Mistake Apparent On Record Pertaining To 'Disputed Tax' & 'Tax Arrears' Can Be Rectified Under Vivad Se Vishwas Scheme: Delhi HC
Pankaj Bajpai
27 Sept 2024 6:18 PM IST
The Delhi High Court held that the once the relief is already accorded to assessee in the original assessment order, then Designated Authority (DA) can rectify the mistake apparent on record by allowing the assessee to file a fresh Form 3 under VSV Act.
On examination of the relevant provisions outlined under Vivad Se Vishwaas Act (VSV Act), the Division Bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed that the legislation takes into consideration the time and resources consumed on account of tax disputes, which acted as a burden for both the Government and taxpayers, and hindering the timely collection of Revenue.
Thus, the Bench opined that the objective of the VSV Act was to address the concerns, and subserve the larger public interest of settling disputes, and therefore unburden the Government from pursuing litigation.
Facts of the case:
The petitioner was seeking a revision of Form 3 and which had taken note of the fact that a set off/carry forward of losses and unabsorbed depreciation had not been claimed in Schedule D of the application which had been made by the petitioner for settlement under the VSV Act.
The petitioner contended that since the order of assessment had itself provisioned for the carry forward of unabsorbed depreciation as well as business loss, the same could have neither been ignored nor refused acknowledgment while drawing up the Form 3. The petitioner also asserted that the action of the respondents goes against the very grain of the VSV Act and which is concerned with settlement of disputes pertaining to a tax liability and according closure thereto.
Hence, the petitioner approached the High Court challenging an order negating its request for a rectification of the Form 3 which was issued under the Direct Tax Vivad Se Vishwas Act, 2020).
Observation of the High Court:
The Bench noted that the term “disputed tax” as defined under VSV Act seeks to resolve disputes pending at various levels.
The Bench also highlighted that tax arrears as defined under the VSV Act refers to aggregate amount of disputed tax, interest, penalty or fee together with interest chargeable or charged on the same.
Therefore, both the concept of “disputed tax” and “tax arrears” as embodied in the legislation are of critical importance, emphasized the Bench.
The Bench opined that Form 3 which was drawn, preserved the right of the Assessee to claim a set off of and carry forward of losses as per law, and further was also accepted in the original assessment order that has not been disputed.
Thus, it would be unjust to construe the provisions of VSV Act as contemplating the settlement exceeding the tax liability as computed in assessment or denying the declarant relief which already stood extended, added the Bench.
The Bench observed that the Designated Authority (DA) fails to accord relief thus losing sight of the fact that unless Form 3 was duly amended and rectified, the spectre of finality which stands statutorily conferred on that determination would result in depriving the Assessee of any claim in respect of carry forward and set off.
Hence, while quashing the order which negated the petitioner's request for rectification of the Form 3 which was issued under the Direct Tax VsV Act, the High Court allowed Assessee's petition.
Counsel for Petitioner/ Assessee: Advocates Vibhooti Malhotra, Bhuvesh Satija and Udit Sharma
Counsel for Respondent/ Revenue: Advocates Debesh Panda, Zehra Khan, Vikramaditya Singh and Advocate Ojaswa Pathak
Case Title: Fresh Pet Private Limited vs Principal Commissioner Of Income Tax
Case Number: W.P.(C) 12362/2021
