Bombay High Court
Govindrajulu Naidu vs The Principle Commissioner Of ... on 29 April, 2021
Bench: S.P. Deshmukh, Abhay Ahuja
WP(L) 6903-2021(J) 7-5-21.doc
Anand IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 6903 OF 2021
1. Govindrajulu Naidu .Petitioner
Age : 70 yrs, Occu : business
an individual having office at C-10,
Shanti Bhavan, Dr. R. P. Road,
Mulund (W),
Mumbai - 400 080.
Vs.
1. The Principal Commissioner of Income Tax .Respondents
(Central - 1), Mumbai (being the Designated
Authority) under the DTVSV Act] having
office at 1001, 10th floor, Pratiksha Bhavan,
Old CGO Building, M. K. Road,
Mumbai - 400 020.
2. The Assistant Commissioner of Income Tax,
Central Circle - 1(2), Mumbai having
office at 906, Pratiksha Bhavan, Old CGO
Building, M. K. Road,
Mumbai - 400 020.
3. The Union of India
Through the Secretary, Ministry of
Finance, Government of India,
North Block,
New Delhi - 110 001.
Mr. Devendra Jain a/w Ms Radha Halbe, Advocate, for the Petitioner
Mr. Suresh Kumar, Advocate, for the Respondents
CORAM : SUNIL P. DESHMUKH &
ABHAY AHUJA, JJ.
DATE : 29.04.2021
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JUDGMENT ( PER SUNIL P. DESHMUKH, J. )
. The Petition concerns an order passed by the Designated
Authority - The Principal Commissioner of Income Tax (Central) - 1,
Mumbai rejecting the declaration of the petitioner under the Direct Tax
Vivad Se Vishwas Act, 2020 ( for short 'DTVSV' Act).
2. The petitioner - Assessee had filed a return of income for
the Assessment Year 2014-15 ( for short 'AY' ) under Section 139(1) of
the Income Tax Act ( for short 'The IT Act' ) declaring a total income of
Rs. 67,55,710/-. The assessment had been completed under section
143(3) of the IT Act assessing petitioner's income at Rs. 67,66,640/-.
3. In 2018, a survey action had taken place under Section
133A of the IT Act on one Mr. Sandipkumar N. Jha and during the
same, some incriminating documents were claimed to have been found
in respect of petitioner showing that said Mr.Jha had paid Rs.
5,76,00,000/- in cash to petitioner for purchase of shop and office
premises. Thereafter, in 2019, a survey action had been undertaken at
the office premises of petitioner. However, no incriminating material
was found during the course of survey. Under pressure, the petitioner
agreed to offer the amount of Rs.5,76,00,000/- allegedly received, as
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his income in the statement recorded under section 131 of the IT Act.
(Later, the petitioner had retracted from his statement under an
affidavit filed before respondent No.2). The assessment for the AY
2014-15 had been re-opened by notice issued under section 148 of the
IT Act. The petitioner, as referred to above, had filed a return showing
amount of Rs.5,76,00,000/- as his income and declared a total amount
of Rs.6,43,69,719/- and on re-assessment, the total amount was
assessed at Rs.6,44,09,400/- under assessment order dated
30.03.2019.
4. The petitioner aggrieved by the order dated 30.03.2019
passed by respondent No. 2 referred to above had filed an appeal
under Section 246A of the IT Act before the Commissioner of Income
Tax (Appeals). The petitioner had raised a ground that respondent No.
2 had erred in taxing the amount of Rs.5,76,00,000/- as income of
petitioner for the relevant assessment year. The appeal had been
pending.
5. During the pendency of the appeal, the Direct Tax Vivad Se
Vishwas Act, 2020 ('DTVSV Act') came to be enacted to resolve certain
categories of disputes pending on specified date before specified
appellate fora relating to the IT Act. Under notification dated
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18.03.2020, the Central Government had framed rules referred to as
the Direct Tax Vivad Se Vishwas Rules ('DTVSV Rules').
6. As is required under the provisions of the DTVSV Act, the
petitioner had filed a declaration to the designated authority as
referred to in section 3 in the prescribed form. Thereafter, the
designated authority was supposed to determine the tax payable by the
declarant - petitioner in accordance with the provisions of the DTVSV
Act and grant certificate in the prescribed form containing particulars
of tax arrears and amount payable upon determination.
7. Learned counsel for petitioner Mr.Devendra Jain states
that, however, strangely, declaration filed in form - 1 of the petitioner
has been purportedly rejected on the online portal without giving any
opportunity to the petitioner observing that there is no disputed tax in
the case of the declarant, as declarant has himself filed return
reflecting the income. The addition of Rs.32,000/- made by the AO
has not been disputed by the declarant in the appeal filed. Learned
counsel submits that said rejection is unsustainable, bad-in-law, against
the provisions of the DTVSV Act and the reasons thereunder are
absolutely misconceived.
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8. Mr. Jain purports to take us through provisions of the
DTVSV Act referring to that Section 2 of the DTVSV Act defines the
terms under the Act, Section 3 is in respect of the amount of tax
payable by the declarant, referring to the percentage at which the same
is payable by the declarant by specified date and or before the notified
date. Section 4 requires that declaration referred to in section 3 shall
be filed by the declarant before the designated authority in the
prescribed form and upon filing the declaration, appeal pending before
the appellate authority in respect of the disputed income or disputed
interest or disputed penalty or disputed fee and tax arrear shall be
deemed to have been withdrawn from the date on which certificate
under sub-section (1) of section 5 is issued by the designated authority.
The Act prescribes under Section 5 (1) that the designated authority
shall, within a period of 15 days from the date of receipt of the
declaration, by order, determine the amount payable by the declarant
in accordance with the provisions of the Act and grant a certificate to
the declarant containing particulars of the tax arrear. Section 9 of the
Act refers to the cases to which, DTVSV Act and rules would not apply.
9. Learned counsel for the petitioner submits that the order
has been passed for entirely unrelated reasons, as well as there is no
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compliance of rules of natural justice. He submits that before rejecting
the application, an opportunity ought to have been afforded having
regard to order dated 30.03.2019. Learned counsel for the petitioner
submits to reject a declaration without giving hearing to declarant
would be in complete defiance of the object of the scheme. Learned
counsel for the petitioner submits that impugned order passed has been
adversely affecting day to day activities of the petitioner and has been
putting lot of pressure are wasting of energy.
10. The affidavit in reply, inter alia, refers to appeal of
petitioner against the assessment order on the ground that the
assessing officer erred in taxing the amount of Rs.5,76,00,000/- as a
total income of the petitioner which was declared by assessee himself.
Since the DTVSV Act can be invoked on the amount of tax which is
disputed, the assessee has not disputed tax amount on account of
addition made by the assessee. It is purportedly referred to that the
authority is required to go through the application, the appeal filed by
the assessee and then determine the disputed tax payable. In the
present case, after going through the record, incidentally it occurs that
the amount of income and the tax thereon has not been disputed and
as such, calculation by the petitioner in form - 1 with regard to
disputed tax is erroneous and not as per the scheme. The DTVSV
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application does not pertain to any disputed income and is based on
the additional amount made by him and therefore, the application was
rejected.
11. He submits, under the DTVSV Act, it is imperative that the
respondent No. 1 would determine the payable amount in form No. 3
and the Act does not empower the authority to reject a declaration
filed on the ground on which declaration has been purportedly
rejected.
12. Learned counsel for the petitioner also takes us through
the provisions of the DTVSV Rules and purports to draw our attention
to Rule 2(b) thereunder defining the term 'dispute' to mean, appeal,
writ or special leave petition filed or appeal or special leave petition to
be filed by the declarant or the income-tax authority before the
Appellate forum.
13. He submits that in the present case, it is undisputed that
the petitioner has filed appeal and it is indisputable there exists dispute
as defined under the Rules. He takes us through the relevant details
referring to that the petitioner is disputing Rs. 5,76,00,000/- in the
appeal and the specific ground in this respect has also been taken up.
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He submits, it is not the case of the revenue that the amount of Rs.
5,76,00,000/- is not disputed amount in the appeal before the
appellate authority.
14. Learned counsel for the respondents contends that the writ
petition is not maintainable, as the appeal filed by the petitioner
against the assessment order, does not involve any disputed issue
arising out of the assessment order. The amount contested by the
petitioner has been disclosed by the petitioner in his return of income
and thus, the appeal itself being untenable and the same cannot be
resolved under the DTVSV Act. It is being contended that the assessee
cannot be aggrieved in respect of income voluntarily declared in return
of income and the petitioner can be said to be aggrieved only to the
extent of addition made of Rs. 42,840/- and not in respect of the
amount which he declared in return filed.
