Facts of the Case

The petitioner, an Indonesian entity, challenged the rejection of its declaration under the Direct Tax Vivad se Vishwas Act, 2020 (DTVSV Act). For Assessment Year 2010-11, the petitioner had filed its return declaring income of ₹6,27,250. After scrutiny proceedings, a final assessment order dated 24 May 2013 assessed income at ₹1,69,68,210.

The petitioner filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], which was dismissed on 1 January 2020 solely on the ground of delay of four years. Subsequently, the petitioner sought to challenge that order before the Income Tax Appellate Tribunal (ITAT).

Issues Involved

  1. Whether benefits under the DTVSV Act can be claimed when no appeal was pending on the specified date but the limitation to file appeal had not expired.
  2. Whether dismissal of appeal by CIT(A) on the ground of delay eliminates “disputed tax arrears.”
  3. Scope and interpretation of the term “appellant” under Section 2(1)(a) of the DTVSV Act.

Petitioner’s Arguments

The petitioner argued that under Section 2(1)(a)(ii) of the DTVSV Act, eligibility extends to cases where an order has been passed but the time limit for filing an appeal has not expired as on the specified date. Since the limitation period to approach the ITAT had not expired on 31 January 2020, the petitioner qualified as an “appellant.”

Reliance was also placed on CBDT Circular No. 09/2020 clarifying that even where the due date for filing appeal falls after the specified date, the assessee remains eligible for the scheme.

Respondent’s Arguments

The Revenue contended that the scheme applied only where an appeal was actually pending on the specified date. Since the CIT(A) had dismissed the appeal on 1 January 2020 and no appeal had yet been filed before the ITAT as of 31 January 2020, there was no pending proceeding.

It was also argued that because the CIT(A) had not adjudicated the merits of the tax dispute but only the issue of delay, there were no “disputed tax arrears” after giving effect to that order.

Court Order / Findings

  • The scheme is a beneficial and remedial legislation intended to resolve tax disputes and reduce litigation.
  • Section 2(1)(a)(ii) expressly covers situations where an order has been passed but the limitation for filing appeal has not expired as on the specified date.
  • It was undisputed that the petitioner still had time to appeal before the ITAT on 31 January 2020.
  • Dismissal of an appeal on limitation grounds results in confirmation of the assessment order; therefore, disputed tax arrears continue to exist.
  • Eligibility under the scheme does not depend on whether the pending appeal is competent or likely to succeed.
  • Authorities cannot impose additional qualifications not contemplated by the statute.
  • Beneficial schemes must be interpreted liberally to advance their objective of dispute resolution.

Important Clarification

  • Actual pendency of appeal is not the sole criterion for eligibility.
  • Cases where the right to appeal still subsists on the specified date are also covered.
  • Dismissal of appeal on technical grounds does not eliminate disputed tax arrears.
  • The scheme must be applied in a manner that furthers its objective of dispute settlement rather than restricting it through narrow interpretation.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1772178326_PTBUKAKATEKNIKUTAMAVsCOMMISSIONEROFINCOMETAXITDELHI2.pdf 

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