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TMI Blog2022 (8) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (h) and 2 (1) (o). CIT however was also relying on definitional sections to contend that while tax arrears included disputed interest but the disputed interest was only in a case where an appeal has been filed and rejection of the waiver application prior in time by the department could not be considered an appeal and petitioner would not be an appellant . In the opinion of this court this contention of respondent is inherently flawed on various grounds. Firstly , there is no definition of appeal in the VSV Act for CIT to take support of any straitjacketed definition. Secondly , what is instead defined was dispute , not in the VSV Act but in the Rules at Clause 2 (b) and includes an appeal, writ, special leave petition, arbitration, conciliation and mediation the intent of the VSV Act was to provide resolution of all nature of disputes relating to tax, penalty, interest, fee as determined under provisions of the VSV Act. The restrictive scope that the CIT is providing for definition of dispute or even of an appeal is not in synchronicity with the letter and spirit of the VSV Act that propounds an ameliorative scheme for resolution. Thirdly , Section 2 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the petitioner in this Court was not an appeal and therefore not within the scope of the VSV Act, which in light of above analysis cannot be accepted. This writ petition is disposed setting aside the rejection dated 5th January, 2021 of From I and II filed by petitioner on 20th March, 2020 by the Principal Commissioner of Income TaxIV, Delhi (CIT) with directions to the CIT to re-examine/reassess the declaration filed by the petitioner under the VSV Act and decide on its merits in terms of procedure envisaged under the Act read with its Rules. - W.P. (C) 1163/2021 - - - Dated:- 5-8-2022 - HON'BLE MS. JUSTICE MUKTA GUPTA AND HON'BLE MR. JUSTICE ANISH DAYAL Petitioner Represented by: Mr. Rajesh Jain and Mr. V. Tiwari, Advocates. Respondent Represented by: Mr. Kunal Sharma, Sr. Standing Counsel with Ms. Zehra Khan, Mr. S. Bhattacharyya, Advocates J U D G M E N T ANISH DAYAL, J. 1. By way of this writ petition, the petitioner (a Company in liquidation, represented through the liquidator) assails the rejection dated 5th January, 2021 of From I and II filed by petitioner on 20th March, 2020 for the assessment years (AY) 1984-85 and 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount payable under the VSV Act viz. Rs.10,47,891/- for AY 1984-85 (against the disputed interest of Rs. 41,91,567/-) and Rs.27,795/- for AY 1985-86 (against the disputed interest of Rs.1,11,180/-). 6. It is the case of the petitioner that on filing of the above declarations in prescribed forms in terms of Section 4 (1) of the VSV Act, the designated authority was required to issue certificate under Section 5 (1) intimating the particulars of tax arrears and the amount payable after such determination. Thereafter, the declarant would be required to withdraw the petition in the concerned court of law and intimate the payment to the designated authority under Section 5 (2) of the VSV Act. 7. However, the petitioner did not receive any response ever since filing on 20th March, 2020 and it was only on 5th January, 2021 that a message flashed on the portal of the department indicating that the declarations so furnished by the petitioner have been rejected. Since there was no reason indicated on portal for such rejection, the petitioner moved an application before the CIT for inspection of the files with a request to take out certified copies. This request was reiterated through an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible reversal or for a retrial and therefore, is a rehearing of a case by a superior court on both law and facts. 11. The petitioner contended that since this Court had given liberty to approach authorities seeking waiver of interest and penalties and while the penalty was waived under Section 273 (A) (4) of the VSV Act, Section 220 (2A) being almost similar, interest ought to have been waived as well. All these issues were therefore disputed in the application before this Court. In relation to the CIT s contention that as per FAQ-13 waiver applications were not considered as appeal within the VSV Act rubric, the petitioner contended that FAQ-13 dealt with a situation of a waiver application being pending in itself and not an appeal / proceeding decision on the waiver application. For the sake of convenient reference, FAQ-13 is reproduced hereunder: Question No.13- With respect to interest under section 234A, 234B or 234C, there is no appeal but the assessee had filed waiver application before the competent authority which is pending as on 31.1.2020? Will such cases be covered under Vivad Se Vishwas? Answer : No, such cases are not covered. Waiver applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Direct Tax Vivad Se Vishwas Act, 2020 ● 2 (h) disputed interest means the interest determined in any case under the provisions of the Income-tax Act, 1961 (43 of 1961), where-- (i) such interest is not charged or chargeable on disputed tax; (ii) an appeal has been filed by the appellant in respect of such interest; ● 2 (o) tax arrear 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; or (ii) disputed interest; or (iii) disputed penalty; or (iv) disputed fee, as determined under the provisions of the Income-tax Act. [ Explanation .-For the removal of doubts, it is hereby clarified that the expression tax arrear shall not include and shall be deemed never to have been included any sum payable either by way of tax, penalty or interest pursuant to an order passed by the Settlement Commission under Chapter XIX-A of the Income-tax Act.] ● Section 3. Amount payable by declarant Subject to the provisions of this Act, where a declarant files under the provisions of this Act on or before the such date as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 subsection (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. (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 authority or the payment of sum determined under that section. Direct Tax Vivad se Vishwas Rules, 2020 Rule 2 (b) dispute means appeal, writ or spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on would necessarily be interpreted for its correct intent i.e. capturing various nature of disputes before the Court as well as those not before the Court but in adjudication to fall within the scope of this scheme. The definition of dispute in Rules does not deviate or is ultra vires the scope and intent of the VSV Act itself since the preamble to the VSV Act itself provides for resolution of disputed tax and most importantly for matters connected therewith and incidental thereto . It is therefore obvious that the intent of the VSV Act was to provide resolution of all nature of disputes relating to tax, penalty, interest, fee as determined under provisions of the VSV Act. The restrictive scope that the CIT is providing for definition of dispute or even of an appeal is not in synchronicity with the letter and spirit of the VSV Act that propounds an ameliorative scheme for resolution. Thirdly , Section 2 (1) (o) which defines tax arrears includes distinct categories which are in the alternative and not cumulative viz., disputed tax, disputed interest, disputed fee, disputed penalty. Therefore, for the CIT to contend that Section 2 (1) (h) relates to a disputed interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting timely revenue but also the taxpayers who will be able to deploy the time, energy and resources saved by opting for such dispute resolution towards their business activities. 3. It is, therefore, proposed to introduce The Direct Tax Vivad se Vishwas Bill, 2020 for dispute resolution related to direct taxes, which, inter alia, provides for the following, namely:- (a) The provisions of the Bill shall be applicable to appeals filed by taxpayers or the Government, which are pending with the Commissioner (Appeals), Income tax Appellate Tribunal, High Court or Supreme Court as on the 31st day of January, 2020 irrespective of whether demand in such cases is pending or has been paid; (b) the pending appeal may be against disputed tax, interest or penalty in relation to an assessment or reassessment order or against disputed interest, disputed fees where there is no disputed tax. Further, the appeal may also be against the tax determined on defaults in respect of tax deducted at source or tax collected at source. 16. Reliance by the CIT on FAQ-13 is not tenable since as rightly argued by the learned counsel for the petitioner FAQ-13 relates to a pending waiver appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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