15. Learned counsel for the petitioner during hearing had
drawn our attention to a decision of this court dated 09.04.2021 in
case of Saddruddin Tejani Vs. Income Tax Officer and another
( W. P. No. 611 of 2021) decided on 9 th April 2021, wherein the
statement of object and the reasons for bringing in the DTVSV Act have
been considered. This court had observed that the enactment has been
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brought in to address the urgent need to provide for resolution of
pending tax disputes, wherein a huge amount of disputed tax arrears
had been locked up. The DTVSV Act is aimed not only to benefit the
Government by generating timely revenue but also to benefit the
taxpayers by providing them peace of mind, certainty and saving time
and resources enabling the taxpayers to deploy the time, energy and
resources towards the business activities by opting for such dispute
resolution. The act confers benefit on the tax payers who can put an
end to tax litigation by paying specified percentage of tax and obtain
immunity from penalty and prosecution and waiver of interest. It has
also been observed that the preamble of the Act provides for resolution
of disputed tax and the matter connected therewith or incidental
thereto and the emphasis is on disputed tax and not on disputed
income.
16. It would be pertinent to take into account the definition of
'disputed tax' under DTVSV Act as under :
17. The definition of disputed tax under Section 2(1)(j) of the
IT Act reads thus :-
"(j) 'disputed tax', in relation to an
assessment year or financial year, as the case
may be, means the income tax, including
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surcharge and cess (hereafter in this clause
referred to as the amount of tax) payable by
the appellant under the provisions of the
Income tax Act, 1961 (43 of 1961), as
computed hereunder :-
(A) in a case where any appeal, writ petition
or special leave petition is pending before
the appellate forum as on the specified
date, the amount of tax that is payable by the
appellant if such appeal or writ petition or
special leave petition was to be decided against
him."
(B) .....
(C) .....
(D) .....
(E) ....."
18. The term 'disputed tax' has been assigned specific
definition in the DTVSV Act and would have to be appreciated in the
context of DTVSV Act. It specifically provides, the disputed tax in
relation to assessment year or financial year means 'income tax',
wherein the appeal is pending before appellate forum as on the
specified date, the amount of tax payable by the appellant, if such
appeal were to be decided against him. Plainly reading, it would
emerge that the disputed tax means an income tax payable by assessee
under the provisions of the IT Act, on the income assessed by the
authority and where any appeal is pending before the appellate forum
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on the specified date, against any order relating to tax payable under
IT Act. It does not presumably seem to ascribe any qualification to the
matter/appeal, save, that it should concern Income Tax Act. It would
not be construed limiting and restricting it as is sought to be submitted
on behalf of the Respondents. It does not appear that merits of appeal/
matter would be consideration to qualify for 'disputed tax' under
DTVSV Act.
19. It would be pertinent also to refer to that 'disputed income'
has also been defined under clause (g) of section 2(1) to mean the
whole or such measure of total income as is relatable to disputed tax.
Further the definition of 'dispute' as appearing under rule 2(b) of the
DTVSV rules shows that "dispute" means an appeal/writ petition or
special leave petition by the declarant before the appellate forum etc.
20. In the present case, the petitioner has specifically
contended that there is a specific ground taken in the appeal and has
specifically referred to those in the writ petitions as well as
memorandum of appeal has also been a part of annexures to the
petition. It has been submitted that a specific ground has been taken
that the assessing officer has erred in taxing the amount of Rs.
5,76,00,000/- as income of the appellant. It is contended that it would
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not be a case that the petitioner has not disputed dis-allowance of the
concerned figure. This position has not been disputed by revenue.
21. In Commissioner of Income Tax Vs. Shatrusailya
Digvijaysingh Jadeja it appears to have been observed to the effect that
while the act contemplates an appeal and its pendency, a qualification
to the same as to competency of appeal is a matter of examination by
the appellate forum. In said Judgment, decision of Tirupati Balaji
Developers (P.) Ltd. Vs. State of Bihar, reported in [2004]5 SCC 1 has
been referred to. It appears to have been observed that an appeal
would be an appeal may be irregular or incompetent.
22. The petitioner had no idea that his appeal would be of no
significance on the consideration underlying impugned order. He had
not been heard on the same.
23. In the present matter, the petitioner has categorically
contended that the revenue does not dispute that an appeal has been
filed by the petitioner/declarant before the appellate forum. As such,
there exists a dispute as referred to under the DTVSV Act and the rules.
