Madras High Court
United Capital Partners India Pvt. Ltd vs Principle Commissioner Of Income Tax on 2 January, 2025
Author: C.Saravanan
Bench: C.Saravanan
2025:MHC:242
W.P.No.25404 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved On 08.11.2024
Pronounced On 02.01.2025
Coram:
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.No.25404 of 2021
and W.M.P.No.26825 of 2021
United Capital Partners India Pvt. Ltd.,
Represented by its Director, Mr.Jayaram V.Menon
K-27-6, Golden Windsor, 1st Avenue,
Anna Nagar East, Chennai – 600 102.
...Petitioner
Versus
Principle Commissioner of Income Tax,
Chennai – 3,
121 MG Road, Nungambakkam,
Chennai – 600 034.
...Respondent
Writ Petition filed under Article 226 of the Constitution of India
praying for issuance of a writ of certiorarified mandamus calling for the
records of the respondent contained in its Form – 3 issued under Section
5(1) of the Direct Tax Vivad Se Vishvas Act, 2020 dated 14.06.2021
bearing acknowledgment number 367506730140621 and to quash the same
as arbitrary, unjust and unfair and to consequently, direct the respondent to
issue a revised Form 3 in terms of Section 5(1) of the Vivad Se Vishwas
1/17
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W.P.No.25404 of 2021
Scheme 2020, in favour of the petitioner and to grant time to the petitioner
to complete the settlement of the assessment under the Direct Tax Vivad Se
Vishwas Act, 2020 in accordance with law.
For Petitioner : Mr.Suhrith Parthasarathy
For Respondent : Mrs.S.Premalatha,
Junior Standing Counsel
ORDER
In this writ petition, the petitioner has challenged Form-3 issued by the respondent under Section 5(1) of the Direct Tax Vivad Se Vishwas Act, 2020 read with the Direct Tax Vivad Se Vishwas Rules, 2020.
2. The petitioner had suffered originally an Assessment Order under Section 143(3) of the Income Tax, 1961 on 27.12.2011. The petitioner had filed an appeal before the Commissioner of Income Tax (Appeals)-III in ITA.No.1405/2013-2014.
3. The appeal was partly allowed on 14.02.2014. Therefore, the petitioner took further steps by filing an appeal before the Income Tax Appellate Tribunal (ITAT) in ITA.No.1058/Mds/2014 on 15.11.2020. The Department had also filed an appeal in ITA.No.1549/Mds/2014. 2/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021
4. The Tribunal by its order dated 13.04.2016, had remitted the case back to the Assessing Officer, which ultimately culminated in an Assessment Order dated 30.03.2017.
5. The petitioner had filed further appeal before the Commissioner of Income Tax (Appeals)-11 in ITA.No.15/2017-2018. The Commissioner of Income Tax (Appeals)-11 by an order dated 15.11.2018, allowed the petitioner's appeal.
6. Aggrieved by the same, the Department filed a further appeal before the Income Tax Appellate Tribunal (for brevity, 'ITAT') in ITA.No.161/Chny/2019. Meanwhile, after the Commissioner of Income Tax (Appeals)-11 passed the order on 15.11.2018 in ITA.No.15/2017-2018, the Department purportedly refunded amounts to the petitioner on 25.02.2019. Primarily, a sum of Rs.40,00,000/- was refunded to the petitioner that was paid by the petitioner as tax. Apart from the above, a sum of Rs.15,47,040/- was refunded towards the aforesaid sum of Rs.40,00,000/- with interest. Thus, in all, a sum of Rs.55,47,040/- was 3/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021 refunded back to the petitioner. Meanwhile, the petitioner decided to settle the dispute under the Direct Tax Vivad Se Vishwas Act, 2020 read with the Direct Tax Vivad Se Vishwas Rules, 2020 by filing Form-I on 29.12.2020. The respondent had also issued Form-3 on 07.01.2021.
