Assessee Can't Be Obstructed From Availing DTVSV Act Benefits Even When Limitation Period For Appeal Hasn't Expired: Delhi High Court

The Delhi High Court has held that the assessee can't be obstructed from availing of the benefits of the Direct Tax Vivad se Vishwas Act, 2020 (DTVSV Act) even where the time limit for an appeal has not expired.

The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav has observed that the DTVSV Act aspires to finally free the tax arrears locked in litigation combat for ages and ultimately ensures timely collection of tax. In the present case, the dispute pertains to AY 2010–11. Much water has already flown through the gates, and a lot of time, resources, and energy have already been consumed in the ongoing litigation. Moreover, since the assessee aspires to avail himself of the benefits of the settlement scheme and the beneficial legislation in place to finally effectuate his aspirations,.

The appellant/assessee is an Indonesian-based entity, and for the assessment year 2010–11, it filed its income tax return, declaring a total income of Rs. 6,27,250. The assessee's case was picked up for scrutiny, and notice under Section 143(2) of the Income Tax Act, 1961, was issued.

A draft assessment order was passed under Section 144C(1), by which the assessing officer proposed to assess the income of the assessee. The final assessment order was passed, and the income of the assessee was assessed at Rs. 1,69,68,210/-.

The assessee preferred an appeal before the CIT (A), which came to be dismissed on the grounds of a four-year delay. This order of CIT (A), however, is under challenge before the ITAT.

In the interregnum, on March 17, 2020, the DTVSV Act came into force, and on December 23, 2020, the assessee filed Forms 1 and 2 as per the provisions of the DTVSV Act. The application was rejected by the department on the pretext that, as of the specified date, no appeal was pending; hence, the assessee was ineligible to reap the benefits under the DTVSV Act.

The assessee contended that the action of the department was wholly arbitrary and completely outside the beneficial objectives of the DTVSV Act. As per the provisions of Section 2(1)(a)(ii) read with Section 2(1)(n) of the DTVSV Act, an assessee in whose case an order has been passed by CIT(A) and the limitation for filing an appeal against the order has not expired as on the specified date, such cases are covered within the meaning of "appellant." As of January 31, 2020, the time limit for filing the appeal before the ITAT had not expired as per Section 253 of the Act and also as per the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, as the time limit for filing the appeal was extended up to March 31, 2021 in view of the COVID-19 pandemic.

The department contended that, as per the provisions of the DTVSV Act, in order to avail the benefit of the “Vivaad se Vishwas” scheme, the appeal had to remain pending as of the specified date, i.e., January 31, 2020. However, no appeal was pending in the assessee's case as the CIT (A) disposed of the condonation of delay application on January 1, 2020.

The court held that it cannot be said that once the CIT (A) has rejected the appeal of the assessee on the ground of being barred by limitation, the resultant effect of such an order would be confirmation of the assessment order so passed, unless and until such position is changed by the appellate forum. Therefore, upon a conjoint reading of Section 2(1)(a)(ii) and Section 2(1)(j)(B) of the DTVSV Act and applying the provisions in the facts of the present case, particularly in light of the objectives of the DTVSV Act, it is distinct to point out that the time limit for filing the appeal against the CIT(A) order dated 01.01.2020 was not expired as on the specified date and the disputed tax arrears existed on the specified date as a resultant effect of the CIT(A) order dated 01.01.2020 leads to confirmation of the assessment order by resulting in the disputed tax arrears.

Counsel For Appellant: Ved Jain

Counsel For Respondent: Indruj Rai

Case Title: PT Bukaka Teknik Utama Versus Commissioner Of Income Tax (IT), Delhi - 2

Citation: 2024 LiveLaw (Del) 613

Case No.: W.P.(C) 4222/2021

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