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2024 (3) TMI 1013 - HC - Income TaxInterest on Refund u/s 7 of the DTVSV Act, 2020 - petitioner s right to interest on declared refunds due from the Department, determined in the Final Order passed under the Income Tax Act, 1961 - taxability of the transaction, the amount payable by the petitioner is the amount of tax due sans the penalty and interest in terms of Sl. No.(a) to Table to Section 3 of DTVSV Act, 2020 - refunds ordered in Form-3 for Assessment Year 1999-2000 to 2002-2003 to be re-calculated along with interest u/s 244-A HELD THAT - Under Section 7 of the DTVSV Act, 2020, any amount paid in excess in pursuance of the declaration is not refundable. However, where the declarant had, before filing the declaration under Sub-Section (1) of Section 4, paid any amount under their Act, 1961 in respect of his tax arrears which exceeds the amount payable under Section 3, shall be entitled to a refund of such excess amount. Such a declarant is not be entitled to interest on such excess amount under Section 244-A of the IT Act, 1961. Section 7 of DTVSV Act, 2020 is a complete code by itself. If the case is to be settled under it, no interest under Section 244-A of the IT Act, 1961 is available. In this case, no amount was paid by the petitioner either along with Form-1 on 31.1.2021 or after Form-3 that was issued on various dates. The petitioner wants the Designated Authority to issue a fresh Form-3 together with interest on refunds under Section 244-A of the IT Act, 1961 on belated adjustment of refunds. This is not available in view of explanation to Section 7 of the DTVSV Act, 2020. Designated Authority while issuing Form-3 has correctly acceded to refund of the amounts to the petitioner for the Assessment year 1999-2000 to 2002-2003. The Designated Authority has declined to order interest under Section 244-A of the IT Act, 1961. It is in accordance with explanation to Section 7 of the DTVSV Act, 2020. Neither the Deputy Commissioner of Income Tax, International Taxation nor the Designated Authority were required to order refund of the amount for the Assessment Year 1999-2000 and Assessment Year 2000-2001 in Form -3, as no amount was paid in excess by the petitioner. There was only adjustment of the refunds due for the Assessment Year 2004-2003 and Assessment Year 2005-2006. In fact, the Deputy Commissioner of Income Tax, International Taxation while passing order dated 29.01.2021 under Section 154 of the IT Act, 1961 was not required to order interest under Section 244-A of the IT Act, 1961 for the Assessment Years 1999-2000 and 2000-2001. The excess amount after adjustment were to be refunded along with interest under Section 244-A for the Assessment Year 1999-2000 and Assessment Year 2000-2001. The excess amount after adjustment were to be refunded along with interest under Section 244-A read with Section 245 of the IT Act, 1961 for the Assessment Year 2004-2005 and Assessment Year 2005-2006. For these two Assessment Years viz., Assessment Year 1999-2000 and Assessment Year 2000-2001, there were mere adjustment of the amounts towards tax liability out of the refunds that were due to the petitioner for the Assessment year 2004-2005 and Assessment Year 2005- 2006. Excess amounts after adjustments of the liability ought to have been refunded together with interest under Section 244-A of the IT Act, 1961 for the Assessment Year 2004-2005 and Assessment Year 2005- 2006, provided no applications were filed for Assessment Year 2004-2005 and Assessment Year 2005-2006 under Sl.No.(a) to Section 3 of the DTVSV Act, 2020. For the Assessment Year 2001-2002 and for the Assessment Year 2002-2003, the petitioner was entitled to interest under Section 244-A of the IT Act, 1961, if no declaration was filed under DTVSV Act, 2020. Interest under Section 244-A of the IT Act, 1961 will not be available to the petitioner in view of explanation to Section 7 of the DTVSV Act, 2020. It makes it clear, that a declarant shall not be entitled to interest under Section 244-A of IT Act, 1961 on such excess amounts. Therefore, the petitioner is not entitled to the relief as prayed for in full. Therefore, to do complete justice and to balance the interest of the petitioner and the Income Tax Department, these writ petitions are disposed with the following directions/orders/ observations - i. The amounts adjusted and appropriated