7. It appears that there were certain mistakes in Form-I and therefore the petitioner was advised to file Revised Form-I which was also filed by the petitioner on 25.01.2021 pursuant to which, the Impugned Form-3 dated 14.06.2021 has been issued, wherein, the petitioner has been called upon to pay the following amount as detailed below:-
Sl. No. Date Balance amount
payable/refundable after adjusting
the amount already paid
1. On or Before 30.06.2021 Rs.65,59,593/-
2. After 30.06.2021 Rs.70,69,443/-
8. The case of the petitioner is that the total tax liability of the petitioner as per the respective Assessment Orders was only Rs.1,03,37,420/- and therefore, the petitioner was liable to pay only 50% of the amount as per Section 3 of the Vivad Se Vishwas Act, 2020. 4/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021
9. It is further submitted that the amount that was to be paid by the petitioner would be therefore only 50% of Rs.1,03,37,420/- i.e., Rs.51,68,710/- and not the amounts specified in the impugned Form-3 dated 14.06.2021.
10. Learned counsel for the petitioner would rely on the decision of the Division Bench of the Bombay High Court in Mantelone Investment Limited Vs. Commissioner of Income Tax (International Taxation) & Ors. reported in (2022) 440 ITR 111. Specifically, the learned counsel would draw the attention of this Court to Paragraph No.11 of the said decision, wherein, it has been observed as under:-
11. Shri Vyas's reliance on Explanation to Section 7 of the Direct Tax Vivad se Vishwas Act, is misplaced inasmuch as the restriction on payment on interest under Section 244A of the Act is only when an assessee is eligible for a refund pursuant to making an application under the Direct Tax Vivad se Vishwas Act, i.e., when the tax paid by the assessee exceeds the amount payable under Section 3. In such a case, the assessee would be entitled to refund but without interest. In the case at hand, interest of Rs.42,72,210/- paid under Section 244A of the Act was not determined as payable under the Direct Tax Vivad se Vishwas Act, but was paid as per the assessment order passed for the assessment year which was more 5/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021 than 2 ½ years before the declaration under the Direct Tax Vivad se Vishwas Act, was filed by the petitioner. Therefore, the Explanation is not applicable to the case at hand. The petitioner has not asked for interest under Section 244A of the Act on the amount of refund claimed in Form 1. In the Explanation to Section 7 of the Direct Tax Vivad se Vishwas Act, the term specifically used is any amount paid “in respect of” tax arrear. The term “tax arrear”, is defined to mean aggregate amount of disputed tax and the term “disputed tax” is defined to mean the tax payable by the petitioner as if the appeal is decided against the petitioner. So, the Explanation only refers to the amount paid in respect of tax arrear which is refunded under the Direct Tax Vivad Se Vishwas Act, and not any other refund amount. This implies that the reference in which the restriction of interest under Section 244A of the Act is made is towards any excess payment of tax in respect of the tax arrears which is the disputed tax. Therefore, the Direct Tax Vivad se Vishwas Act, clearly envisages that no interest under Section 244A of the Act is payable on the amount of tax paid towards the disputed tax which is in excess of the amount determined payable as per Section 3 of the Direct Tax Vivad se Vishwas Act. The amount payable towards disputed tax will only arise post the assessment order is passed. In the case at hand, the petitioner has not made any payment post the assessment order, in fact, respondent No.2 has determined a refund to the petitioner in the revised assessment order after adjusting all the disputed tax. The refund determined by respondent No.2 in the assessment order is out of tax deducted at source and taxes paid prior to filing of the 6/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021 return of income and not on account of any amount paid towards tax arrear prior to applying under the Direct Tax Vivad se Vishwas Act, which has resulted in excess payment of the tax arrear (disputed tax) determined as per Section 3 of the Direct Tax Vivad se Vishwas Act. The interest on refund that was paid was on the undisputed part of the excess tax paid and not on the disputed tax.”
