2023 (10) TMI 1202 - HC - Income Tax

Capital gain tax liabilities adjustment against the Direct Tax Vivad Se Vishwas scheme - Correct incidence/year of capital gains - transfer the challans standing to the credit of AY 2016-17, along with the applicable interest u/s 244A to the credit of the tax demand raised as per Form 3 issued as per Section 5(1) and Rule 4 of DTVSV Act - Seeking refund the excess income tax to the petitioner, and further direct the respondents to issue Form 5, after accepting manual filing of Form 4 by the petitioner. HELD THAT - The concerned respondent has to make suitable adjustments either physically or by online and to transfer the amount paid under the Direct Tax Vivad Se Vishwas Scheme for the assessment year 2016-2017 to the assessment year 2014-2015 without any further delay. If there is any difficulty for the Department, it is for them to sort out the same without providing any inconvenience to the Assessee with regard to the transfer of challans standing to the credit of assessment year 2016-17 to the assessment year 2014-15. If e-filing or e-transfer is not possible, the respondent is directed to accept the same manually and pass suitable orders. Department has to consider the amount paid as capital gain for assessment year 2016-17 under the Vivad se Vishwas Scheme for the assessment year 2014-15 as no incidence of tax arose for the assessment year 2016-2017, but paid for the incidence of tax which arose for the assessment year 2014-15. Thus, suitable orders can be passed in accordance with law within a period of 30 days from the date of issuance of a copy of this order. Further, the concerned respondents shall accept the Form 4 and issue the Form 5 for the clearance as well.

Summary

Issues Involved:
The issues involved in the judgment are the transfer of challans standing to the credit of Assessment Year (AY) 2016-17, refund of excess income tax, issuance of Form 5, and the reopening of the petitioner's Income Tax Assessment for AY 2014-15.

Transfer of Challans and Refund of Excess Income Tax:
The petitioner, as the owner of a plot in Chennai, entered into a Joint Development Agreement with a construction company. The Developer transferred the built-up area to the petitioner during AY 2016-17. The petitioner filed returns for AY 2016-17 and paid tax in instalments. However, a notice was issued seeking to reopen the assessment for AY 2014-15 due to alleged non-disclosure of capital gains. The petitioner objected, stating that capital gains were offered in AY 2016-17. The respondent insisted on reassessment for AY 2014-15. The petitioner sought the transfer of challans to AY 2014-15 and refund of excess tax paid, as well as the issuance of Form 5.

Reopening of Income Tax Assessment for AY 2014-15:
The respondent sought to reopen the petitioner's assessment for AY 2014-15, claiming non-disclosure of capital gains from the Joint Development Agreement. The petitioner argued that capital gains were declared in AY 2016-17. Despite objections, the reassessment was upheld, leading to the petitioner's request for the transfer of tax paid to AY 2014-15 and refund of excess amount, as well as the issuance of Form 5.

Resolution and Directions:
The respondent contended that the correct year for capital gains was AY 2014-15, issuing a notice under Section 148 as a protective measure. The petitioner requested a refund of excess tax paid for AY 2016-17 to adjust against AY 2014-15 liabilities. The petitioner suggested exploring the transfer of funds instead of a refund, emphasizing the need for efficient software for such transfers. The court directed the respondent to make suitable adjustments to transfer the amount paid under the Direct Tax Vivad Se Vishwas Scheme for AY 2016-17 to AY 2014-15 promptly, either physically or online. The Department was instructed to consider the tax paid for AY 2016-17 under the Vivad se Vishwas Scheme as applicable to AY 2014-15 and to accept Form 4 and issue Form 5 accordingly within 30 days.

Conclusion:
The writ petition was disposed of with directions for the transfer of funds, refund of excess tax, and issuance of necessary forms. Compliance reporting was scheduled for a later date to ensure the implementation of the court's directives.