Case Note & Summary
The petitioner, Sunil Wamanrao Sakore, filed a writ petition before the Bombay High Court seeking a writ of mandamus to direct respondent No.2 (Commissioner of Income-tax, Pune) to revise Form-3 issued under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) by giving credit for the amount of Rs. 3,48,752/- already paid under the Income Declaration Scheme, 2016 (IDS). The petitioner had declared an undisclosed income of Rs. 15,50,000/- under IDS and paid Rs. 3,48,752/- but could not deposit the full amount due to personal difficulties. Subsequently, his case was reopened for reassessment under sections 147 and 148 of the Income Tax Act, 1961, leading to additions and penalty, which were challenged in appeal. When the DTVSV Act was enacted to resolve pending tax disputes, the petitioner applied under the scheme, but the designated authority issued Form-3 demanding payment of Rs. 6,97,500/- without adjusting the earlier deposit. The petitioner's representations for rectification went unanswered, prompting the writ petition. The revenue’s stand was that the DTVSV Act does not provide for adjustment of amounts lying with the department, and that the assessee did not specifically claim such credit while filing Forms 1 and 2; the amount could only be refunded with interest. The court, however, noted that the purpose of the DTVSV Act is to unlock revenue locked in litigation and resolve disputes efficiently. Denying credit for amount already lying with the department would defeat the object and lead to unjust enrichment. The Act does not contain any prohibition against such adjustment. The court, therefore, allowed the petition and directed the respondents to give credit for the amount paid under IDS and issue a revised Form-3 accordingly. The judgment thus reinforced the principle that settlement schemes must be interpreted in a manner that furthers their object of bringing finality and fairness to tax disputes.
Headnote
A) Direct Tax Vivad Se Vishwas Act, 2020 – Interpretation and Applicability – Credit for taxes paid under Income Declaration Scheme, 2016 – The Act does not explicitly bar adjustment of amounts already paid under a prior scheme. The revenue’s refusal to give credit and insistence on refund only was held to be inconsistent with the object of the Act, which is to facilitate resolution of tax disputes and unlock blocked revenue. The designated authority was directed to revise Form-3, taking into account the sum of Rs. 3,48,752/- already deposited by the petitioner under IDS, 2016. (Paras 2-10)
Issue of Consideration
Whether the designated authority under the Direct Tax Vivad Se Vishwas Act, 2020 is required to give credit for the taxes already paid under the Income Declaration Scheme, 2016 while computing the amount payable under the DTVSV Act
Final Decision
The court allowed the writ petition and directed the respondents to give credit for the amount of Rs. 3,48,752/- already deposited under IDS, 2016 while computing the tax payable under DTVSV Act and to issue a revised Form-3 accordingly.
Law Points
- Legal points not extracted
- Amounts paid under previous scheme must be considered while computing tax payable under Vivad Se Vishwas Act
- principle of fairness
- no unjust enrichment
- statutory interpretation of DTVSV Act and IDS
Case Details
2023 LawText (BOM) (05) 22
WRIT PETITION NO. 4119 OF 2022
Dhiraj Singh Thakur, Kamal Khata
Citation not available, 2023:BHC-AS:13677-DB
Sanket Bora, Vidhi Punmiya for petitioner; Suresh Kumar for respondents
Union of India, Ministry of Finance; Commissioner of Income-tax-4, Pune; Income Tax Officer, Ward 7(3), Pune
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Nature of Litigation
Writ petition seeking mandamus to direct designated authority to revise Form-3 under DTVSV Act to give credit for taxes already paid under IDS, 2016
Remedy Sought
Petitioner sought a writ from the High Court directing respondent No.2 (Commissioner of Income-tax) to revise Form-3 dated 27 September 2021 by giving credit for amounts paid under Income Declaration Scheme, 2016
Filing Reason
The designated authority did not give credit for Rs. 3,48,752/- already paid by petitioner under IDS, 2016 while computing the amount payable under DTVSV Act, and the request for rectification was ignored
Previous Decisions
Assessment order dated 30 November 2018 and penalty order were challenged before appellate forum; designated authority issued Form-3 on 27 September 2021 demanding Rs. 6,97,500/- without credit; petitioner's subsequent communications for rectification went unanswered
Issues
Whether the designated authority under DTVSV Act can be compelled to give credit for taxes already paid under IDS 2016 while determining the amount payable under the scheme
Submissions/Arguments
Petitioner contends that the amount already paid under IDS 2016 should be adjusted against the amount payable under DTVSV Act, and that the designated authority must revise Form-3 to reflect such credit
Revenue contends that DTVSV Act does not envisage adjusting prior payments, and that the assessee did not specifically claim credit while filing declarations; the amount can only be refunded separately with interest
Ratio Decidendi
The purpose of the DTVSV Act is to resolve tax disputes and unlock blocked revenue; denying credit for taxes already paid under a previous scheme would defeat the object and lead to unjust enrichment. The Act does not explicitly bar adjustment of such payments, and the revenue's stand that the amount can only be refunded is untenable.
Judgment Excerpts
The petitioner prays for issuance of a writ of mandamus to respondent No.2 to revise the impugned Form-3 dated 27th September 2021 issued under the provisions of Direct Tax Vivad Se Vishwas Act, 2020 by giving credit and taking into consideration the amounts already paid under the Income Declaration Scheme, 2016.
the DTVSV Act nowhere envisages that an amount which was lying with the department be taken into consideration while determining tax payable under DTVSV Act, even if the assessee had not claimed the same while submitting Forms 1 and 2. The stand taken is that while the amount paid under the IDS could be refunded with interest, it cannot be taken into consideration under the DTVSV Act.
It is not denied that the petitioner had deposited an amount of Rs.3,48,752/- under the IDS but had not deposited the entire amount which was otherwise calcula...
Procedural History
Petitioner declared undisclosed income under IDS 2016 and paid partial tax. Reassessment initiated under sections 147/148 of Income Tax Act leading to addition and penalty. Petitioner filed appeals. DTVSV Act enacted; petitioner filed declarations. Designated authority issued Form-3 demanding entire disputed amount without credit for earlier payments. Petitioner's rectification requests ignored. Filed writ petition seeking direction to revise Form-3.
Acts & Sections
- Direct Tax Vivad Se Vishwas Act, 2020:
- Income Tax Act, 1961: 147, 148
- Finance Act, 2016: Chapter IX (Income Declaration Scheme, 2016)
