Mahali Assanar Azeez Vs ITO (Kerala High Court)
Direct Tax Vivad Se Vishwas Scheme’s benefit cannot be denied for minor shortfall in payment: Kerala HC
Kerala High Court Permits Remedy for Minor Tax Payment Shortfall Under Vivad Se Vishwas Scheme
In a significant ruling, the Kerala High Court held that a minor shortfall in tax payment under the Direct Tax Vivad Se Vishwas Act, 2020, should not disqualify an applicant from availing the scheme’s benefits. The court emphasized the importance of the doctrine of substantial compliance, considering the objective of the legislation to resolve tax disputes effectively.
Background of the Case
The petitioner, an individual taxpayer, faced tax and penalty demands for the assessment year 2009-2010. The total tax liability was ₹85,00,041, with an additional penalty of ₹40,92,205. While appeals against these demands were pending, the petitioner opted for the Direct Tax Vivad Se Vishwas Scheme, aiming to settle the dispute.
Under the scheme, the petitioner’s payable amount was calculated as ₹19,69,747 after adjusting a pre-deposited sum of ₹53,50,029. However, due to a clerical error, the petitioner remitted only ₹19,57,182, leading to a shortfall of ₹12,565. This shortfall prompted the tax department to deny the petitioner the benefits of the scheme.
