Case Note & Summary
The Petitioner, Cooperative Rabobank U.A., a bank established in the Netherlands and part of the Rabobank Group, is a regular assessee under the Income Tax Act, 1961. For Assessment Year 2002-2003, the Petitioner filed a return of income on 31st March 2003 declaring nil income. The Assessing Officer passed an assessment order on 28th March 2005 assessing business profits attributable to a permanent establishment (PE) at Rs.31,25,060/-. Aggrieved, the Petitioner appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who by order dated 15th May 2006 deleted the addition, holding that the Petitioner does not have a PE in India. The Assessing Officer then appealed to the Income Tax Appellate Tribunal (Tribunal) on 11th August 2006. The Tribunal, by order dated 1st April 2015, restored the issue to the file of the Assessing Officer. Against this order, the Petitioner filed an appeal before the High Court on 23rd September 2015 under Section 260A of the IT Act. The Petitioner also filed a Miscellaneous Application before the Tribunal, which was rejected on 21st August 2018. On 29th August 2018, the High Court in Income Tax Appeal No.1198 of 2015 and connected appeals passed an order setting aside both the orders of the Tribunal. The Petitioner then filed a declaration under the Direct Tax Vivad Se Vishwas Scheme, 2020 (DTVSV Act) on 28th January 2021. The Designated Authority issued Form-3 dated 28th January 2021 and 26th March 2021 rejecting the declaration on the ground that the appeal was not pending as per the scheme. The Petitioner challenged these Form-3 notices by way of a writ petition under Article 226 of the Constitution of India. The legal issue was whether the Petitioner's appeal pending before the High Court constitutes an 'appeal pending' under Section 2(1)(a) of the DTVSV Act. The Petitioner argued that the appeal was pending before the High Court and thus eligible. The Respondents contended that the appeal was not pending as the High Court had already set aside the Tribunal's order. The court analyzed the definition of 'appeal pending' under Section 2(1)(a) and held that the Petitioner's appeal under Section 260A was pending before the High Court as on the specified date, and thus the Petitioner was entitled to the benefits of the scheme. The court allowed the writ petition, quashed the Form-3 notices, and directed the Designated Authority to process the declaration in accordance with law.
Headnote
A) Direct Tax Vivad Se Vishwas Act, 2020 - Section 2(1)(a) - Definition of 'Appeal Pending' - Interpretation - The term 'appeal pending' includes an appeal filed before the High Court under Section 260A of the Income Tax Act, 1961, which is pending as on the specified date. The court held that the Petitioner's appeal pending before the High Court qualifies as an 'appeal pending' under the DTVSV Act, entitling the Petitioner to file a declaration under the scheme. (Paras 1-10) B) Direct Tax Vivad Se Vishwas Act, 2020 - Section 5 - Issuance of Form-3 - Validity - The Designated Authority issued Form-3 rejecting the Petitioner's declaration on the ground that the appeal was not pending as per the scheme. The court held that the Form-3 was invalid as the Petitioner's appeal was indeed pending before the High Court, and the Designated Authority erred in rejecting the declaration. (Paras 11-15) C) Income Tax Act, 1961 - Section 260A - Appeal to High Court - Pending Appeal - The Petitioner's appeal under Section 260A was pending before the High Court as on the specified date, and thus the Petitioner was eligible to avail the benefits of the DTVSV Act. The court directed the Designated Authority to process the declaration in accordance with law. (Paras 16-18)
Issue of Consideration
Whether the Petitioner's appeal pending before the High Court under Section 260A of the Income Tax Act, 1961 constitutes an 'appeal pending' within the meaning of Section 2(1)(a) of the Direct Tax Vivad Se Vishwas Act, 2020, entitling the Petitioner to the benefits of the scheme, and whether the Form-3 issued by the Designated Authority is valid.
Final Decision
The court allowed the writ petition, quashed the Form-3 dated 28th January, 2021 and 26th March, 2021, and directed the Designated Authority to process the Petitioner's declaration under the Direct Tax Vivad Se Vishwas Act, 2020 in accordance with law.
Law Points
- Interpretation of 'appeal pending' under Section 2(1)(a) of Direct Tax Vivad Se Vishwas Act
- 2020
- Scope of Section 5 of DTVSV Act
- Validity of Form-3 issued by Designated Authority
