TMI Blog2021 (4) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner had calculated disputed tax and filed the declarations under the DTVSV Act. The main purpose of the application under section 264 of the Income Tax Act being only to considerably reduce the interest under Sections 234-B and 220(2) of the Income Tax Act by seeking to adjust the credit of regular tax paid challans for Assessment Year 1987-88 of ₹ 12,43,000/- to various years i.e. to Assessment Years 1988-89 to 1998-99 even though Petitioner would be liable to pay a total demand of ₹ 88,90,180/- including a large interest component if the revision application under section 264 was to be rejected. Whether Petitioner satisfies the definition of disputed tax as contained in the DTVSV Act and Rules so as to be considered to have filed a valid declaration in Form-1 and waiver undertaking in Form-2? - Going by the submission and the definition of disputed tax as contained in section 2(1)(j)(F) of the DTVSV Act as contended by the Petitioner, it appears from the facts that the Petitioner would fall within the said definition. We find merit in the submissions made on behalf of the Petitioner. It would, therefore be apposite to refer to the legislative backgr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax arrears which include the disputed tax which will become payable as may be determined by designated authority under Section 3. A look at definition of tax arrears clearly refers to an aggregate of the amount of disputed tax, interest chargeable or charged on such disputed tax etc. determined under the provisions of Income Tax Act. This is not only a case where there is a disputed tax but also tax arrears as referred to in section 3 of the DTVSV Act. The respondents have not raised any objection under any provision of the DTVSV Act or DTVSV Rules with respect to the declarations or undertakings furnished by the Petitioner nor have they passed any order let alone a reasoned or speaking order rejecting the said declarations. The Respondents have summarily rejected the declarations without their being any such provision in the DTVSV Act or the Rules. There also does not appear to be any fetter on the Designated Authority to determine disputed tax of an amount other than that declared by the petitioner. From a plain reading of the provisions of the DTVSV Act and the Rules it emerges that the Respondent- Designated Authority would have to issue Form-3 as referred to in Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 Section 4 (1) of the DTVSV Act on 18th November, 2020. However, the same has been rejected by updating the status on the e-filing portal of the Petitioner on 30th January, 2021, which shows the action on the DTVSV Forms filed by the Petitioner from Assessment Year 1988-89 to 1997-98 as Rejected . Aggrieved by the same, Petitioner is before us. 4. Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to avoid any coercive action, Petitioner handed over cheques totaling to an amount of ₹ 12,43,000/- from time to time to the TRO, which appears to be pursuant to an order of stay of demand by the ITAT. 8. Petitioner submits that the said amount of ₹ 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 ₹ 19,170/- and, therefore the entire amount of ₹ 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). Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90,77,160/- (including interest u/s 220(2) of the Income Tax Act of ₹ 47,75,722/-). 13. Aggrieved by the same, Petitioner sought remedy by filing Revision Application dated 15th May, 2018 under Section 264 of the Income Tax Act before the Principal Commissioner of Income Tax to compute the tax demand for Assessment Year 1987-88 to Assessment Year 1998-99 after giving credit of ₹ 12,43,000/- for the Assessment Years 1988-89 to 1998-99, which has been adjusted in the impugned order against Assessment Year 1987-88 only, and which is pending. 14. Learned Counsel for the Petitioner, Mr. K. Gopal, submits that pending this application under Section 264 of the Income Tax Act, the Direct Tax Vivad Se Vishwas Act, 2020 came to be enacted on 17th March, 2020 to reduce pending income tax litigations, generate timely revenue for the Government 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to various years i.e. for A. Y. 1988 to 1998 so that the interest u/s. 234B and 220(2) of the Act could be reduced considerably. There is no dispute on the income arrived for A. Y. 1987 to 1998 in the order passed u/s. 154 of the I. T. Act dated 16.04.2018 whereas in your application in form 1 Schedule X for A. Y. 1988 to 198 disputed income is shown nil, however, you have calculated disputed tax. On perusal of the order passed u/s. 154 of the I. T. Act and I.T. N. S-150 for A. Y. 1987 to 1998 dated 16-04-2108 it is seen that Income Tax is correctly calculated, there is no dispute in income tax calculation however you have mentioned disputed tax against undisputed income in Form-1. In view of the above, you are hereby given an opportunity to submit your working of disputed tax in relation to undisputed income for A. Y. 1987-88 to 1998-99 within 3 days 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted and all the