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TMI Blog2024 (9) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeals and challenges would necessarily be in respect of either adverse findings or decisions made by the AO and which would have constrained the asssessee to adopt remedial measures. This is further fortified by the manner in which the VSV Act defines and introduces the concept of a disputed tax liability and tax arrears. The statute is fundamentally aimed at settling matters and issues on which the assessee and the Revenue may have been litigating on the relevant date as opposed to those on which parties may have been ad idem and which may have never formed part of the ongoing litigation. It was the existing dispute which was sought to be laid to rest under the VSV Act. The statute was never envisaged to be concerned with issues on which there existed no debate or disagreement on the relevant date. Petitioner, thus appears to be correct in her submission that the VSV Act cannot foist a liability upon a declarant which exceeds that which formed the subject matter of contestation on the relevant date. The provisions of the VSV Act cannot be accorded an interpretation which may lead to an applicant being saddled with a liability far greater than what was determined in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution impugning an order dated 30 September 2021 negating its request for a rectification of the Form 3 which was issued under the Direct Tax Vivad Se Vishwas Act, 2020 [VSV Act] observing that in the absence of any apparent mistake, no rectification was warranted. 2. The petitioner was principally seeking a revision of Form 3 and which had taken note of the fact that a set off/carry forward of losses and unabsorbed depreciation had not been claimed in Schedule D of the application which had been made by the petitioner for settlement under the VSV Act. However, Form 3, it was pointed out to us, had itself noted that the set off and carry forward would be open to be claimed as permissible in law. 3. It is the case of the writ petitioner that since the order of assessment had itself provisioned for the carry forward of unabsorbed depreciation as well as business loss, the same could have neither been ignored nor refused acknowledgment while drawing up the Form 3. It is asserted that the action of the respondents goes against the very grain of the VSV Act and which is concerned with settlement of disputes pertaining to a tax liability and according closure thereto. 4. For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner for the carry forward of unabsorbed depreciation as well as business losses. In view of the above, it was her submission that the denial of carry forward of depreciation and loss is wholly unjustified. 9. In order to examine the correctness of the aforenoted submission, we deem it apposite to extract the following passages from the order of assessment dated 31 March 2015: 3.17 During the year, the assessee company has received share application money of Rs. 3,00,00,000/- from two companies, which has been credited in the books of account of the assesee company. It has been discussed on foregoing paragraphs that the share application money so received is not a genuine investment and it is a form of accommodation entries. No evidence of creditworthiness and genuineness of transactions with regard to these amounts have been furnished by the assessee. Even the activities of the investor companies with regard to the investment made do not appear to be genuine as observed in various paragraphs herein above. During the course of assessment proceedings, none of such entities could be produced by the assessee company. Even, the director of the assessee company didn t appear to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above is hereby allowed to be carried forward. The notice of demand is issued accordingly alongwith a copy of this order. Credit of prepaid taxes after verification is given. Calculation of the tax and other statutory liabilities consequent upon this order of assessment is appended to the notice of demand u/s 156. Penalty u/s 27 (1) (c) is also initiated on the additions made in Para 3.17, since I am satisfied that the assessee company has concealed the particulars of its income. 10. Ms. Malhotra contended that the VSV Act itself is concerned with the settlement of disputes with respect to tax which is asserted to be payable and, consequently, the respondents have taken a wholly untenable and erroneous view in the matter. Learned counsel drew our attention firstly to Section 2 (o) which defines the expression tax arrear as follows:- (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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat where the thirty-five per cent. of disputed tax exceeds the aggregate amount of interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax, the excess shall 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 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, whether direct or indirect, to seek or pursue any remedy or 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 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the benefits otherwise extended to an assessee cannot possibly be denied nor can an assessee be deprived of those parts of the assessment which were in its favour. This since according to learned counsel, that part of the assessment cannot be viewed or construed to be disputed . 13. Ms. Malhotra also invited our attention to the clarifications issued by the Central Board of Direct Taxes [CBDT] in terms of a Circular dated 22 April 2020 and where Question 46 was answered in the following terms:- Whether DA can amend his order to rectify any patent errors? Yes, the DA shall be able to amend his order under section 5 to rectify any apparent errors. It was in light of the above that Ms. Malhotra submitted that nothing fettered the power of the Designated Authority to rectify the Form 3 which had been framed. 