11. On the other hand, the learned Senior Standing Counsel for the respondent would submit that there is no error in the amount that has been demanded from the petitioner in the impugned Form-3 dated 14.06.2021.
12. In this connection, a reference is made to Paragraph No.19 of the counter affidavit, wherein, the total tax payable was Rs.1,03,37,420/- and the balance tax payable is given as Rs.65,59,593/- (Rupees Sixty Five Lakhs Fifty Nine Thousand Five Hundred and Ninety Three only).
13. Defending the stand of the Revenue Department, the learned counsel for the respondent drew the attention of this Court to Paragraph No.19 of the counter affidavit and submitted that a sum of Rs.65,59,593/- was payable by the petitioner under the Direct Tax Vivad Se Vishwas Act, 7/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021 2020.
14. In this connection, a reference is made to the following table :- 8/17
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15. It is further submitted that the order of the Commissioner (Appeals), dated 15.11.2018 in ITA.No.15/2017-18 was followed by giving effect to order dated 07.01.2019 bearing reference to PAN:AAACU9457G/Corp.Cir.3(2)/2018-19, wherein, a sum of Rs.55,47,040/- was refunded back to the petitioner as detailed below:- 9/17
https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021 Assessed income as per order u/s 143 (3) r.w.s 254 Rs.3,04,13,119/-
dated 30.03.2017 LESS: Relief given by CIT(A)-11 order as above Rs.3,00,00,000/-
i) Unexplained Cash Deposits u/s 68 of Rs.3,00,00,000/-
After giving effect to the above order, the Revised Rs.4,13,119/-
income as per this order
Gross Tax Rs.1,23,936/-
Add:Surcharge Nil
Add:Edu.Cess Rs.3,718/-
Net Tax Rs.1,27,654/-
Less : TDS Rs.2,26,367/-
: Collections Rs.40,00,000/-
Refundable Rs.40,98,713/-
Add: Interest u/s 244A Rs.14,18,331/-
Total Amount Refundable Rs.55,47,040/-
16. It is submitted that the amount to be paid by the petitioner would include not only the tax payable on the disputed tax, but, also the interest which was paid under Section 244A of the Income Tax Act, 1961 to the petitioner pursuant to the order of the Commissioner (Appeals) vide order dated 15.11.2018 in ITA.No.15/2017-18 of the Deputy Commissioner of Income Tax in giving effect to the said order.
17. Thus, the short point for consideration in this writ petition is whether for the purpose of determining the “amount payable” by the 10/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021 petitioner under the Direct Tax Vivad Se Vishwas Act, 2020 would include the amount that was refunded back to the petitioner under Section 244A of the Income Tax Act, 1961 in terms of giving effect to the order dated 07.01.2019 bearing reference to PAN:AAACU9457G/Corp.Cir.3(2)/2018- 19 of the Deputy Commissioner, pursuant to the aforesaid order in appeal dated 15.11.2018 in ITA.No.15/2017-18 of the CIT (Appeals).
18. I have considered the arguments advanced by the learned counsel for the petitioner and the learned counsel for the respondent. I have also perused the documents filed in support of the present writ petition. I have also considered the decision of the Division Bench of the Bombay High Court referred to supra.
19. The view taken by the Division Bench of the Bombay High Court cannot be applied although it deals with the same issue. The petitioner is entitled to settle the dispute under Section 3 of the Direct Tax Vivad Se Vishwas Act, 2020, in respect of “tax arrear” as defined in Section 2(o) of the said Act on the “disputed tax” as defined in Section 2(1)(j) of the said Act. These are three categories in Section 3 of the Direct Tax Vivad Se 11/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021 Vishwas Act, 2020. They are as under:
Sl.No. Nature of tax arrear Amount payable under Amount payable under this Act on or before the this Act on or after the [31st day of December, [1st day of January, 2021 2020 or such later date as or such later date as may may be notified] be notified] but on or before the last date
(a) where the tax arrear is amount of the disputed tax. the aggregate of the the aggregate amount of amount of disputed tax dispute tax, interest and ten per cent. of chargeable or charged disputed tax:
on such disputed tax and penalty leviable or provided that where the levied on such disputed ten per cent. of disputed tax. tax exceeds the aggregate amount of interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax, the excess shall be ignored for the purpose of computation of amount payable under this Act.