revision applications filed by the Applicant were to be rejected. Thus, the Applicant humbly submits the definition of disputed tax gets duly satisfied in the facts under consideration. For the sake of easy reference, the Applicant makes a following table depicting the quantum disputed tax under consideration separately year wise: Assessment Years Disputed Tax (Amounts in Rs.) 1988-89 3,192/- 1989-90 74,228/- 1990-91 96,577/- 1991-92 3,370/- 1992-93 46,971/- 1993-94 1,34,400/- 1994-95 1,48,435/- 1995-96 76,127/- 1996-97 75,555/- 1997-98 2,79,116/- 1998-99 17,432/- 10.1. Section 2(1)(a)(v):- Section 2(1)(a) defines the terms appellant and Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration are valid and thus, the Applicant requests the learned competent authority (i.e. the learned PCIT) to process the said applications and oblige. 11. Now, the Applicant specifically deals with the objections raised by Your Honour in the mail/ reply dated 3rd December, 2020. The relevant part of the said mail/ notice is reproduced as under: The main ground of appeal as per your petition u/s. 264 of the I.T. Act is to direct the A. O. to give credit to regular tax paid challan s of A. Y. 1987-88 at ₹ 12,43,000/- to various years i.e. for A. Y. 1988 to 1998 so that the interest u/s. 234B and 220(2) of the Act could be reduced considerably. There is no dispute on the income arrived for A. Y. 1987-1998 in the order passed u/s. 154 of the I. T. Act dated 16.04.2018 whereas in your application in form 1 schedule X. for A. Y. 1988 to 1998 disputed income is shown nil, however, you have calculated disputed tax. On perusal of the order passed u/s. 154 of the I. T. Act and I.T. N.S150 for A. Y, 1987 to 1998 dated 16.04.2018 it is seen that Income tax is correctly calculated, there is no dispute in income tax calculation however you have mentioned disputed tax against u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. It is pertinent to note that the definition of disputed tax operated separately without bearing any nexus with the quantum of disputed income. As explained herein above, the disputed tax is computed by considering tax which would be payable by an Applicant if his appeal/ application u/s. 264 was to be rejected without having any relevance of quantum of the disputed income involved in such an appeal or a revision application. Even the scheme defines disputed income in a reverse manner giving reference to the quantum of disputed tax. The definition of disputed income mentioned u/s. 2(1)(g) of the The Act, 2020 reads as under:- Disputed income in relation to an assessment year, means the whole or so much of the total income as is relatable to the disputed tax. In the light of the aforesaid submission, the Applicant states that the Applications preferred by him are in consonance with the provisions of the Act, 2020 and requests Your Honour to process the same. 12. Before closing the present submission, the Applicant clarifies that he has not made any elaborate submissions on the merits of the applications filed by him u/s. 264 of the Act and the present submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at disputed income is something which is relatable to the disputed tax and not the other way round. He, submits that, therefore, the definition of disputed tax in Section 2(1)(j) (F) becomes very much relevant. The same is quoted as under:- (j) disputed tax in relation to an assessment year or financial year, as the case may be, means the income tax, including surcharge and cess (hereafter in this clause referred to as the amount of tax) payable by the appellant under the provisions of the Income Tax Act, 1961 (43 of 1961), as computed hereunder:- . . . . . . . . . . . . (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. 21. He submits that the disputed tax in the case of Petitioner would mean the amount of income tax including surcharge and cess payable by the Appellant under the Income Tax Act, if the application for revision u/s. 264 of the Act was not to be accepted. According to him, if the Petitioner s Revision Application for the Assessment Years 1988-89 to 1998-99, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applications made under the DTVSV Act. 24. Mr. Gopal, learned Counsel for the Petitioner would submit that Petitioner does not fall under section 4(6) nor within the disqualifications provided in Section 9 of the DTVSV Act, a fact which is not disputed by the petitioner and, therefore, Respondent No.2 is not justified in rejecting the declarations filed by Petitioner under Section 4(1) of the DTVSV Act. 25. He also submits that the Respondent within the time period prescribed under Section 5(1) of the Act i.e. within 15 days from the date on which the declaration is filed, is required to determine disputed tax payable under the DTVSV Act which may not be the same as declared by the Petitioner in the Forms 1 and 2 but the Respondent has no jurisdiction to reject the valid declaration filed by the Petitioner. 