ACIT Vs Lifecell International Private Limited (ITAT Chennai)
ITAT Chennai held that it is fact that under Direct Tax Vivad Se Vishwas Act, 2020 declarant cannot challenge sum payable before any appellate forum, however, once the declarant violates condition of DTVSVS Act, 2020 the same can be revived by the Department.
Facts- The Revenue has filed a petition on maintainability of appeal filed by the assessee in ITA No. 3334/Chny/2019 in light of declaration filed by the assessee u/s. 4(1) of the Direct Tax Vivad Se Vishwas Act, 2020 (hereinafter referred to as “DTVSVS Act, 2020) and subsequent Form no. 3 (certificate) issued by the designated authority as per provisions of section 5(1) of the DTVSVS Act, 2020.
Conclusion- We are of the considered view that in the present case, the assessee has violated conditions prescribed under DTVSVS Act, 2020 and thus, even if appeal filed by the assessee is dismissed or deemed dismissal of appeal, the same can be revived the moment the Department notices any of the conditions prescribed therein are violated.
We find that sub-section (7) deals with a situation where the declarant challenges the order passed by the designated authority under sub-section (1) of section 5 on any issue relating to tax arrear and or the payment of sum determined under any section, then no appellate forum or arbitrator or conciliator or mediator shall proceed to decide said dispute. In other words, designated authority determines sum payable by declarant under DTVSVS Act, 2020, then the same becomes final and which cannot be challenged by the declarant before any appellate forum.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
In this case, the Revenue has filed a petition on maintainability of appeal filed by the assessee in ITA No. 3334/Chny/2019 in light of declaration filed by the assessee u/s. 4(1) of the Direct Tax Vivad Se Vishwas Act, 2020 (hereinafter referred to as “DTVSVS Act, 2020) and subsequent Form no. 3 (certificate) issued by the designated authority as per provisions of section 5(1) of the DTVSVS Act, 2020. The relevant contents of petition filed by the Revenue are as under:
“In this case, the Designated Authority i.e., the Principal Commissioner of Income-tax- 4, Chennai has already issued Form-3 (certificate) as per the provisions of section 5(1) of the DTVSVS Act 2020. Sec. 5(1) of the DTVSVS is extracted as under:
“5(1) The designated authority shall, within a period of fifteen days from the date of receipt of the declaration, by order, determine the amount payable by the dec/arant in accordance with the provisions of this Act and grant a certificate to the declarant containing particulars of the tax arrear and the amount payable after such determination, in such form as may be prescribed.”
2. As per section 4(2) of the DTVSVS Act 2020 upon 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 date on which certificate under subsection (1) of section 5 is issued by the designated authority. Section 4(2) of the DTVSVS Act 2020 is as under:
“4(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 date on which certificate under sub-section (1) of section 5 is issued by the designated authority.”
3. In view of the express provision of section 4(2), the appeal pending before Hon’ble Tribunal is deemed to have been withdrawn by the assessee on the day on which the Form-3 is issued u/s 5(1) of DTVSVS Act 2020. Once the appeal is deemed to have been withdrawn, then there is no question of pursuing the appeal by the assessee.
4.4 Sec. 4(3) of DTVSVS Act 2020 states that “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 the intimation of payment to the designated authority under sub-section (2) of section 5. In view of this provision, once having opted for the VSV scheme and Form-3 issued, there is no option for the assessee except to withdraw the appeal. Even if the assessee does not want to withdraw, it is deemed to have been withdrawn u/s 4(2) of DTVSVS Act 2020.
5. Further, Sec. 4(7) of DTVSVS Act 2020 states that “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”. Hence, this Hon’ble Tribunal cannot proceed to decide the appeal filed by the assessee.
6. Sections 10 and 11 of Vivad se Vishwas Act empower the Central Government/Central Board of Direct Taxes to issue directions or orders in public interest or to remove difficulties. In order to facilitate the taxpayers, clarifications under the said sections in form of answers to frequently asked questions (FAQs) were issued vide Circular No. 9/2020 dated 22nd April, 2020 (covering FAQ 1-55) and Circular No. 21/2020 dated 4th December, 2020(covering FAQ Nos. 56-89). The above legal position is expounded in the form of FAQs in the above Circulars. However, it is submitted that FA s and Circulars issued b the Department are onl clarificator in nature and cannot override the express provisions of DTVSVS Act 2020.
7. The attention of Hon’ble Members is drawn to the answers to Questions 43 and 47 of the FAQs contained in Circular No. 9/2020 dated 22nd April, 2020.
7.1 Question No. 43 and its answer Circular No. 9/2020 dated 22nd April, 2020 are extracted here under:
