approach to granting relief while upholding the statutory framework. The judgment provided a specific direction for the petitioner to deposit the balance tax amount with interest within a stipulated timeframe, ensuring clarity and finality in the resolution of the dispute.