2022 (11) TMI 985 - AT - Income Tax

Restoration of deemed withdrawal of appeal - Declaration filed by the assessee u/s. 4(1) of the Direct Tax Vivad Se Vishwas Act, 2020 found as false - Non payment of taxes as determined by the designated authority - HELD THAT - If assessee violates any of the conditions including tax determined by the designated authority in Form No. 3 is not paid within the specified period, then it is nothing but violation of conditions referred to in this Act. Therefore, if assessee does not make payment of taxes as determined by the designated authority, then, even if appeal filed by the assessee is dismissed or deemed dismissal of the appeal, then as per sub-section (6) of section 4 of the DTVSVS Act, 2020, all the proceedings and claims which were withdrawn u/s. 4 and all the consequences under the Income-tax Act, 1961 against the declarant shall be deemed to have been revived. Therefore, in our considered view, if a conjoint reading of sub-section (2) and subsection (6) of section (4), it is clear that the moment designated authority issues Form no. 3, pending appeal shall be deemed to have been withdrawn and further, the moment declarant violates any of the conditions, the appeals which were withdrawn u/s. 4, shall be deemed to have been revived. In the present case, the assessee has violated conditions prescribed under DTVSVS Act, 2020 and thus, even if appeal filed by the assessee is dismissed or deemed dismissal of appeal, the same can be revived the moment the Department notices any of the conditions prescribed therein are violated. Designated authority determines sum payable by declarant under DTVSVS Act, 2020, then the same becomes final and which cannot be challenged by the declarant before any appellate forum. Therefore, we are of the considered view that the Revenue cannot take shelter under sub-section (7) of section 4 of the DTVSVS Act, 2020. In so far as FAQs referred to in Circular 09 of 2020 issued by CBDT, we find that CBDT in question no. 43 47 has clarified the position of the law as per DTVSVS Act, 2020, and in our considered view, said clarification is only on withdrawal of appeal by the declarant after receipt of Form no. 3 (certificate) and further, the legal position of section 4(7) of the DTVSVS Act, 2020. As per section 4(6) of DTVSVS Act, 2020, the law is very clear, in as much as in case the declarant violates any of the conditions, then all the proceedings and claims which were withdrawn u/s. 4 and all the consequences under the Income-tax Act, 1961 against declarant shall be deemed to have been revived. In the present case, the declarant has violated the conditions of payment of tax as determined by the designated authority in Form no. 3. Therefore, appeal filed by the assessee is deemed to have been revived and thus, we are of the considered view, that since the appeal filed by the assessee is pending before the Tribunal for adjudication, the same needs to be decided on the issues challenged in said appeal and thus, we reject application filed by the Revenue on maintainability of appeal filed by the assessee.

Summary

Issues Involved:
1. Maintainability of the appeal filed by the assessee in light of the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSVS Act, 2020).
2. Interpretation of Section 4(2), Section 4(6), and Section 4(7) of the DTVSVS Act, 2020.
3. Implications of Form No. 3 issued under Section 5(1) of the DTVSVS Act, 2020.
4. Clarifications provided in Circular 9 of 2020 by the CBDT.

Detailed Analysis:

1. Maintainability of the Appeal:
The Revenue filed a petition challenging the maintainability of the appeal filed by the assessee, arguing that the appeal should be deemed withdrawn under Section 4(2) of the DTVSVS Act, 2020, once Form No. 3 is issued by the designated authority. The Revenue contended that the appeal cannot be pursued by the assessee after the issuance of Form No. 3.

2. Interpretation of Section 4(2), Section 4(6), and Section 4(7):
- Section 4(2): This section states that any appeal pending before the Income-Tax Appellate Tribunal or Commissioner (Appeals) shall be deemed to have been withdrawn from the date on which the certificate under Section 5(1) is issued by the designated authority.
- Section 4(6): This section provides that if the declarant violates any conditions of the Act, including non-payment of tax, the declaration shall be presumed never to have been made, and all proceedings and claims which were withdrawn shall be revived.
- Section 4(7): This section states that no appellate forum or arbitrator, conciliator, or mediator shall proceed to decide any issue relating to the tax arrear mentioned in the declaration once an order is passed under Section 5(1).

3. Implications of Form No. 3:
The issuance of Form No. 3 by the designated authority signifies the determination of the amount payable by the declarant. The Revenue argued that the appeal should be deemed withdrawn upon the issuance of this form. However, the assessee contended that due to differences in the tax payable, they decided to opt out of the VSVS Scheme, invoking Section 4(6), which presumes the declaration never to have been made if conditions are violated.

4. Clarifications in Circular 9 of 2020:
The Revenue referred to FAQs in Circular 9 of 2020, particularly Questions 43 and 47, to support their argument. These FAQs clarify that the appeal is deemed withdrawn once Form No. 3 is issued and that no appellate forum can proceed with the appeal once the designated authority has determined the tax arrear.

Judgment:
The Tribunal, after considering the arguments and relevant provisions of the DTVSVS Act, 2020, concluded that:
- The appeal is deemed to have been withdrawn upon the issuance of Form No. 3 as per Section 4(2).
- However, if the declarant violates any conditions, including non-payment of tax, the declaration is presumed never to have been made, and the proceedings are revived as per Section 4(6).
- The Tribunal rejected the Revenue's petition on maintainability, stating that the appeal is deemed to be revived due to the violation of conditions by the assessee.
- The Tribunal directed that the appeal needs to be heard on its merits and scheduled further hearing.

Conclusion:
The Tribunal held that the appeal filed by the assessee is maintainable and should be heard on the issues involved. The Revenue's petition on maintainability was rejected, and the appeal was treated as part heard, with further hearing scheduled.