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2022 (7) TMI 286 - HC - Income TaxEligibility of Vivad se Vishwas scheme - Denial of claim as prosecution proceedings under Section 276 CC of the Act were instituted for the aforesaid assessment years before the date of filing of the declarations and the proceedings were pending - compounding fees for offences committed by the Petitioners under Section 276CC - HELD THAT:- As basic thrust is settlement of direct tax disputes in respect of tax arrears which as already noticed above has a definite connotation under the Vivad se Vishwas Act. Therefore, the interpretation which has been put forward by the respondents runs counter to the scope of settlement as contemplated under the Vivad se Vishwas Act. To that extent answers given to FAQ Nos.22 and 73 are contrary to the very scheme of the Vivad se Vishwas Act. Coming back to the facts of the present case, prosecution against petitioner No.1 is under Section 276 CC which pertains to failure to furnish return under Sections 139 (1) or under Section 153 A etc., of the Act. Such delayed filing of income tax returns cannot be construed to be a ‘tax arrear’ within the meaning of Section 2 (1) (o) of the Vivad se Vishwas Act. Therefore, such pending prosecution cannot be said to be in respect of tax arrear though it may be relatable to the assessment years in question and cannot render petitioner No.1 ineligible. Thus, having regard to the discussions made above, rejection of the declarations of petitioner No.1 by the respondents on 31.01.2021 and 31.03.2021 cannot be sustained and those are accordingly set aside and quashed. Consequently, the matter is remanded back to the respondents who shall consider the declarations of petitioner No.1 dated 29.12.2020 (or subsequent declarations dated 31.01.2021 and 31.03.2021) in conformity with the provisions of the Vivad se Vishwas Act dehors the answers given to FAQ Nos.22 and 73. In view of the decision rendered on the second grievance of the petitioners, it may not be necessary for us to adjudicate on the other grievance of the petitioners relating to computation of compounding fee by the respondents and the related compounding of offences under Section 276 CC of the Act. Writ petition is accordingly allowed to the extent indicated above
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