The Delhi High Court ruled that the unit for settlement of disputes under the DTVSV Act, 2020 is an appeal, writ petition or SLP and not the assessment year.
The Petitioner is a banking company incorporated under the laws of Japan and carries on the banking business in India through branches in various cities. The return of income filed by the petitioner was selected for scrutiny assessment and a final assessment order dated 29th October, 2010 under Section 143 read with Section 144C of the Income Tax Act, 1961 was passed by the Assessing Officer for the Assessment Year 2007-08 making various adjustments to the total income of the Petitioner.
The primary issue that arises for consideration in the case is whether an assessee is free to settle any appeal under the Direct Tax Vivad se Vishwas Act, 2020 (“DTVSV Act”) and is not required to settle all the pending appeals filed by the respondents-revenue for an assessment year.
Senior Counsel for the Petitioner submitted that the DTVSV Act treats an appeal and an SLP for the same assessment year as a separate dispute for the purpose of settlement under the Act.
He submitted that this position is evident from the provisions of Section 2(1)(j) read with Section 2(1)(a) of DTVSV Act, which consider each appeal as a separate dispute for the purpose of computing disputed tax under the Act.
Advocate Zoheb Hossain, appearing for the respondents-revenue, submitted that the DTVSV Act treats one assessment year as a whole and therefore if issues arise out of one assessment year, then the assessee is required to settle all such issues relating to such assessment year which cannot be dissected at the choice of the assessee.
He submitted that the unit for settlement of disputes under the DTVSV Act is an assessment year and not an appeal or writ petition or a special leave petition.
The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora said that every modern legislation is actuated with some policy. While the intent of taxing statutes is to collect taxes, the intent of amnesty acts like Voluntary Disclosure of Income Scheme is to provide an opportunity to the assesses to declare their undisclosed income on fulfilling certain terms and conditions.
“It is settled law that any ambiguity in a taxing statute enures to the benefit of the assessee, but any ambiguity in the amnesty act or exemption clause in an exemption notification has to be construed in favour of the revenue and amnesty/exemption has to be given only to those assesses who demonstrate that they satisfy all the conditions precedent for availing the amnesty/exemption” the court added.
The court observed that the DTVSV Act, 2020 is a beneficial/remedial piece of legislation enacted by the Parliament to reduce pendency of cases, generate timely revenue for the government and provide certainty and savings of resources that would be spent on the long drawn litigation process.
Therefore the court viewed that the DTVSV Act is neither a taxing statute nor an amnesty act. It is a remedial/beneficial statute.
It was further observed that under the DTVSV Act, 2020 each appeal, writ petition or SLP is treated as a separate dispute which is evident from Section 2(1)(j) read with Section 2(1)(a) of the Act.
“The DTVSV Act permits the settlement of a dispute which is pending either in appeal, writ petition or SLP. The assessee cannot settle any issue which may arise in the assessment proceeding pending before the AO” the court said.
It was further held by the court that an assessee is free to settle any appeal under the DTVSV Act and is not required to settle all the pending appeals filed by the respondent-revenue for an assessment year.
The court set aside the order and the reasons being Annexures P-27 and P-30 to the writ petition and directed the respondents-revenue to reconsider the declaration filed by the Petitioner for the assessment year 2007-08 under the provisions of DTVSV Act 2020 and issue refund, if any, in accordance with law within eight weeks.
Case title: MUFG Bank Ltd v/s Commissioner of Income Tax 2 & Anr.
Citation: W.P.(C) 3973/2021