M/S Manoj Finvest Pvt. Ltd v. Principal Commissioner Ofincome-Tax-4 & Ors

$~17 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 3891/2021 M/S MANOJ FINVEST PVT. LTD ..... PetitionerThrough :Ms.AnanyaKapoor,AdvocateforMr.SalilKapoorandMr.SumitLalchandani, Advocates. versus PRINCIPAL COMMISSIONER OFINCOME-TAX-4 & ORS. ..... RespondentsThrough :Mr.AbhishekMaratha,SeniorStanding Counsel for Revenue. Date of Decision: 28[[th]]September, 2022 %Date of Decision: 28[[th]]CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): 1.Present Writ Petition has been filed by the Petitioner challenging therejection of Form 1 and Form 2 by the respondents under Direct Tax VivadSe Vishwas Act, 2020 (‘VSV Act’). 2.The relevant facts of the present case are that the petitioner filed itsoriginal return of income for the Assessment Year (‘AY’) 2018-19 on 29[th]October, 2018. The return of income of the Petitioner was processed underSection 143(1) of the Income Tax Act, 1961 (‘the Act’). Vide intimationorder dated 16[th]September, 2019, the respondents added back some amountand computed tax as per Section 115JB of the Act. The petitioner preferred an application under Section 154 of the Act stating that there are mistakesapparent from the record. The respondents issued revised intimation orderunder Section 143(1) of the Act whereby plea of the petitioner was rejected.Aggrieved by the aforesaid order, the petitioner preferred an appeal beforethe Commissioner of Income Tax (Appeals) [CIT(A)] on 14[th]January, 2020.The petitioner, with an intention to put an end to the dispute once and for all,filed the requisite forms being Form 1 and Form 2 on 2[nd]September, 2020,as per the provisions of the VSV Act read with VSV Rule. It was declared inthe Forms filed that the amount payable on or before 31[st]December, 2020i.e. the extended due date of payment, as it was then, at normal rate shall beRs.1,47,09,423/- (Rs. 201,906/- is already paid so balance payable isRs.1,45,07,517/-). However, the Form 3 has been rejected by the respondentby placing reliance on FAQ 71 of Circular No.21/2020 dated 4[th]December,2020. It is the case of the petitioner that the said rejection is illegal and thepetitioner’s entitlement under the VSV Act cannot be rejected and FAQ 71of Circular No.21/2020 dated 4[th]December, 2020 is illegal and ultra vires innature. 3.Learned counsel for the petitioner submits that the issue raised in thepresent writ petition is no longer res integra as the Bombay High Court inChandrakant Narayan Patkar Charitable Trust through its Trusteesv.Union of India in Writ Petition (L). No. 5956/2021 has quashed the FAQNo. 71 of Circular No.21/2020 dated 4[th]December, 2020. She also statesthat the Special Leave Petition preferred by the Revenue has been dismissedby way of a speaking order dated 15[th]July, 2022. 4.Learned counsel for the petitioner states that in accordance with theinterim order, the petitioner has already deposited the balance amount ofRs.1,45,07,517/- on 27[th]August, 2021. 5.Learned counsel for respondents states that he has received thefollowing instruction from the Assessing Officer by way of an e-mail dated27[th]September, 2022. “M/s. Manoj Finvest Private Limited having PAN AAACM6582ChasfileditsITRforA.Y.2018-19on29.10.2018videAcknowledgement No.353451621291018 declaring at a loss ofRs.47,03,369/-. The ITR was processed u/s 143(1) of the Act videorder dated 16.09.2019 determining therewith deemed income ofRs.7,21,44,422/- u/s 115JB of the Act.CPC has computedIncome From Business as Rs.7,33,36,975/- and after consideringthecurrentyearlossnetIncomeisRs.7,21,44,422/-.Subsequently, the assessee filed rectification application torectify order dated 16.09.2019. Accordingly rectification orderu/s 154/143(1) of the Act was passed