In such a scenario, the submission on behalf of the revenue, the
petitioner had offered the income and as such, the tax on the same
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cannot be considered as disputed tax, would not align itself with the
object and the purpose underlying the bringing in of the DTVSV Act
and the rules thereunder. It would have to be considered that the
enactment and the rules have been brought out with specific purpose,
object and intention to expedite realisation of locked up revenue
providing certain reliefs to the tax payers who opt for applying under
the Act and such an option is not available to only a few persons. The
scheme appears to be an open scheme with specific exclusions as are
referred to in section 9 which is as under :-
"9. The provisions of this Act shall not
apply-
(a) in respect of tax arrear,-
(i) relating to an assessment year in
respect of which an assessment has been
made under sub-section (3) of section 143 or
section 144 or section 153A or section 153C
of the Income-tax Act on the basis of search
initiated under section 132 or section 132A of
the Income-tax Act, if the amount of disputed
tax exceeds five crore rupees;
(ii) relating to an assessment year in
respect of which prosecution has been
instituted on or before the date of filing of
declaration;
(iii) relating to any undisclosed income from
a source located outside India or undisclosed
asset located outside India;
(iv) relating to an assessment or
reassessment made on the basis of
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information received under an agreement
referred to in section 90 or section 90A of the
Income-tax Act, if it relates to any tax arrear;
(b) to any person in respect of whom an
order of detention has been made under the
provisions of the Conservation of Foreign
Exchange and Prevention of Smuggling
Activities Act, 1974 on or before the filing of
declaration :
Provided that -
(i) such order of detention, being an order
to which the provisions of section 9 or section
12A of the said Act do not apply, has not been
revoked on the report of the Advisory Board
under section 8 of the said Act or before the
receipt of the report of the Advisory Board; or
(ii) such order of detention, being an order
to which the provisions of section 9 of the said
Act apply, has not been revoked before the
expiry of the time for, or on the basis of, the
review under sub-section (3) of section 9, or
on the report of the Advisory Board under
section 8, read with sub-section (2) of section
9, of the said Act; or
(iii) such order of detention, being an order
to which the provisions of section 12A of the
said Act apply, has not been revoked before
the expiry of the time for, or on the basis of,
the first review under sub-section (3) of that
section, or on the basis of the report of the
Advisory Board under section 8, read with
sub-section (6) of section 12A, of the said Act;
or
(iv) such order of detention has not been set
aside by a court of competent jurisdiction;
(c) to any person in respect of whom
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prosecution for any offence punishable under
the provisions of the Unlawful Activities
(Prevention) Act, 1967, the Narcotic Drugs
and Psychotropic Substances Act, 1985, the
Prevention of Corruption Act, 1988, the
Prevention of Money Laundering Act, 2002,
the Prohibition of Benami Property
Transactions Act, 1988 has been instituted on
or before the filing of the declaration or such
person has been convicted of any such offence
punishable under any of those Acts;
(d) to any person in respect of whom
prosecution has been initiated by any Income-
tax authority for any offence punishable
under the provisions of the Indian Penal Code
or for the purpose of enforcement of any civil
liability under any law for the time being in
force, on or before the filing of the declaration
or such person has been convicted of any such
offence consequent to the prosecution
initiated by an Income-tax authority;
(e) to any person notified under section 3
of the Special Court (Trial of Offences
Relating to Transactions in Securities) Act,
1992 on or before the filing of declaration."
24. It is not the case of the revenue at all that in the
petitioner's case, the provisions of the DTVSV Act would not apply to
petitioner's case, being under the exclusionary category referred to
under Section 9. The contention that the petitioner's tax liability cannot
be construed as disputed tax, while going by the definition and the
scheme of DTVSV Act, when those do not make any distinction and
categorize the appeals. The act does not purport to go into the grounds
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of appeal or for that matter, inside the return.
25. The reasons given tend to go beyond the provisions of the
DTVSV Act and rules and are at cross roads with intention and object
of the enactment. The reasons are not compatible with the provisions
of the Act and rules.
26. Learned counsel had submitted that the petitioner has not
been offered any opportunity of hearing relying on Umanath Pandey
Vs. State of U. P., reported in 2010(20) STR 268(SC) contending that
may not be it is provided for, however, the same will have to be read
into and the principles will have to be followed, while determining tax
payable adverse to the assessee. He also refers to orders of this court in
the case of Sabareesh Pallikere, Proprietor of M/s. Finbros Marketing
vs. Jurisdictional Designated Committee (bearing Writ Petition No.
WP(L)/5510/2020), wherein it is observed that it would be in defiance
of logic and contrary to the very object of the scheme to reject a
declaration on the ground of being ineligible without giving a chance
to the declarant to explain its case.
27. Having regard to the provisions and the scheme of the
DTVSV Act, it appears that the submissions on behalf of the petitioner
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carry lot of weight and it is difficult to consider the authority under the
DTVSV Act would be able to go into the merits/grounds or legality of
the appeal filed by the declarant.
28. The Petition is allowed. The rejection of declaration of the
Petitioner is set aside. The declaration of petitioner be processed in
accordance with the DTVSV Act and the rules thereunder.
( ABHAY AHUJA, J. ) ( SUNIL P. DESHMUKH, J. )
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