Kartik Pravinchandra Mehta v. Per Dhiraj Singh Thakur, J

Digitallysigned byRUSHIKESHRUSHIKESHV PATILV PATILDate:2023.03.0116:55:16+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 954 OF 2023 Kartik Pravinchandra Mehta...Petitioner Versus Principal Commissioner of Income Tax – 1, Thane & Ors.…Respondents **** Mr. Dharan V. Gandhi, Advocate for the Petitioner. Mr. Ajeet Manwani a/w Ms Samiksha Kanani, for the Respondents. **** CORAM : DHIRAJ SINGH THAKUR AND KAMAL KHATA, JJ. DATE : 24[th] FEBRUARY, 2023. PER DHIRAJ SINGH THAKUR, J.: (ORAL) .The Petitioner considering himself eligible for settlement ofdisputes under the Direct Tax, Vivad Se Vishwas Act, 2020 (“theAct”) submitted Forms - 1 and 2 with Respondent No. 1 i.e. thePrincipal Commissioner of Income Tax, Thane. According to thescheme of the Act, Respondent No. 1 issued Form - 3 refectingtherein an amount of Rs.8,39,676/-, as the balance amount payableafter taking into account and adjusting the amounts of refund etc.for the relevant assessment year 2013-14. This amount had to beR.V. Patil1 of 8 paid on or before 31[st] March, 2021. After 31[st] March, 2021, theamount payable would be Rs.9,67,194/-. 2.The Petitioner Responded to the Form - 3 and deposited anamount of Rs.8,39,376/- on 21[st] January, 2021. A Form - 4 wasfilled up and submitted with Respondent No. 1 as evidence of thepayment having been made in terms of Form - 3. Admittedly, theamount paid and refected in Form - 4 was short by approximatelyRs.300/-, as against the amount that was required to be paid interms of Form – 3. This the learned Counsel for the Petitionerstates was entirely due to inadvertence. According to the scheme ofthe Act, upon a declaration having been filed in terms of Section 3 ofthe Act in Forms - 1 and 2, and upon the amount which is payableby an applicant having been determined in terms of Form – 3, underSection – 5(1), the appeal filed by the Petitioner would be deemedto have been withdrawn in terms of Section 4(2) of the Act witheffect from the date on which a certificate under Section 5(1) i.e.Form - 3 was issued. 3.It is stated that the Petitioner informed the AppellateAuthority i.e. the CIT(A) before whom the appeal was pending aboutthe issuance of Form - 3 in favour of the Petitioner and, therefore,R.V. Patil2 of 8 expected the Appellate Authority to pass formal orders in regardthereto. However, it is stated that the Petitioner was surprisedwhen penalty proceedings were initiated against the Petitioner andupon verification it transpired that in fact Respondent No. 1 had notissued the Form -5, on account of short payment of the balance taxpayable as had been determined in terms of Form - 3. 4.Learned Counsel for the Petitioner states that repeatedrequests were made to Respondent No. 4 with regard to permittingthe Petitioner to deposit the balance amount of Rs.300/- with a viewto settle the disputes permanently and also emphasized the factthat the omission was in fact neither deliberate nor intentional, yetno response could be elicited based upon such applications. It is in this background that the present petition has been filedseeking a mandamus to Respondent No. 1 for purposes of allowingthe Petitioner to pay the balance tax of Rs.300/- and further thatthe application filed by the Petitioner under the Act be accepted anda Form - 5 issued in that regard. A prayer is also made for purposesof condoning the delay in the payment of the said amount. Objections have been filed, in which the stand taken is that the Petitioner having failed to deposit the entire amount within theprescribed period, the time cannot be extended beyond what wasprescribed by the Act and the extensions granted subsequently videvarious notifications. It is thus stated that the application filed bythe Petitioner requires no consideration and the case cannot bepermitted to be settled in terms of the Act. 5.We have heard learned Counsel for the parties and perusedthe record. Objections have been filed, in which the stand taken is that the Petitioner having failed to deposit the entire amount within theprescribed period, the time cannot be extended beyond what wasprescribed by the Act and the extensions granted subsequently videvarious notifications. It is thus stated that the application filed bythe Petitioner requires no consideration and the case cannot bepermitted to be settled in terms of the Act. 5.We have heard learned Counsel for the parties and perusedthe record. 6.The Direct Tax, Vivad Se Vishwas Act, 2020 was enacted bythe Parliament with a view to provide for resolution of disputed taxand for matters connected therewith or incidental thereto as isclear from the preamble of the said Act. The purpose and spirit ofsuch an enactment can be noticed from the Bill that was introducedin the parliament, the statements and objects and reasons whereofread as under: “24. Let us now read the statement of objects and reasons of theVivad se Vishwas Bill when introduced in the Parliament whichlater on became the Vivad se Vishwas Act. The statement ofobjects and reasons reads as under:- " Over the years, the pendency of appeals filed by taxpayersas well as Government has increased due to the fact thatthe number of appeals that are filed is much higher thanthe number of appeals that are disposed. As a result, a huge amount of disputed tax arrears is locked-up in theseappeals. As on the 30th November, 2019, the amount ofdisputed direct tax arrears is Rs. 9.32 lakh crores.Considering that the actual direct tax collection in thefinancial year 2018-19 was Rs.11.37 lakh crores, thedisputed tax arrears constitute nearly one year direct taxcollection. 