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TMI Blog2021 (4) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... ion order or a writ including a writ in the nature of 'Certiorari' to call for the records and verify the declaration filed under section 4(1) of the DTVSV Act and direct the Respondent No.2 to accept the same; (b) That the Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India appropriate writ or order or direction including a writ in the nature of 'Mandamus' directing the Respondent No.2 to accept the declaration made by the Petitioner on 18th November, 2020 under section 4(1) of the DTVSV Act; (c) That this Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate writ or order or direction including a writ in the nature of 'Prohibition' restraining the Respondent No.2 disposing off the application filed under section 264 of the Act and recover the outstanding disputed demand thereunder". 3. A sojourn into the facts will be helpful to appreciate the controversy. Petitioner who is stated to be engaged in the business of retail footwear under the shop name "Jolly Shoes", has filed declarations in Form-1 and undertaking in Form-2 in respect of each of the Assessment Year from 1988-89 to 1997-98 under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said amount of Rs. 12,43,000/was adjusted only against the demand for Assessment Year 1987-88 and not for demands for the various Assessment Years 1987-88 to 1998-99. This, according to the Petitioner, was despite the fact that, the original demand for the Assessment Year 1987-88 was only Rs. 19,170/- and, therefore the entire amount of Rs. 12,43,000/- could not have been adjusted for the tax liability for that year alone. 9. It is submitted that, pursuant to the order dated 20th August, 2004, passed by the ITAT, Respondent No.1 passed the Assessment Order on 13th March, 2006 under Section 143(3) of the Income Tax Act for the Assessment Years 1987-88 to 1998-99 against which, Petitioner filed appeals before CIT(A). Vide order dated 23rd November, 2006, the CIT(A) granted partial relief to the Petitioner, pursuant to which, Respondent No.1 passed order on 23rd January, 2007, giving effect to the order passed by the CIT(A). However, it is submitted that no credit for taxes paid on regular assessment of Rs. 15,86,151/- including Rs. 12,43,000/- was given while determining the demands for the respective years. 10. Being aggrieved by the partial relief granted by CIT(A), Revenue fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment and benefit tax payers by providing for peace of mind, certainty and saving time and resources that would otherwise be spent on the long drawn and vexatious litigation process. The Direct Tax Vivad Se Vishwas Rules, 2020 (the "DTVSV Rules") were notified on 19th March, 2020, pursuant to which, Petitioner has filed declaration in Form - 1 and undertaking in Form-2 as per Rule 3 of the DTVSV Rules with the Designated Authority viz: Respondent No.2 on 18th November, 2020. Petitioner claims that he is an Appellant as per Section 2(1)(a)(v) of the DTVSV Act, inasmuch as he is a person who has filed an application for revision under Section 264 of the Income Tax Act and the said application is pending on the specified date viz: 31st January, 2020 as defined in Section 2(1)(m) of the DTVSV Act. It is submitted that as such he is an eligible Appellant as his application under Section 264 of the Income Tax Act is pending on the specified date. He further submits that in the Petitioner's case, resolution of disputed tax has been sought for. This he says is because as per Section 2(1)(j)(F) of the DTVSV Act, "disputed tax" means the income tax (including surcharge and cess) that would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from receipt of the mail. If no reply is received within 3 days, your application for DTVsV scheme will be processed accordingly considering the disputed tax in relation to disputed income at Rs.Nil." 16. In reply, Petitioner has filed a detailed submission dated 5th December, 2020, which for the sake of convenience, is reproduced as under:- "Submissions of the Applicant: 9. For the sake of convenience, the Applicant divides his submissions into two parts as under:- 9.1 Submissions on the claims made by the Applicant in the said application (Paragraph 10) 9.2 Submissions dealing with the specific queries raised by Your Honour in the mail/ notice dated 03.12.2020 under consideration (Paragraph 11) 10. The Applicant at the outset draws Your Honour's attention to the following definitions as mentioned u/s. 2 of the "the Act, 2020" and submits as under:- 10.1. Section 2(1)(a)(v):- Section 2(1)(a) defines the terms "appellant" and Section 2(1)(a)(v) as under:- "person who has filed an application for revision under section 264 of the Income Tax Act and such application is pending on specified date" The Applicant submits that since his applications for revision for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for the years under consideration are pending on specified date (i.e. 31.01.2020), the Applicant is an "appellant" as per the aforesaid definition. 10.5 Section 2(1)(o) of "the Act, 2020" defines tax arrears as under:- "(o) Tax arrears means, (i) "The aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, and penalty leviable or levied on such disputed tax". The Applicant submits that from the aforesaid table, it is discernible that the amount / quantum of disputed tax is pending for all the years under consideration and thus, the definition of "disputed tax" duly gets satisfied in the present facts. 