In a recent case, the Kerala High Court has observed that mere attempted compliance is not sufficient , but actual compliance is necessary under Direct Tax Vivad se Vishwas scheme and held that if the petitioner has, by now, remitted the full amount required to be remitted by the petitioner in terms of the provisions of the Direct Tax Vivad se Vishwas Act, 2020, the liability of the petitioner will be treated as settled.
Mahali Assanar Azeez,the petitioner is an individual assessee under the provisions of the Income Tax Act, 1961. For the assessment year 2009-2010, there was a demand for a sum of Rs.85,00,041/- (Eighty-five Lakhs Forty-one only) as tax. A penalty of Rs. 40,92,205/- (Forty Lakhs Ninety-two Thousand Two Hundred Five only) was also imposed on the petitioner. While appeals were pending against the order of assessment as well as the order imposing the penalty, the petitioner preferred an application to settle the liability under the Direct Tax Vivad se Vishwas Act, 2020.
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The amount payable by the petitioner was determined to be Rs.19,69,747/- (Nineteen Lakhs Sixty-nine Thousand Seven Hundred Forty-seven only) after giving credit to a sum of Rs.53,50,029/- (Fifty-three Lakhs Fifty Thousand Twentynine only) already paid by the petitioner pending the proceedings. According to the petitioner, by an inadvertent error, the petitioner paid only a sum of Rs.19,57,182/-(Nineteen Lakhs Fifty-seven Thousand One Hundred Eightytwo only) and thereby there was a short remittance of Rs.12,565/- (Twelve Thousand Five Hundred Sixty-five only).
The petitioner is before the Court being aggrieved by the fact that on account of the short remittance of Rs.12,565/-, the competent among the respondents has not completed the proceedings by treating the issue as settled. It is submitted that, on noticing the error, the petitioner subsequently remitted the amount of Rs.12,565/- and the same may be treated as substantial compliance with the provisions of the Settlement Scheme (the Scheme).
The Senior Standing Counsel appearing for the Income Tax Department would submit the terms of the scheme under the Direct Tax Vivad se Vishwas Act, 2020 are specific, and if the amount payable by the petitioner is not paid in full before the date specified, the petitioner will lose the benefit of the scheme. It is submitted that though the petitioner had remitted substantial amounts, there is an admitted short remittance of a sum of Rs.12,565/-, making the petitioner ineligible for settling the matter in terms of the provisions contained in the scheme.
The court viewed that the petitioner is entitled to succeed. The admitted facts are that after giving credit to the sum of Rs.53,50,029/- paid by the petitioner pending the proceedings, the petitioner was required to remit a sum of Rs.19,69,747/- to settle the liability in terms of the Scheme. However, the petitioner remitted only a sum of Rs.19,57,182/- and thus there was a short remittance of Rs.12,565/-. According to the petitioner, this was on account of a clerical error.
While the Senior Standing Counsel may be right in contending that strict compliance with the provisions of the scheme is mandatory, it is seen from the facts of the case that the petitioner had substantially complied with the terms of the scheme and had remitted a sum of Rs.19,57,182/- before the last date specified. The doctrine of substantial compliance was considered in CCE v. Hari Chand Shri Gopal, (2011).
A single bench of Justice Gopinath P while allowing the writ petition directed that if the petitioner has, by now, remitted the full amount required to be remitted by the petitioner in terms of the provisions of the Direct Tax Vivad se Vishwas Act, 2020, the liability of the petitioner for tax, penalty and interest for the assessment year 2009-2010 will be treated as settled and the petitioner will be eligible for all benefits under the Direct Tax Vivad se Vishwas Act, 2020.
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