26. Mr. Gopal, learned Counsel for the Petitioner submits that the object behind the enactment is to settle tax disputes and to reduce litigation. The Act confers benefits upon tax payers, who can put an end to the litigation by paying specified percentages of tax and obtain immunity from penalty and prosecution and when Petitioner has come forward and filed valid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to be accepted. The petitioner submitted that the revision application preferred u/s. 264 of the Act, is pending and the petitioner would be liable to pay the total demand of ₹ 88,90,180/- if the main contention of granting credit of taxes of ₹ 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. The appellant had further submitted that it is incorrect to mention that he has raised only one issue (i.e. the issue of computation of interest u/s 234 and 220(2) of the Act, in the revision application. 10:- From plain reading of Sec. 2(j)(F) of DTVSV Act, 2020 it is clear that disputed tax means the income tax including surcharge and cess. Nowhere in Sec. 2(j)(F) of DTVSV Act, 2020, it is mentioned that disputed tax includes interest viz. 234A, B, C or 220(2) of the Act, etc. or credit of challans given or to be given etc. This definition of disputed tax as per Sec. 2(j)(F) of DTVSV Act, 2020 is emphasized upon solely for the reason that the declaration of petitioner s applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s. 264 of the Act, has applied for waiver of interest u/s. 220(2) of the Act, even though the matter does not fall under the ambit of the provisions of Sec. 264 of the Act. The revision petition u/s. 264 of the Act cannot be a remedy for waiver of interest u/s. 220 (2) of the Act. The petitioner for waiver of interest has to apply to the appropriate authority and revision petition u/s. 264 of the Act cannot be a route for waiver of interest u/s. 220(2) of the Act. 23:- With reference to paragraphs 3.10(iv) of the petition, I say that the contention of the petitioner that definition of tax arrears as per provisions of Sec.2(1)(o) of DTVSV Act, is satisfied is found to be correct. In fact the petitioner himself if accepting the fact that the disputed tax for A.Ys. 1988-89 to 1998-99 and tax arrears implies to the same demand. For further clarity: Disputed Tax Income Tax including surcharge and cess-Tax Arrears Disputed tax plus interest and penalty leviable or levied. Hence, the petitioner himself is contracting his statement made in Para 3.10(iv) that he has satisfied the definition of disputed tax as per Sec.2(1)(j)(F) of DTVSV Act, simply for the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner had calculated disputed tax and filed the declarations under the DTVSV Act. The main purpose of the application under section 264 of the Income Tax Act being only to considerably reduce the interest under Sections 234-B and 220(2) of the Income Tax Act by seeking to adjust the credit of regular tax paid challans for Assessment Year 1987-88 of ₹ 12,43,000/- to various years i.e. to Assessment Years 1988-89 to 1998-99 even though Petitioner would be liable to pay a total demand of ₹ 88,90,180/- including a large interest component if the revision application under section 264 was to be rejected. 33. The issue really is whether Petitioner satisfies the definition of disputed tax as contained in the DTVSV Act and Rules so as to be considered to have filed a valid declaration in Form-1 and waiver undertaking in Form-2. Going by the above submission and the definition of disputed tax as contained in section 2(1)(j)(F) of the DTVSV Act as contended by the Petitioner, it appears from the facts that the Petitioner would fall within the said definition. We find merit in the submissions made on behalf of the Petitioner. 34. It would, therefore be apposite to refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 tax payers 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Definitions (1) In this Act, unless the context otherwise requires - (a) appellant means- (i) a person in whose case an appeal or a writ petition or special leave petition has been filed either by him or by the income-tax authority or by both, before an appellant forum and such appeal or petition is pending as on the specified date; (ii) to (iv) . . . . . . . . (v) a person who has filed an application for revision under section 264 of the Income tax and such application is pending as on the specified date. (g) disputed income in relation to an assessment year, means the whole or so much of the total income as is relatable to the disputed tax. (j) disputed tax , in relation to an assessment year or financial year, as the case may be, means the income tax, including surcharge and cess (hereafter in this clause referred to as the amount of tax) payable by the appellant under the provisions of the Income 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law for the time being in force, the amount payable by the declarant under this Act shall be as under, namely:- Sl.No. Nature of tax appear Amount payable under this Act on or before 31 st day of March, 2020 Amount payable under this Act on or after the 1 st day of April, 2020 but on or before the last date. (a) Where the tax arrear is the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax. Amount of the disputed tax The aggregate of the amount of disputed tax and ten per cent of disputed tax; provided that where the ten 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 under this Act. (b) Where the tax arrear includes the tax, interest or penalty determined in any assessment on the basis of search under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above calculated on such issue, in such manner as may be prescribed. Counsel for the parties submit that the date in the second column is now 30th day of April, 2021 instead of 31st day of March, 2020. 