The Bombay High Court ruled that Direct Tax Vivad Se Vishwas (DTVSV) Act, 2020 is a Beneficial Legislation, Dept cannot deny the Benefit If Assesee is eligible for the Scheme.
The Petitioner, Bhupendra Harilal Mehta filed a declaration in Form No.1 under Section 4(1) of the DTVSV Act read with Rule 3(1) of the DTVSV Rules on 16th December 2020. The disputed income was declared to be Rs.5,98,90,960/- and the disputed tax thereon as Rs.2,02,69,581/-. Petitioner submitted that the gross amount payable by it was 100% of the disputed tax i.e. Rs.2,02,69,581/- out of which a sum of Rs.69,31,892/- was declared to have been paid and the balance of Rs.1,33,37,689/- was declared to be payable by Petitioner.
By Order dated 26th January 2021, the Income Tax Authority passed an order in Form No.3 under Section 5(1) of the DTVSV Act read with Rule 4 of the DTVSV Rules, determining the tax payable by petitioner to be Rs.2,57,67,714/- being 125% of the disputed tax as against Rs.2,02,69,581/- being 100% of the disputed tax declared by Petitioner.
Mr. Pardiwala, Senior Counsel for Petitioner, submitted that in case of Petitioner for Assessment Year 2015-16, assessment has not been made on the basis of any search but the addition was made only on the basis of certain information obtained in the course of a search conducted on the premises of other entities. He submits that Petitioner has not directly been subjected to any search. Drawing attention of this Court to Section 3 of the DTVSV Act, he submits that sub-clause (a) is applicable to the case of petitioner as the tax arrear is the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax and therefore, the amount payable by the Petitioner would be the amount of the disputed tax. He submits that only in a case as contained in sub-clause (b) of Section 3, where the tax arrears include tax, interest or penalty determined in any assessment on the basis of search under Section 132 or Section 132A of the Income-tax Act, only then the amount payable under the DTVSV Act would be 125% of the disputed tax and in no other case.
The division bench of Justice Abhay Ahuja and Justice Sunil P.Deshmukh while examining the issue whether the assessment is on the basis of search initiated under Section 132, or requisition etc. made under Section 132A of the Income-tax Act, held that nowhere in the statements recorded, referred to in the assessment order is there any allegation that Petitioner was one of the parties that had booked any artificial gains. There is no allegation that any incriminating material belonging to Petitioner was obtained in the course of the search. The assessment therefore does not appear to be on the basis of search initiated under Section 132, or requisitions made under Section 132A of the Income-tax Act. Having regard to aforesaid, it is difficult to agree with the submissions made on behalf of the counsel for the Revenue that the assessment order is on the basis of search.
The court while setting aside the impugned order directed the direct the Respondent Authority pass a fresh order in Form No.3 determining tax payable by the Petitioner as a non-search case in accordance with the DTVSV Act read with Rule 4 of the DTVSV Rules, as per Circular no. 4/2021 dated 23rd March, 2021 within a period of two weeks.
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