2. Tax disputes consume copious amount of time, energyand resources both on the part of the Government as wellas taxpayers. Moreover, they also deprive the Governmentof the timely collection of revenue. Therefore, there is anurgent need to provide for resolution of pending taxdisputes. This will not only benefit the Government bygenerating timely revenue but also the taxpayers who willbe able to deploy the time, energy and resources saved byopting for such dispute resolution towards their businessactivities. 3. It is, therefore, proposed to introduce the Direct TaxVivad se Vishwas Bill, 2020 for dispute resolution relatedto direct taxes, which, inter alia, provides for the following,namely:-- (a) the provisions of the Bill shall be applicable toappeals filed by taxpayers or the Government, whichare pending with the Commissioner (Appeals),Income-tax Appellate Tribunal, High Court orSupreme Court as on the 31st day of January, 2020irrespective of whether demand in such cases ispending or has been paid; (b) the pending appeal may be against disputed tax,interest or penalty in relation to an assessment orreassessment order or against disputed interest,disputed fees where there is no disputed tax. Further,the appeal may also be against the tax determined ondefaults in respect of tax deducted at source or taxcollected at source; (c) in appeals related to disputed tax, the declarantshall only pay the whole of the disputed tax if thepayment is made before the 31st day of March, 2020and for the payments made after the 31st day ofMarch, 2020 but on or before the date notified byCentral Government, the amount payable shall beincreased by 10 per cent of disputed tax; (d) in appeals related to disputed penalty, disputedinterest or disputed fee, the amount payable by thedeclarant shall be 25 per cent of the disputed penalty, disputed interest or disputed fee, as the case may be,if the payment is made on or before the 31st day ofMarch, 2020. If payment is made after the 31st day ofMarch, 2020 but on or before the date notified byCentral Government, the amount payable shall beincreased to 30 per cent of the disputed penalty,disputed interest or disputed fee, as the case may be. (d) in appeals related to disputed penalty, disputedinterest or disputed fee, the amount payable by thedeclarant shall be 25 per cent of the disputed penalty, disputed interest or disputed fee, as the case may be,if the payment is made on or before the 31st day ofMarch, 2020. If payment is made after the 31st day ofMarch, 2020 but on or before the date notified byCentral Government, the amount payable shall beincreased to 30 per cent of the disputed penalty,disputed interest or disputed fee, as the case may be. 4. The proposed Bill shall come into force on the date itreceives the assent of the President and declaration may bemade thereafter up to the date to be notified by theGovernment." It is thus clear that the spirit of the enactment was to unlockthe amounts held up in disputes on account of pendency of variousappeals filed by not only the tax payers but also the Government.The amount of disputed tax arrears as refected in the Bill was anenormous amount of Rs.9.32 lakh crores, which refectedapproximately one year’s direct tax collection. 7.In the present case it can be seen that the Petitioner beingeligible did apply for settlement of these disputes in terms of theAct. The Petitioner’s eligibility therefore is not in dispute. It is truethat the Petitioner did not deposit the entire amount which wasdetermined as payable by Respondent No. 1 and which ought tohave been paid before the specified date. The specified date earlierfixed as per the Act was 31[st] March, 2020. The Petitioner wasrequired to pay an amount of Rs.8,39,676/- before the said date, R.V. Patil however in case the payment was made after 01[st] April, 2020, theamount payable was Rs.967194/- 8.Learned Counsel for the parties agreed that variousextensions had been granted on account of Covid, extending thedates and the last extension granted was vide Notification No.94/2021/F.No.IT(A)/01/2020-TPL granting extension up-till 30[th]September, 2021 and 01[st] October, 2021, in regard to the timeperiods earlier fixed as 31[st] March, 2020 and 01[st] April, 2020,respectively. 9.The Petitioner had therefore admittedly not approached theauthorities for depositing the balance amount within even theextended period up to 01[st] October, 2021. In our opinion thePetitioner never intended that its dispute with the department benot settled, nor would the Petitioner gain any unfair advantage bynot paying the balance amount which was insignificant and small.In fact on the face of it it is clear that the payment which wasrequired to be paid in terms of Form - 3 was short only by Rs.300/-.This clearly appears to us to be an inadvertent error on the part ofthe Petitioner, which is neither deliberate nor intentional.Considering the purpose and spirit of the act, which was noting butR.V. Patil7 of 8 7 of 8 to unlock the amount of disputed tax before various appellate foraas also put an end to litigation, we feel that issuing a writ ofmandamus in the present case, directing the Respondents to acceptthe balance payment would be nothing but in furtherance of theobject for which the Direct Tax, Vivad Se Vishwas Act was enacted. 10.We accordingly allow the present petition. The RespondentNo. 1 is directed to accept the balance payment which remained tobe paid in terms of Form - 3 alongwith interest at the rate of 10%per annum calculated on the said unpaid amount from the date ofissuance of Form - 3. A Form - 5 be issued thereafter in terms of thescheme. The writ petition is disposed of accordingly. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)