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TMI Blog2024 (12) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... by the concerned authority to accept the said declaration. According to the petitioner, the conclusion that there is no dispute is contrary to the plain language of the Scheme, and therefore, the impugned communication is liable to be set aside. The petitioner also claims the consequential direction holding that the petitioner is entitled to settlement of the disputed income and disputed tax in terms of the VSV Act. FACTUAL CONTEXT 3. The petitioner had filed its return of income for AY 2009-10, on 30.09.2009, declaring 'Nil' income, both under the normal provisions of the tax as well as under Minimum Alternative Tax Provisions (hereafter MAT Provisions). The petitioner claims that it had earned income from the sale of rural agricultural land amounting to Rs. 18,50,79,348/-. However, since the same was exempt from the charge of tax, the petitioner had declared its income in respect of AY 2009-10 as 'Nil'. 4. The petitioner's return was selected for scrutiny and for assessment under Section 143 (3) of the Income Tax Act, 1961 (hereafter the Act). The Assessing Officer (AO) had issued a notice dated 27.09.2010 under Section 143 (2) of the Act raising certain queries for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closure of the issue, the petitioner filed a declaration and undertaking in Form 1 and 2 on 18.12.2020, which was rejected on the same day. 10. However, subsequently, the learned ITAT passed an order dated 09.02.2023, whereby the petitioner's appeal (ITA No.7390/Del/2019) captioned Prayas Buildwell Private Limited v. ITA was allowed. The learned ITAT, set aside the order dated 05.08.2019 passed by the learned CIT(A), whereby the petitioner's appeal was set aside and the matter was remanded to the learned CIT(A) to consider the same on merits. REASONS AND CONCLUSION 11. In the aforesaid context, the only question to be examined is whether the petitioner was entitled to apply under the VSV Scheme on the ground that a dispute was pending on the date when it filed its application. 12. The expression 'disputed penalty' and 'disputed tax' are defined under Section 2(1)(i) & (j) of the VSV Act. The said clauses are set out below: "2. (1) In this Act, unless the context otherwise requires.- *** *** *** (i) disputed penalty" means the penalty determined in any case under the provisions of the Income-tax Act, 1961, where- (i) such penalty is not levied or leviable in respect of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed tax shall be increased by the amount of tax pertaining to issues for which notice of enhancement has been issued: Provided further that in a case where the dispute in relation to an assessment year relates to reduction of tax credit under section 115JAA or section 115D of the Income-tax Act or any loss or depreciation computed thereunder, the appellant shall have an option either to include the amount of tax related to such tax credit or loss or depreciation in the amount of disputed tax, or to carry forward the reduced tax credit or loss or depreciation, in such manner as may be prescribed." 13. Section 3 of the VSV Act sets out the computation of the amount payable in cases where a declaration is made to the designated authority in accordance with the provisions of Section 4 of the VSV Act in respect of 'tax arrears'. 14. Section 3 of the VSV Act is set out below: "3. Subject to the provisions of this Act, where a declarant files under the provisions of this Act on or before the last date, a declaration to the designated authority in accordance with the provisions of section 4 in respect of tax arrear, then, notwithstanding anything contained in the Income-tax Act or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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: Provided also that in a case where an appeal is filed by the appellant on any issue before the Income Tax Appellate Tribunal on which he has already got a decision in his favour from 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." 15. It is also relevant to refer to Sub-section (1) & (2) of Section 4 of the VSV Act, which are reproduced below: "4. (1) The declaration referred to in section 3 shall be filed by the declarant before the designated authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel appearing for the petitioner, has referred to the decision of this Court in Commissioner of Income Tax vs. Bharat General Reinsurance Co. Ltd.:(1971) 81 ITR 303 and has drawn attention of this Court to paragraph 11 of the said decision, which reads as under: "It is true that the assessee itself had included that dividend income in its return for the year in question but there is no estoppel in the Income-tax Act and the assessee having itself challenged the validity of taxing the dividend during the year of assessment in question, it must be taken that it had resiled from the position which it had wrongly taken while filing the return. Quite apart from it, it is incumbent on the income-tax