Macrotech Developers Limited Vs PCIT (Bombay High Court)
The Bombay High Court examined the validity of Question No.73 of Circular No.21/2020-Income Tax dated 04.12.2020 issued under the Direct Tax Vivad se Vishwas Act, 2020 (“Vivad se Vishwas Act”).
The petitioner, a public limited company engaged in real estate development, had filed its return for Assessment Year (AY) 2015-16 and paid self-assessment tax, though part of it was paid after the due date. The Income Tax Department issued a show cause notice proposing prosecution under Section 276-C(2) of the Income Tax Act, 1961 for alleged wilful attempt to evade tax due to delayed payment. Subsequently, sanction for prosecution was granted and a criminal complaint was filed. Meanwhile, the assessment order was passed under Section 143(3), partly disallowing expenses, and the matter was pending in appeal before the Income Tax Appellate Tribunal.
After the Vivad se Vishwas Act came into force, the petitioner filed a declaration on 23.09.2020 to settle the pending tax dispute for AY 2015-16. However, Circular No.21/2020 clarified in Question No.73 that if prosecution had been instituted for an assessment year, the taxpayer would not be eligible to file a declaration for that assessment year, even on issues not relating to prosecution.