10.6 Now, proceeding further the Applicant draws Your Honour's attention to section 3 and section 4 of the Act, 2020 and submits that a conjoint reading of both the sections lays down the procedure to be adopted/ followed by a person/ declarant under the scheme after satisfying the aforesaid eligible conditions. The relevant parts of Section 3 and 4 of the Act, 2020 reads as under: Section 3: Subject to the provisions of this Act, where a declarant files [under the provisions of this Act on or before such date as may be notified], a declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged the inaction on the part of the learned AO, with regard to granting credit of taxes of Rs. 12,43,000/- paid by the Applicant. Thus, the main dispute under consideration is "non-allowance of tax credit of Rs. 12,43,000/- for the relevant years." The Applicant draws Your Honour's attention tot he specific prayers sought in his revision applications which are self-explanatory and factually support the aforesaid contention of the Applicant. "Thus, the Applicant prays that your honours may be pleased to: A. The Ld. A. O. may be directed to compute the tax demand for A Y 1987-88 to A Y 1998-99 and demand may be raised after giving credit of the taxes paid amounting to Rs. 12,43,000/- which have been adjusted in the impugned order against A Y 1987-88 only. B. The Ld AO may be directed to compute the tax demand for A Y 1987-88 to 1998-99 by restricting the charge of the interest u/s. 220(2) of the Act till October' 2013. C. That, your honours may be pleased to pass such further and other order as the facts and circumstances of the case may require." In the light of the aforesaid submission, the Applicant submits that it is incorrect to mention that the Applicant has ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same one more time with the present submission. However, the Applicant mentions that if Your Honour seeks any document/ clarification, the Applicant shall be pleased to provide. In the view of the above, the Applicant requests shall be pleased to provide. In the view of the above, the Applicant requests Your Honour to accept his all applications and process the same under the scheme." 17. Thereafter, admittedly, an opportunity of personal hearing was given to the Petitioner, wherein the aforesaid submissions were reiterated. However, Respondent No.2 has rejected the applications by updating the status on the e-filing portal of the Petitioner on 30th January, 2021, which according to the Petitioner, has been done in an arbitrary manner without passing any order and without assigning any reason for the same and, therefore, he prays that the 2nd Respondent be directed to accept the Form-1 declarations filed by the Petitioner. 18. Learned Counsel for the Petitioner Mr. K. Gopal reiterates the submissions made in the Petition and the Rejoinder as he purports to take us through the provisions of Section 2(1)(a) of the DTVSV Act with respect to the definition of "Appellant". He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a total demand of Rs. 88,90,180/- including income tax, interest. Learned Counsel also draws our attention to Section 2(1)(o) of the DTVSV Act, which defines tax arrear as under:- "(o) Tax arrears means, - (i) "The aggregate amount of disputed tax, interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax.". 22. He submits that considering that since the total amount of demand upon rejection will have a substantial interest component u/s. 234B and 220(2) of the Income Tax Act, the definition of 'tax arrears' as above also gets satisfied in the facts of the case. He, therefore submits that it is not correct for the Revenue to say that there is no dispute in income tax calculation. He would submit that there is disputed tax against the income as declared in Form-1 and which is a subject matter of pending Revision Application. Therefore, to say that the disputed income is 'Nil' is not correct. Referring to the 1st Respondent's e-mail communication dated 3rd December, 2020, he would submit that the main dispute under consideration is disallowance of tax credit of Rs. 12,43,000/- for the relevant years and that it is incorrect to menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmits that the Petition as prayed for, be allowed. 28. Per contra, the Revenue has filed its affidavit in reply where it is admitted that Petitioner is an Appellant as per Section 2(1)(a)(v) of the DTVSV Act. Further stating that the applications of the Petitioner have not been rejected on that ground but on the ground that there is no disputed tax. 29. Mr. Sham Walve, learned standing counsel for the Revenue seeks to rely upon and takes us through paragraphs 5, 8, 10, 11, 12 and 23 of the said reply. For the sake of convenience, the said paragraphs are reproduced here under:- "5:- I say that, as per the definition of "appellant" mentioned in Sec.2(1)(a)(v) of The Direct Tax Vivad se Vishwas Act, 2020 (henceforth referred as DTVSV Act), the Petitioner is an appellant under DTVSV Act. Also, the Petitioner's case does not fall in any of the categories mentioned in Section 9 of DTVSV Act. Hence, the contention of the petitioner that he is an "appellant" under DTVSV Act, is found to be correct and is not the reason for rejection of application under DTVSV Act, made by the appellant. 