2024 (1) TMI 119 - HC - Income Tax

Benefit of the scheme under Direct Tax Vivad Se Vishwas Act, 2020 denied - delayed payment of just 25% of the amount by the petitioner and that too of a period which is around two (2) months - COVID period delays - HELD THAT - High Court of Rajasthan in the case of Agroha Electronics Vs. Union Of India and Ors. 2021 (3) TMI 1319 - RAJASTHAN HIGH COURT under similar circumstances particularly in respect of the fact that the transaction therein was also under the COVID period had while allowing the writ petition in favour of the petitioner held as this Court deems it fit that in the given facts and circumstances that the petitioner is a of the High Court of Rajasthan bona fide businessman and is prepared to pay the amount in question in accordance with the scheme along with interest for the period which he has defaulted in scheme and looking into the extreme pandemic conditions of COVID and the death of petitioner's father, this is a fit case for invocation of the powers under Article 226 of the Constitution of India. If we look into the facts of the present case, where there appears to be certain payment of tax which was due on the part of the petitioner herein petitioner had paid about 75% of the amount payable by him. We cannot brush aside the fact that it was admittedly COVID pandemic period and there were compelling circumstances faced by every person including the business entities. Nonetheless, the petitioner herein had cleared the balance of 25% as well within a further period of sixty (60) days i.e. 31.12.2021 clearing the entire amount payable by him i.e. balance amount of Rs. 31,38,874/- which was the total amount payable by him by 31.10.2021. Thus, prima facie, we are of the considered opinion that the petitioner had not tried to evade payment of tax at any point of time and if at all there is any delay, the delay is only to the extent of 25% of the total tax payable which too he has paid in its entirety within sixty (60) days beyond the date of 31.10.2021. We are inclined to endorse the views taken by the High Court of Rajasthan as also by the High Court of DelhiI.IA. Housing Solution Private Limited 2022 (11) TMI 1308 - DELHI HIGH COURT And as a consequence, we are inclined to allow the writ petition with a direction to the respondent to immediately take necessary steps for issuance of Form 5 under the Direct Tax Vivad Se Vishwas Act, 2020. However, the petitioner would be liable to make payment of extra payment of interest for the period 31.10.2021 to 31.12.2021 for the amount which was paid belatedly on 31.12.2021 within a period of thirty (30) days from today. Immediately upon the petitioner making payment, the respondent shall issue Form 5 to the petitioner forthwith.

Summary

Issues:
The judgment deals with the issuance of Form 5 under the Direct Tax Vivad Se Vishwas Act, 2020 and the delay in payment of tax by the petitioner during the COVID-19 pandemic period.

Summary:

Issue 1: Delay in Payment of Tax
The petitioner sought a direction for the issuance of Form 5 under the Direct Tax Vivad Se Vishwas Act, 2020. The petitioner had to make a payment of Rs. 1,10,35,340 by 31.03.2021 and Rs. 1,21,38,874 by 31.10.2021 with interest. Due to the COVID-19 pandemic, the petitioner managed to pay 75% of the total amount by 31.10.2021 and the remaining 25% by 31.12.2021. The respondent refused to issue Form 5 citing lack of power beyond the cutoff date, leading to the writ petition.

Issue 2: Precedents and Legal Interpretation
The High Court of Rajasthan and the High Court of Delhi, in separate cases, allowed writ petitions under similar circumstances. They emphasized the broad jurisdiction of Article 226 of the Constitution to grant relief in exceptional circumstances. The courts highlighted the need to consider genuine hardship faced by taxpayers and the objective of reducing litigation.

Decision:
Considering the petitioner's efforts to pay the outstanding amount within a reasonable time despite the pandemic challenges, the High Court allowed the writ petition. The court directed the respondent to issue Form 5 promptly upon the petitioner's payment of the extra interest for the delayed period. The judgment aligned with previous decisions emphasizing substantial justice and the objectives of the Vivad Se Vishwas Act.