Case Note & Summary
The petitioner, Chandrakant Narayan Patkar Charitable Trust, is a registered charitable trust. It filed a belated return of income for financial year 2009-10 (assessment year 2010-11) disclosing nil income. The audit report in Form No.10B was prepared but not filed along with the return. On 22 December 2012, the Income Tax Department issued an intimation/computation sheet under Section 143(1) of the Income Tax Act, 1961, determining income of Rs.69,36,357/- and total tax liability of Rs.19,84,908/- with interest totalling Rs.31,83,240/-. The petitioner preferred an appeal before the Commissioner of Income Tax (Appeals)-1, Mumbai in November 2018, which was dismissed on 31 January 2020 on the ground of belated filing of the return. The petitioner then filed a declaration in Form No.1 under the Direct Tax Vivad Se Vishwas Act, 2020 on 30 December 2020, seeking to settle the dispute. However, the declaration was rejected by the Income Tax Department's portal on the ground that the audit report in Form No.10B was not filed along with the return of income. The petitioner challenged this rejection before the Bombay High Court. The court considered the submissions of both parties. The petitioner argued that the rejection was arbitrary and that the audit report was subsequently filed. The respondents contended that the rejection was in accordance with the rules. The court held that the requirement of filing the audit report along with the return is a curable defect and the rejection was not sustainable. The court directed the respondents to permit the petitioner to file a fresh declaration under the DTVSV Act and process it in accordance with law, without being influenced by the earlier rejection. The petition was allowed with no order as to costs.
Headnote
A) Direct Tax Vivad Se Vishwas Act, 2020 - Vivad Se Vishwas Scheme - Declaration Form No.1 - Rejection by Portal - The petitioner, a charitable trust, filed a belated return for AY 2010-11 claiming nil income, but the audit report in Form No.10B was not filed along with the return. An intimation under Section 143(1) was issued determining income and tax liability. The appeal against the intimation was dismissed on the ground of belated filing. The petitioner filed a declaration under the DTVSV Act, which was rejected by the portal on the ground that the audit report was not filed along with the return. The court held that the rejection was not sustainable as the requirement of filing audit report along with return is a curable defect and the petitioner had filed the audit report subsequently. The court directed the respondents to permit the petitioner to file a fresh declaration under the DTVSV Act and process it in accordance with law. (Paras 1-18) B) Income Tax Act, 1961 - Section 143(1) - Intimation - Adjustment - The intimation under Section 143(1) was issued without providing reasons for disallowing exemption under Section 11 or for making adjustments. The court noted that the petitioner had filed the audit report in Form No.10B subsequently, and the rejection of the declaration under DTVSV Act on the ground of non-filing of audit report along with return was not justified. (Paras 3-10) C) Direct Tax Vivad Se Vishwas Act, 2020 - Appeal Pending - Eligibility - The appeal against the intimation under Section 143(1) was pending before the CIT(A) when the declaration was filed. The court held that the petitioner was eligible to file a declaration under the DTVSV Act as the appeal was pending. The rejection by the portal was set aside. (Paras 4-18)
Issue of Consideration
Whether the rejection of declaration Form No.1 under the Direct Tax Vivad Se Vishwas Act, 2020 by the Income Tax Department's portal on the ground that the audit report in Form No.10B was not filed along with the return of income is valid, and whether the petitioner is entitled to file a fresh declaration under the Act.
Final Decision
The court allowed the writ petition, set aside the rejection communication, and directed the respondents to permit the petitioner to file a fresh declaration under the Direct Tax Vivad Se Vishwas Act, 2020 and process it in accordance with law, without being influenced by the earlier rejection. No order as to costs.
Law Points
- Direct Tax Vivad Se Vishwas Act
- 2020
- Section 143(1) of Income Tax Act
- 1961
- Section 11 of Income Tax Act
- Form No.10B
- Audit Report
- Belated Return
- Appeal Pending
- Rejection of Declaration
- Opportunity to Cure Defect
