The Delhi High Court in the case of Rose Wood Buildwell Private Limited Versus Pr. Commissioner Of Income Tax-7 allowed the assessee to exclude subject matter of department’s appeal while opting for settlement under Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act).
The bench of Justice Vibhu Bakhru and Justice Swarana Kanta Sharma has observed that filing of a declaration as prescribed would result in any appeal in respect of the disputed income being withdrawn from the date on which the certificate under Section 5(1) of the DTVSV Act was issued by the designated authority.
The court stated that a declarant as referred to in Section 3 of the DTVSV Act is in respect of disputes pending in an appeal, which on the declaration being made shall be deemed to be withdrawn. It is clear from the express language of the provisions of DTVSV Act that the unit of settlement is the subject matter of disputes pending before an appellate forum.
The petitioner/assessee has challenged the certificate issued by respondent Commissioner of Income Tax under Sub-section (1) of Section 5 of the DTVSV Act by which the declaration as furnished by the Assessee under Section 3 of the DTVSV Act was modified to include settlement of certain disputes that were not the subject matter of the declaration made by the Assessee.
The department stated that the Assessee was required to settle all disputes pertaining to an assessment year and could not confine the settlement of disputes to only some issues that had arisen in the assessment year, while leaving the others.
Thus, issue raised was whether the Assessee is entitled to confine the settlement of the disputes, which were subject matter of its appeal filed before the Income Tax Appellate Tribunal (ITAT) in respect of assessment year (AY) 2011-12 and excluding the disputes, which was the subject matter of the Revenue’s appeal for the same assessment year.
The department contended that there was no appeal pending before any forum on 31.01.2020 being the specified date as mentioned in clause (n) of Section 2(1) of the DTVSV Act. The ITAT rendered the decision on 09.12.2019 and the Revenue had not filed its appeal (ITA No.143/2021] prior to the specified date. Thus, the ambit of disputes must necessarily be construed on the basis of an appeal filed by the department subsequently.
The court noted that the Assessee had filed a declaration in respect of its appeal . The disputed tax paid is confined to the tax, interest and penalty payable in respect of the loss in derivatives which was the subject matter of appeal. The fact that the Revenue had preferred a consolidated appeal against the order passed as well as its appeal would not in any manner detract from the fact that Revenue’s appeal to this Court is in respect of order relatable to two separate appeals. The issues involved in the two appeals are not interlinked. The dispute, which is subject matter of, is confined to deletion of addition of Rs. 3,50,00,000 under Section 68 of the Act. The Assessee’s declaration does not concern the said dispute as it was confined to the order passed by the ITAT in respect of its appeal.
The Court allowed the petition and directed that the certificate dated 23.04.2021 issued by the designated authority in Form no.3 to be confined to the declaration made by the Assessee.
The court directed the department to take steps for issuing a modified certificate under Section 5(1) of the DTVSV Act.
Read More: Calcutta High Court Quashes Income Tax Transfer Order Issued Without Supporting Documentation
Case Details
Case Title: Rose Wood Buildwell Private Limited Versus Pr. Commissioner Of Income Tax-7
Case No.: W.P.(C) 6097/2021 and CM APPL. 19293/2021
Date: 27.11.2024
Counsel For Petitioner: Sumit Lalchandani
Counsel For Respondent: Indruj Singh Rai