8:- On perusal of order passed u/s. 154 of the Act, it is seen that the Income Tax (Income Tax inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of granting credit of taxes Rs. 12,43,000/- against the revised demand of subsequent years is not accepted and the revision application filed by the petitioner is rejected. Thus, the definition of "disputed tax" gets duly satisfied in the facts under consideration. 11:- Careful perusal of the revision application u/s. 264 of the Act, and the above reply of the assessee, revealed that the petitioner has never contested against the income tax demand raised in order u/s. 154 of the Act, tax (i.e. income tax, including surcharge and cess) calculated thereon from A. Y. 1987-88 to 1998-99. However, the only request or contention behind revision application made by the assessee is to compute the tax demand for A. Y. 1987-88 to 1998-99 after giving credit of the taxes paid amounting to Rs. 12,43,000/- which have been adjusted against A. Y. 1987-88 only. Nowhere in the revision application u/s. 264 of the Act, has the petitioner objected to the income tax demand (income tax including surcharge and cess) raised by the AO for A. Ys. 1987-88 to 1998-99, in fact, he has only contended that the AO has treated the tax payments made by the petitioner against disputed demands, only against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. Petitioner is only seeking remedy of waiver of interest which cannot be by way of an application under Section 264 of the Income Tax Act. He submits that Petitioner is, therefore, not entitled to the reliefs claimed as rejections by the designated authority are justified. 31. We have heard learned Counsel for the parties. We have also with their assistance, perused the papers and proceedings in the matter as well as the relevant provisions of the DTVSV Act as well as the DTVSV Rules. 32. The basic facts set out above are not in dispute. Without getting into the merits of the demands by the Revenue or the Application for Revision under Section 264 of the Income Tax Act by the Petitioner, it would be relevant to note that, it is not in dispute that Petitioner had filed application under Section 264 of the Income Tax Act for adjustment/credit of Rs. 12,43,000/-paid earlier in respect of the tax demands for Assessment Years 1988-89 to 1998-99 as according to him, this amount had been adjusted only against the demand for the A.Y 1987-88. While this application was pending, the Direct Tax Vivad Se Vishwas Act, 2020 came to be enacted followed by Direct Tax Vivad Se Vishwas Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases. Currently, there are 4,83,000 direct tax cases pending in various appellate forms i.e. Commissioner (Appeals). ITAT, High Court and Supreme Court. This year, I propose to bring a scheme similar to the indirect tax Sabka Vishwas for reducing litigations even in the direct taxes. Under the proposed 'Vivad se Vishwas' scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided the pays by 31st March, 2020. Those who avail this scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June, 2020. Taxpayers in whose case appeals are pending at any level can benefit from this scheme. I hope that taxpayers will make use of this opportunity to get relief from vexatious litigation process." 35. Thus, what was intended by the Hon'ble Finance Minister was to bring a scheme similar to the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 which pertained to indirect taxes. The object of the Vivad se Vishwas Scheme is to reduce litigations in direct taxes, where the tax payer would have to pay disputed tax. 36. Also, the statement of objects an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty, disputed interest or disputed fee, the amount payable by the declarant shall be 25 per cent of the disputed penalty, disputed interest or disputed fee, as the case may be if the payment is made on or before the 31st day of March, 2020. If payment is made after 31st day of March, 2020 but on or before the date notified by Central Government, the amount payable shall be increased to 30 per cent of the disputed penalty, disputed interest or disputed fee, as the case may be. 4 The proposed Bill shall come into force on the date it receives the assent of the President and declaration may be made thereafter up to the date to be notified by the Government." 37. It therefore emerges that the DTVSV Act has been enacted to address the urgent need to provide for resolution of pending tax disputes where a huge amount of disputed tax arrears of over Rs. 9.32 lakh crores is locked-up. The DTVSV Act is aimed not only to benefit the Government by generating timely revenue but also to benefit the taxpayers by providing them peace of mind, certainty and saving time and resources rather than spending the same otherwise, enabling the taxpayers to be able to deploy the time, energy and resourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer on or before the specified date, and the time for filing appeal against such order has not expired as on that date, the amount of tax payable by the appellant in accordance with such order; (D) in a case where objection filed by the appellant is pending before the Disputed Resolution Panel under section144C o the Income-tax Act as on the specified date, the amount of tax payable by the appellant if the Disputed Resolution Panel was to confirm the variation proposed in the draft order; (E) in a case where Disputed Resolution Panel has issued any direction under sub-section (5) of section 144C of the Income-tax Act and the Assessing Officer has not passed the order under subsection (13) of that section on or before the specified date, the amount of tax payable by the appellant as per the assessment order to be passed by the Assessing Officer under sub-section (13) thereof; (F) in a case where an application for revision under section 264 of the Income-tax Act is pending as on the specified date, the amount of tax payable by the appellant if such application for revision was not to be accepted." (o) tax arrear means - (i) the aggregate amount of disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be ignored for the purpose of computation of amount payable. (c) Where the tax arrear relates to disputed interest or disputed penalty or disputed fee Twenty-five per cent of disputed interest or disputed penalty or disputed fee. Thirty-five per cent of disputed interest or disputed penalty or disputed fee. Provided that in a case where an appeal or writ petition or special leave petition is filed by the income-tax authority on any issue before the appellate forum, the amount payable shall be one half of the amount in the table above calculated on such issue, in such manner as may be prescribed: Provided further that in a case where an appeal is filed before the Commissioner (Appeals) or objections is filed before the Dispute Resolution Panel by the appellant on any issue on which he has already got a decision in his favour from the Income-tax Appellate Tribunal (where the decision on such issue is not reversed by the High Court or the Supreme Court) or the High Court (where the decision on such issue is not reversed by the Supreme Court), the amount payable shall be one-half of the amount in the table above calculated on such issue, in such manner as may be prescribed: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any claim in relation to the tax arrear which may otherwise be available to him under any law for the time being in force, in equity, under statute or under any agreement entered into by India with any country or territory outside India whether for protection of investment or otherwise and the undertaking shall be made in such form and manner as may be prescribed. (6) The declaration under sub-section (1) shall be presumed never to have been made if,- (a) any material particular furnished in the declaration is found to be false at any stage; (b) the declarant violates any of the conditions referred to in this Act; (c) the declarant acts in any manner which is not in accordance with the undertaking given by him under sub-section (5), and in such cases, all proceedings and claims which were withdrawn under section 4 and all the consequences under the Income Tax Act against the declarant shall be deemed to have been revived. (7) No appellate forum or arbitrator, conciliator or mediator shall proceed to decide any issue relating to the tax arrear mentioned in the declaration in respect of which an order has been made under sub-section (1) of section 5 by the designated author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o him in law or equity under statute or under any agreement. 45. It is also stated in section 4(6) that declaration under sub section 1 shall be presumed never to have been made if- (a) any material particular(s) furnished in the declaration, is found to be false at any stage; (b) the declarant violates any of the conditions referred to in the Act; (c) the declarant acts in any manner which is not in accordance with the undertaking given by him under sub section (5) and in such cases, all the proceedings and claims which were withdrawn under section 4 and all the consequences under the Income Tax Act against the declarant shall be deemed to have been revived. 46. Section 9 specifies the matters in respect of which the DTVSV Act shall not apply, such as where the tax arrears in respect of which, the disputed tax amount exceeds Rs. 5 crores in respect of assessments made under section 143(3) or 144 or 153-A or 153-C on the basis of search initiated under Section 132 or 132-A or if on or before the date of filing of the declarations, the tax arrears relates to an assessment year in respect of which prosecution has been instituted or if it relates to un-disclosed income or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sub-section (2) of section 5, in respect of payment of amount payable by the declarant as per certificate granted under sub-section (1) of section 5, shall be in Form-5." 48. From the above exposition, what emerges is that for a declarant to file a valid declaration, there should be disputed tax in the case of such a declarant. As can be seen from the aforesaid undisputed fact that Petitioner having filed revision application under Section 264 of the Income Tax Act for the Assessment Years 1988-89 to 1998-99 for credit/ adjustment of Rs. 12,43,000/- which application is pending before the Commissioner. Petitioner, admittedly being an eligible Appellant, squarely satisfies the definition of "disputed tax" as contained in Section 2(1) (j)(F) of the DTVSV Act, 2020. This is because, if the revision application under Section 264 of the Income Tax Act is rejected, then the Petitioner would purportedly be liable to pay a demand of Rs. 88,90,180/including income tax, interest. Petitioner as eligible Appellant has filed declaration under section 4 with the designated authority under the provisions of Section 4 of the DTVSV Act in respect of tax arrears which include the disputed tax w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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