on 18.12.2019 by the CPCat total income of Rs.NIL under Normal Provisions and bookprofit of Rs.7,21,44,422/-. The assessee filed appeal before theCIT(A) against the order u/s 154/143(1) of the Act. “M/s. Manoj Finvest Private Limited having PAN AAACM6582ChasfileditsITRforA.Y.2018-19on29.10.2018videAcknowledgement No.353451621291018 declaring at a loss ofRs.47,03,369/-. The ITR was processed u/s 143(1) of the Act videorder dated 16.09.2019 determining therewith deemed income ofRs.7,21,44,422/- u/s 115JB of the Act.CPC has computedIncome From Business as Rs.7,33,36,975/- and after consideringthecurrentyearlossnetIncomeisRs.7,21,44,422/-.Subsequently, the assessee filed rectification application torectify order dated 16.09.2019. Accordingly rectification orderu/s 154/143(1) of the Act was passed on 18.12.2019 by the CPCat total income of Rs.NIL under Normal Provisions and bookprofit of Rs.7,21,44,422/-. The assessee filed appeal before theCIT(A) against the order u/s 154/143(1) of the Act. The assessee has filed declaration under DTVSV Act, 2020 on02.09.2020 to settle dispute pending before the CIT(A).Thesame was rejected by the Designated Authority with the followingremarks: “As per FAQ-71, the case is not eligible under DTVSVS Act,2020. Adjustment in Book Profit u/s 115JB for LTCG is notdisallowance of expenditure which alone is covered in claim143(1)a(iv).The nature of adjustment is not covered underFAQ-71. Moreover, proviso to section 10(38) is unambiguouson this issue” Subsequently,theassesseefiledrevisedForm-1&2on29.01.2021 with the same details which was also rejected withthe same reason of rejection as narrated above. FAQ No.71 issued by the CBDT Circular No.21/2020 dated04.12.2020 is produced as under: Q.No.71: Vivad s Vishwas form do not contain a specificoption to settle appeal filed against intimation under section143(1) of the Act. Accordingly, please clarify how to settlesuch appeal, which is pending as on 31[st]Jan, 2020 (or timeto file appeal has not expired on 31[st]Jan, 2020). Answer: Appeal filed against intimation u/s 143(1) of theAct is eligible under Vivad se Vishwas if adjustment hasbeen made under sub-clauses (iii) to (vi) of clauses (a) ofsection 143(1) of the Act. The assessee has contended in the instant writ petition thatCBDT FAQ cannot limit the applicability of VSV Act. It issubmitted by the assessee that Hon’ble High Court of Bombayvide Order dated 22.06.2021 passed in WP(C) No.5956/2021in the case of Chandrakant Narayan Patkar that reply to FAQ-71 issued vide Circular No.21/2020 has been quashed. In thisconnection, it was submitted that the aforesaid law positionhad not been established by the jurisdictional High Courtearlier, hence was made not applicable. Now assessee submitted before the Hon’ble High Court thatorder of the High Court of Bombay dated 22.06.2021 is to befollowed in the case of assessee as the SLP (11399/2022) filedby the Department of Revenue in the Hon’ble Supreme Courtagainst the said order of Bombay High Court has beendismissed by the Hon’ble Apex Court vide order dated15.07.2022. Perusal of the order of the Hon’ble Bombay High Court andthe Hon’ble Apex Court revealed that adjustment made as perprovision u/s 143(1)(a)(ii) of the Act is covered underprovisions of VsVS Scheme. Accordingly, Form 1 & 2 of theVsVS Scheme as submitted by the assessee is taken for consideration as per the Scheme. Suitable order regarding the”issue is being passed. (emphasis supplied) 6.Keeping in view the aforesaid instructions, the respondents aredirected to process the petitioners Form 1 and Form 2 of the VSV Schemewithin four weeks in accordance with law. 7.With the aforesaid direction, the present writ petition stands disposedof. MANMOHAN, J SEPTEMBER 28, 2022 j MANMEET PRITAM SINGH ARORA, J