41. Sections 4 and 5 read as under:- 4. (1) The declaration referred to in section 3 shall be filed by the declarant before the designated authority in such form and verified in such manner as may be prescribed. (2) Upon the filing the declaration, any appeal pending before the Income Tax Appellate Tribunal or Commissioner (Appeals), in respect of the disputed income or disputed interest or disputed penalty or disputed fee and tax arrear shall be deemed to have been withdrawn from the ate on which certificate under sub-section (1) of section 5 is issued by the designated authority. (3) Where the declarant has filed any appeal before the appellate forum or any writ petition before the High Court or the Supreme Court against any order in respect of tax arrear, he shall withdraw such appeal or writ petition with the leave of the Court wherever required after issuance of certificate under sub-section (1) of section 5 and furnish proof of such withdrawal along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the declarant containing particulars of the tax arrear and the amount payable after such determination, in such form as may be prescribed. (2) The declarant shall pay the amount determined under subsection (1) within fifteen days of the date of receipt of the certificate and intimate the details of such payment to the designated authority in the prescribed form and thereupon the designated authority shall pass an order stating that the declarant has paid the amount. (3) Every order passed under sub-section (1), determining amount payable under this Act, shall be conclusive as to matters stated therein and no matter covered by such order shall be reopened in any other proceeding under the Income Tax Act or under any other law for the time being in force or under any agreement, whether for protection of investment or otherwise, entered into by India with any other country or territory outside India. 42. Under the provisions of this Act, tax payers have been given an option to settle their tax disputes by making a declaration to designated authority and paying specified percentage of disputed tax as per section 3 of the DTVSV Act. 43. Section 3 of the DTVSV Act pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears, or to persons in respect of whom detentions have been made under COFEPOSA Act, 1974 or in respect of prosecutions for any offence under UAPA, 1967, NDPS 1985, Prevention of Corruption Act, 1988, PMLA 2002, Prohibition of Benami Property Transaction Act, 1988 or such persons have been convicted of any such offences punishable under those Acts or to any person in respect of whom prosecution has been initiated by an income tax authority for an offence punishable under the Indian Penal Code or for the purposes of enforcement of any civil law under Section 3 of the Special Court (Trial and offence relating to transaction in securities) Act, 1992 etc. 47. It would also pertinent to quote the following provisions from the Direct Tax Vivad se Vishwas Rules 2020 (DTVSV Rules):- 2. Definition In these rules, unless the context otherwise requires- (b) dispute means appeal, writ or special leave petition filed or appeal or special leave petition to be filed by the declarant or the income-tax authority before the Appellate Forum, or arbitration, conciliation or mediation initiated or given notice thereof, or objections filed on or to be filed under Section 264 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on such disputed tax etc. determined under the provisions of Income Tax Act. 49. We are of the view that this is not only a case where there is a disputed tax but also tax arrears as referred to in section 3 of the DTVSV Act. The respondents have not raised any objection under any provision of the DTVSV Act or DTVSV Rules with respect to the declarations or undertakings furnished by the Petitioner nor have they passed any order let alone a reasoned or speaking order rejecting the said declarations. The Respondents have summarily rejected the declarations without their being any such provision in the DTVSV Act or the Rules. There also does not appear to be any fetter on the Designated Authority to determine disputed tax of an amount other than that declared by the petitioner. 50. From a plain reading of the provisions of the DTVSV Act and the Rules set out above, it emerges that the Respondent- Designated Authority would have to issue Form-3 as referred to in Section 5 (1) specifying the amount payable in accordance with section 3 of the DTVSV Act in the case of declarant who is an eligible appellant not falling under section 4(6) nor within the exceptions in section 9 of t ..... 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