Case Note & Summary
The petitioner, Pinnacle Vastunirman Private Limited, filed a writ petition challenging the refusal of the Principal Commissioner of Income Tax-2 (respondent no. 3) to adjust or give credit to the amount paid by the petitioner under the Income Declaration Scheme, 2016 (IDS) in the petitioner's application under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act). The IDS, introduced by Chapter 9 of the Finance Act, 2016, allowed persons to declare undisclosed income and pay tax, surcharge, and penalty totaling 45% of the declared income. The petitioner filed a declaration on 30 September 2016 disclosing undisclosed income of Rs. 7,31,89,985/- for assessment year 2016-2017, and paid the first installment of Rs. 82,33,872/- on 30 November 2016. However, the petitioner could not pay the remaining installments due to financial constraints. Subsequently, the DTVSV Act was enacted to resolve pending tax disputes. The petitioner applied under the DTVSV Act and sought credit for the amount already paid under IDS. The respondents refused, contending that the DTVSV Act does not provide for such credit. The court examined the provisions of both schemes and held that the DTVSV Act is a beneficial legislation intended to provide relief to taxpayers. The non obstante clause in Section 3 of the DTVSV Act does not expressly or impliedly bar credit for amounts paid under earlier schemes. The court directed the respondents to give credit for the amount paid under IDS and recalculate the amount payable under the DTVSV Act accordingly. The petition was allowed.
Headnote
A) Direct Taxation - Vivad Se Vishwas Scheme - Credit for Prior Payments - Section 3 of Direct Tax Vivad Se Vishwas Act, 2020 - The issue was whether amounts paid under the Income Declaration Scheme, 2016 (IDS) should be credited against the amount payable under the DTVSV Act. The court held that the DTVSV Act is a beneficial legislation intended to provide relief to taxpayers and that the non obstante clause in Section 3 does not exclude credit for amounts paid under earlier schemes. The court directed the respondents to give credit for the amount paid under IDS and recalculate the amount payable under DTVSV Act. (Paras 1-21) B) Direct Taxation - Income Declaration Scheme - Credit under DTVSV Act - Sections 184, 185 of Finance Act, 2016 - The petitioner had paid Rs. 82,33,872/- under IDS. The court held that the DTVSV Act does not expressly or impliedly bar credit for such payments and that the scheme should be interpreted liberally to achieve its objective. (Paras 4-21)
Issue of Consideration
Whether the amount paid by the petitioner under the Income Declaration Scheme, 2016 (IDS) is required to be adjusted/given credit to in the petitioner's application under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act)?
Final Decision
The court allowed the writ petition and directed the respondents to give credit for the amount of Rs. 82,33,872/- paid by the petitioner under the Income Declaration Scheme, 2016, and recalculate the amount payable under the Direct Tax Vivad Se Vishwas Act, 2020 accordingly.
Law Points
- Interpretation of Section 3 of Direct Tax Vivad Se Vishwas Act
- 2020
- Credit for amounts paid under earlier schemes
- Non obstante clause
- Beneficial legislation
- Purposive interpretation