towards tax liability for the Assessment Year 1999-2000 and Assessment Year 2000- 2001 under the provisions of the Direct Tax Vivad Se Vishwas Act, 2020 from and out of the refunds due for the Assessment Year 2004-05 and Assessment Year 2005-06 are treated as amount paid by the petitioner for the Assessment Year 1999-2000 and Assessment Year 2000-2001 under Direct Tax Vivad Se Vishwas Act, 2020; ii. Consequently, the Designated Authority or any other Authority in its place shall issue Form 5 to the Petitioner and close the pending case of the petitioner for the Assessment Year 1999- 2000 and Assessment Year 2000-2001; iii. Consequently, the Income Tax Department is directed to process the excess amount quantified as refundable in Section 154 orders dated 29.01.2021 for the Assessment Year 1999-2000 and Assessment Year 2000-2001 together with interest under Section 244-A of the IT Act, 1961 for Assessment Year 2004-2005 and Assessment Year 2005-2006, subject to Section 7 of the Direct Tax Vivad Se Vishwas Act, 2020;
Issues Involved:
1. Entitlement to interest under Section 244-A of the Income Tax Act, 1961. 2. Adjustment of refunds against tax liabilities. 3. Validity of forms issued under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act, 2020). Summary: Issue 1: Entitlement to interest under Section 244-A of the Income Tax Act, 1961 The petitioner sought interest on delayed payments/adjustments under Section 244-A of the Income Tax Act, 1961. The Designated Authority declined to recognize this interest, citing the Explanation to Section 7 of the DTVSV Act, 2020, which clearly states that a declarant shall not be entitled to interest on any excess amount paid before filing the declaration. The court upheld this interpretation, noting that Section 7 of the DTVSV Act, 2020 is a complete code by itself, and thus, no interest under Section 244-A is available. Issue 2: Adjustment of refunds against tax liabilities The petitioner adjusted refundable amounts from Assessment Years 2004-2005 and 2005-2006 towards liabilities for Assessment Years 1999-2000 to 2002-2003. The Designated Authority accepted these adjustments and ordered refunds accordingly. However, for the Assessment Years 1999-2000 and 2000-2001, the court noted that the refunds were merely adjusted and not paid in excess, hence no interest under Section 244-A was warranted. For the Assessment Years 2001-2002 and 2002-2003, excess amounts were refundable, but without interest due to the DTVSV Act, 2020. Issue 3: Validity of forms issued under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act, 2020) The petitioner filed declarations under the DTVSV Act, 2020 for various assessment years. The Designated Authority issued Form-3, quantifying the amounts payable and refundable. The petitioner contested the amounts, seeking recalculations including interest under Section 244-A. The court found that the amounts quantified by the Designated Authority were correct as per the DTVSV Act, 2020, and the petitioner was not entitled to additional interest. Court Orders: 1. The amounts adjusted for the Assessment Years 1999-2000 and 2000-2001 are treated as paid under the DTVSV Act, 2020. The Designated Authority shall issue Form 5 for these years and close the cases. 2. The Income Tax Department is directed to process excess amounts refundable with interest under Section 244-A for Assessment Years 2004-2005 and 2005-2006, subject to Section 7 of the DTVSV Act, 2020. 3. For Assessment Years 2001-2002 and 2002-2003, the amounts quantified by the Designated Authority are correct. The Designated Authority shall issue Form 5 and close the cases. No interest under Section 244-A is warranted. 4. The petitioner's writ petitions for the Assessment Years 2001-2002 and 2002-2003 are dismissed. 5. For the Assessment Years 2003-2004 to 2006-2007, the Designated Authority shall issue Form 5 and close the cases within three months. 6. Refunds and interest for Assessment Years 2004-2005 and 2005-2006 shall also be processed within three months. Conclusion: The court balanced the interests of both the petitioner and the Income Tax Department, ensuring compliance with the provisions of the DTVSV Act, 2020, and the Income Tax Act, 1961. The petitioner was granted refunds but denied interest under Section 244-A for the relevant assessment years as per the DTVSV Act, 2020.
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