ITAT Dismisses Scan Ispat's Appeal as Withdrawn Under Vivad Se Vishwas Scheme [Read Order]

The Income Tax Appellate Tribunal (ITAT), Raipur bench has dismissed the appeal filed by Scan Ispat Limited after the steel manufacturer opted to settle its tax dispute under the Direct Tax Vivad Se Vishwas Scheme, 2024. The company had challenged additions of Rs.3.43 crore made by tax authorities for assessment year 2010-11 regarding unexplained share capital and premium.

Scan Ispat Limited, based in Raigarh, Chhattisgarh, had filed the appeal against an order passed by the Commissioner of Income-Tax (Appeals) at the National Faceless Appeal Centre. The dispute originated from a 2017 assessment order that made additions under Section 68 of the Income Tax Act, treating share capital transactions as unexplained cash credits.

During proceedings before the tribunal, the company's authorized representative submitted a letter dated January 17, 2025, requesting abeyance of the appeal since they had already filed Form 1 under the Vivad Se Vishwas Scheme. The scheme provides a settlement mechanism for pending direct tax disputes by offering waiver of interest and penalties.

The bench comprising Judicial Member Ravish Sood and Accountant Member Arun Khodpia noted that while the company sought to keep proceedings in abeyance, the tribunal preferred to dismiss the appeal as withdrawn since the assessee had already opted for the alternate dispute resolution mechanism. The department's representative raised no objections to this course of action.

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The Tribunal observed that once a taxpayer submits Form 1 under the Vivad Se Vishwas Scheme, there remains little purpose in continuing parallel appellate proceedings. However, they clarified that if the designated authority doesn't issue the final settlement order (Form 4), the company retains the right to seek restoration of its appeal.

The tribunal's order brings closure to a tax dispute that had been ongoing since 2017, when the assessing officer first made additions to Scan Ispat's declared income. The company had originally declared a loss of Rs.1.93 crore for AY 2010-11 but the department assessed income at Rs.1.49 crore after making the disputed additions.

The Vivad Se Vishwas Scheme, reintroduced in 2024, aims to reduce pending income tax litigation by offering taxpayers a chance to settle disputes by paying the principal tax amount while getting relief from interest and penalties. In Scan Ispat's case, the scheme provided an exit route from prolonged litigation over the share capital additions.

The decision demonstrates how the dispute resolution scheme is helping clear long-pending tax cases by providing taxpayers an alternative to the regular appellate process.

The tribunal's approach balances the finality of dispute resolution schemes with protecting taxpayers' rights - allowing for appeal restoration if the settlement process fails. This pragmatic handling of scheme cases helps reduce the backlog of appeals while ensuring justice isn't compromised.

To Read the full text of the Order CLICK HERE

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