Sadruddin Tejani Vs ITO (Bombay High Court)
The basic facts set out above are not in dispute. Without getting into the merits of the demands by the Revenue or the Application for Revision under Section 264 of the Income Tax Act by the Petitioner, it would be relevant to note that, it is not in dispute that Petitioner had filed application under Section 264 of the Income Tax Act for adjustment/credit of Rs.12,43,000/-paid earlier in respect of the tax demands for Assessment Years 1988-89 to 1998-99 as according to him, this amount had been adjusted only against the demand for the A.Y 1987-88. While this application was pending, the Direct Tax Vivad Se Vishwas Act, 2020 came to be enacted followed by Direct Tax Vivad Se Vishwas Rules, 2020.
Petitioner filed applications under the DTVSV Act and Rules vide declarations in Form-1 dated 18th November, 2020 and waiver undertakings in Form-2 for each of the 11 years for the period 1988-89 to 1998-99 to avail of beneficial tax payments to end the litigation with the Revenue-Authorities. Pursuant to the filing of these applications, on 3rd December, 2020, Respondent No.1 called upon the Petitioner to submit working of disputed tax in relation to undisputed income for A.Y 1987-88 to 1998-99, stating that, Petitioner had mentioned disputed tax in the Form-1 despite the disputed income shown as ‘Nil’ in the 154 proceedings, tax having been calculated correctly for Assessment Years 1987 to 1998 and there being no dispute in income tax calculation and despite that, 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 Rs.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 Rs.88,90,180/- including a large interest component if the revision application under section 264 was to be rejected.
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.
It therefore emerges that the DTVSV Act has been enacted to address the urgent need to provide for resolution of pending tax isputes where a huge amount of disputed tax arrears of over Rs.9.32 lakh crores is locked-up. The DTVSV Act is aimed not only to benefit the Government by generating timely revenue but also to benefit the taxpayers by providing them peace of mind, certainty and saving time and resources rather than spending the same otherwise, enabling the taxpayers to be able to deploy the time, energy and resources saved, by opting for such dispute resolution, towards their business activities. The Act confers benefit on the tax payers who can put an end to tax litigation by paying specified percentage of tax and obtain immunity from penalty and prosecution and waiver of interest. In the context of the issue at hand, it would be pertinent to refer to the preamble to the DTVSV Act.
The preamble clearly provides that this is an Act to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The emphasis is on disputed tax and not on disputed income.
From the above exposition, what emerges is that for a declarant to file a valid declaration, there should be disputed tax in the case of such a declarant. As can be seen from the aforesaid undisputed fact that Petitioner having filed revision application under Section 264 of the Income Tax Act for the Assessment Years 1988-89 to 1998-99 for credit/ adjustment of Rs.12,43,000/- which application is pending before the Commissioner. Petitioner, admittedly being an eligible Appellant, squarely satisfies the definition of “disputed tax” as contained in Section 2(1) (j)(F) of the DTVSV Act, 2020. This is because, if the revision application under Section 264 of the Income Tax Act is rejected, then the Petitioner would purportedly be liable to pay a demand of Rs.88,90,180/- including income tax, interest. Petitioner as eligible Appellant has filed declaration under section 4 with the designated authority under the provisions of Section 4 of the DTVSV Act in respect of 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. 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.
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 the DTVSV Act, which fact appears to be undisputed. As also observed by us earlier, the case of the Petitioner would be covered by the definition of disputed tax as per Section 2(1)(j)(F) of the DTVSV Act. It has to be kept in mind in view of what has been observed by us earlier, that the DTVSV Act is a beneficial legislation for both the Revenue and the tax payer.
In view of the aforesaid discussion, we are of the view that the Designated Authority under the DTVSV Act viz Respondent No.2 in this case is not justified in rejecting the declarations filed by the Petitioner.
Accordingly, we set aside the rejections. We direct the Respondent No.2 to consider the applications made by Petitioner by way of declarations dated 18th November, 2020 in Form-1 as per law and proceed with according to the scheme of the DTVSV Act and Rules in the light of above discussion within a period of two weeks from the date of this order
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
By these Petitions filed under Article 226 of the Constitution of India, 1950, Petitioner is challenging the rejection of its declarations filed on 18th November, 2020 under Section 4(1) of the Direct Tax Vivad-Se-Vishwas Act, 2020 (“DTVSV” Act) for the eleven Assessment Years from A.Y. 1988-89 to 1998-99.
2 Petitioner has filed these Petitions for the following reliefs :-
“(a) That this Hon’ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction order or a writ including a writ in the nature of ‘Certiorari’ to call for the records and verify the declaration filed under section 4(1) of the DTVSV Act and direct the Respondent No.2 to accept the same;
(b) That the Hon’ble Court may be pleased to issue under Article 226 of the Constitution of India appropriate writ or order or direction including 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 Petitioner had earlier filed returns of income for the Assessment Years 1987-88 to 1998-99. Assessments for the Assessment years 1987-88 to 1995-96 were reopened by issuance of notices under Section 148 (1) of the Income Tax Act, 1961 (the Income Tax Act) and the re-assessment proceedings were completed by passing of Assessment Orders under Section 144 read with Section 147 of the Income Tax Act by making additions on account of gross profit and unsecured loan. For the Assessment Years 1996-97 to 1998-99, assessments were finalized under Section 143(3) of the Income Tax Act. Pursuant to the said Assessment Orders, Respondent No.1 raised following demands for those years by issuing notice under Section 156 of the Income Tax Act:-