14. Appearing for the respondents, Mr. Pathak learned counsel, contended that the petitioner admittedly failed to provide any particulars and make appropriate declarations in Schedule D. Taking us through the disclosures and declarations made in Form 1, learned counsel sought to highlight the fact that the prayer for a set off and carry forward of unabsorbed depreciation and bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ume copious amount of time, energy and resources both on the part of the Government as well as taxpayers. Moreover, they also deprive the Government of the timely collection of revenue. Therefore, there is an urgent need to provide for resolution of pending tax disputes. This will not only benefit the Government by generating 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 di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, 1961 (43 of 1961), as computed hereunder: (A) in a case where any appeal, writ petition or special leave petition is pending before the appellate forum as on the specified date, the amount of tax that is payable by the appellant if such appeal or writ petition or special leave petition was to be decided against him; (B) in a case where an order in an appeal or in writ petition has been passed by the appellate forum on or before the specified date, and the time for filing appeal or special leave petition against such order has not expired as on that date, the amount of tax payable by the appellant after giving effect to the order so passed; (C) in a case where the order has been passed by the 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 Dispute Resolution Panel under Section 144-C of the Income-tax Act as on the specified date, the amount of tax payable by the appellant if the Dispute Resolution Panel was to confirm the variation proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident from the discussion which ensues. 19. In terms of Section 3, an applicant desirous of resolution of a tax dispute stands enabled to submit a declaration before the Designated Authority setting out the nature of the tax arrears as well as the amount payable in connection therewith. In terms of Section 4 the moment an applicant comes to submit a declaration, all appeals pending either before the Income Tax Appellate Tribunal [Tribunal] or the Commissioner of Income Tax (Appeals) at its behest are deemed to have been withdrawn from the date when a certificate under Section 5 (1) comes to be issued by the Designated Authority. A declarant is also enjoined to withdraw all appeals pending either before any appellate forum as well as any writ petitions pending before the High Court or the Supreme Court in respect of the tax arrears immediately after the issuance of a certification under Section 5 (1) and furnish proof of withdrawal thereof along with the intimation of payment spoken of in Section 5 (2). 20. Upon the submission of that application, the Designated Authority proceeds to examine and evaluate the same and on a culmination of that exercise determine the amount payable by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assesses to declare their undisclosed income on fulfilling certain terms and conditions. There are also legislations which are directed to cure some mischief and bring into effect some type of reform by improving the system or by relaxing the rigour of the law or by ameliorating the condition of certain class of persons who according to present day notions may not have been treated fairly in the past. Such welfare, beneficent or social justice oriented legislation are also known as remedial statutes. 28. It is settled law that any ambiguity in a taxing statute enures to the benefit of the assessee, but any ambiguity in the amnesty act or exemption clause in an exemption notification has to be construed in favour of the Revenue and amnesty/exemption has to be given only to those assesses who demonstrate that they satisfy all the conditions precedent for availing the amnesty/exemption. ( See: Commr. of Customs case[Commr. of Customs v. Dilip Kumar Co., (2018) 9 SCC 1]). 29. For determining whether the DTVSV Act is a taxing statute or an amnesty act or a beneficial/remedial act, one has to examine what is the objective and intent behind enacting the statute. The relevant portion of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VSV Act also benefits the society as it reduces litigation, acrimony, decongests the courts and relieves the system of unnecessary burden. Consequently, this Court is of the view that DTVSV Act is neither a taxing statute nor an amnesty act. It is a remedial/beneficial statute. 23. It is the aforenoted principles which would thus govern the interpretation that is liable to be accorded to the VSV Act. When tested on the aforesaid precepts, we come to the firm conclusion that the respondents have not only taken an extremely narrow and pedantic view while refusing to accord relief to the petitioner, their action goes against the fundamental grain of the legislation itself. 24. The VSV Act enables an assessee to seek resolution of disputes pending at various stages of the appellate and review tiers created under the Act on the prescribed date. Those proceedings would undoubtedly be concerned with challenges which an assessee may have instituted to an original order of assessment and would be logically confined to parts which would have been adverse to it. Those appeals and challenges would necessarily be in respect of either adverse findings or decisions made by the AO and which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation and business losses, the same could not have been denied to the declarant. The failure of the writ petitioner to make the requisite disclosures in Schedule D would neither detract from the relief which had been accorded by the AO nor change the factum of carry forward and set off as forming part of the assessment order. The grant of that facility appears to have been noticed by the Designated Authority and it was perhaps this aspect which convinced it to record that it would be open to the petitioner to seek relief in that respect accordance with law. However, the Designated Authority clearly appears to have lost sight of the fact that unless Form 3 were duly amended and rectified, the spectre of finality which stands statutorily conferred on that determination would have deprived the petitioner of asserting any claim in respect of carry forward and set off. Once it was conceded that those reliefs stood granted in the original order of assessment itself, the Designated Authority would have been justified in rectifying the mistake which was apparent from the record. 28. We, accordingly, allow the writ petition and quash the impugned order dated 30 September 2021. The Design ..... X X X X Extracts X X X X X X X X Extracts X X X X
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