department to find out whether a particular income was assessable in the particular year or not. Merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year. We are, therefore, of the view that the income from dividend was not assessable during the assessment year 1958-59 but it was assessable in the assessment year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, if an appeal in respect of any disputed tax is pending before the learned ITAT or the learned CIT(A), the assessee would be entitled to file a declaration under Section 4 (1) of the VSV Act. 24. It is material to note that the petitioner had succeeded before the learned ITAT in its appeal and the order of the learned CIT(A) rejecting the petitioner's appeal on the ground of limitation was set aside. The learned ITAT has issued specific directions for the learned CIT(A) to decide the dispute on merits. It is also material to note that the Revenue has not challenged the order dated 09.02.2023 passed by the learned ITAT. However, sensu stricto this may not be relevant at this stage. All that was necessary to be considered is whether on the date when the petitioner had made declaration under Section 4 of the VSV Act, an appeal before the learned CIT(A) or the learned ITAT was pending. Undisputedly, the petitioner's appeal before the learned ITAT was pending on the said date. 25. We may also refer to the decision of the Bombay High Court in Govindrajulu Naidu v. Principal Commissioner of Income Tax, (Central-1), Mumbai: (2021) 127 taxmann.com 154 (Bombay). In the said case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered that the enactment and the rules have been brought out with a specific purpose, object and intention to expedite realisation of locked up revenue providing certain reliefs to the taxpayers who opt for applying under the Act and such an option is not available to only a few persons. The scheme appears to be an open scheme with specific exclusions as are referred to in section 9 which is as under (page 128 of 422 ITR (St.)): "9. The provisions of this Act shall not apply- (a) in respect of tax arrear,- (i) relating to an assessment year in respect of which an assessment has been made under sub-section (3) of section 143 or section 144 or section 153A or section 153C of the Income-tax Act on the basis of search initiated under section 132 or section 132A of the Income-tax Act, if the amount of disputed tax exceeds five crore rupees ; (ii) relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration ; (iii) relating to any undisclosed income from a source located outside India or undisclosed asset located outside India ; (iv) relating to an assessment or reassessment made on the basis of information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... victed of any such offence consequent to the prosecution initiated by an Income-tax authority ; (e) to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (27 of 1992) on or before the filing of declaration." 23. In the present matter, the petitioner has categorically contended that the Revenue does not dispute that an appeal has been filed by the petitioner/ declarant before the appellate forum. As such, there exists a dispute as referred to under the Direct Tax Vivad Se Vishwas Act and the Rules. In such a scenario, the submission on behalf of the Revenue, the petitioner had offered the income and as such, the tax on the same cannot be considered as disputed tax, would not align itself with the object and the purpose underlying the bringing in of the Direct Tax Vivad Se Vishwas Act and the Rules thereunder. It would have to be considered that the enactment and the rules have been brought out with a specific purpose, object and intention to expedite realisation of locked up revenue providing certain reliefs to the taxpayers who opt for applying under the Act and such an option is not available to only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) to any person in respect of whom prosecution for any offence punishable under the provisions of the Unlawful Activities (Prevention) Act, 1967 (37 of 1967), the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985), the Prevention of Corruption Act, 1988 (49 of 1988), the Prevention of Money Laundering Act, 2002 (15 of 2003), the Prohibition of Benami Property Transactions Act, 1988 (45 of 1988) has been instituted on or before the filing of the declaration or such person has been convicted of any such offence punishable under any of those Acts ; (d) to any person in respect of whom prosecution has been initiated by an Income-tax authority for any offence punishable under the provisions of the Indian Penal Code (45 of 1860) or for the purpose of enforcement of any civil liability under any law for the time being in force, on or before the filing of the declaration or such person has been convicted of any such offence consequent to the prosecution initiated by an Income-tax authority ; (e) to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (27 of 1992) on or before the filing of decl ..... 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