(b) where the tax arrear the aggregate of the amount the aggregate of the includes the tax, of disputed tax and twenty- amount of disputed tax interest or penalty five per cent. of the and thirty-five per cent. of determined in any disputed tax: disputed tax:
assessment on the basis of search under section provided that where the provided that where the 132 or section 132 of twenty-five per cent. of thirty-five per cent. of the Income-tax Act. disputed tax exceeds the disputed tax exceeds the aggregate amount of aggregate amount of interest chargeable or interest chargeable or charged on such disputed charged on such disputed tax and penalty leviable or tax and penalty leviable or levied on such disputed tax, levied on such disputed the excess shall be ignored tax, the excess shall be for the purpose of ignored for the purpose of computation of amount computation of amount payable under this Act. payable.
(c) where the tax arrear twenty-five per cent. of thirty per cent. of disputed relates to disputed disputed interest or disputed interest or disputed interest or disputed penalty or disputed fee. penalty or disputed fee:
penalty or disputed fee.12/17
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20. These expressions as defined under the Direct Tax Vivad Se Vishwas Act, 2020 are reproduced below:-
2(1)(j) 2(1)(o)
Disputed Tax Tax Arrear
“disputed tax”, in relation to an “tax arrear” means,— assessment year or financial year, as the (i) the aggregate amount of disputed tax, case may be, means the income-tax, interest chargeable or charged on including surcharge and cess (hereafter such disputed tax, and penalty in this clause referred to as the amount leviable or levied on such disputed of tax) payable by the appellant under tax; or the provisions of the Income-tax Act, (ii) disputed interest; or 1961 (43 of 1961), as computed (iii) disputed penalty; or hereunder:— (iv) disputed fee, (A) in a case where any appeal, writ as determined under the provisions of the petition or special leave petition is Income-tax Act. pending before the appellate forum Explanation.—For the removal of as on the specified date, the amount doubts, it is hereby clarified that the of tax that is payable by the expression “tax arrear” shall not appellant if such appeal or writ include and shall be deemed never to petition or special leave petition have been included any sum payable was to be decided against him; either by way of tax, penalty or (B) ... interest pursuant to an order passed by the Settlement Commission under Chapter XIX-A of the Income-tax Act.
21. As per Sl.(a) to Section 3 of the said Act, where the tax arrear is the aggregate amount of “disputed tax”, “interest chargeable” or 13/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021 “charged” on such “disputed tax” and “penalty” leviable or levied on such “disputed tax”, the amount payable under the said Act on or before the 31st day of December, 2020 or such later date as may be notified is the amount of the “disputed tax”.
22. The amount determined was to be paid on or after the 1st day of December 2020 or such later date as may be notified or before such later date as may be notified in the said Act, the amount payable is the aggregate of the amount of “disputed tax” and 10% of the disputed tax, provided that where the 10% of disputed tax exceeds the aggregate amount of interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax, the excess shall be ignored for the purpose of computation of amount payable under the said Act .
23. As extracted above, the definition of the expression “Disputed Tax” in Section 2(1)(j) of the said Act will be the amount of tax that is payable by an assessee, if an appeal or writ petition or a special leave petition is pending was to be decided against the assessee. Therefore, the interest paid to the petitioner under Section 244-A of the Income Tax Act, 14/17 https://www.mhc.tn.gov.in/judis W.P.No.25404 of 2021 1961 will be recoverable, if the appeal filed by the Income Tax Department before the Tribunal (ITAT) in ITA.No.161/Chny/2019 is decided against the petitioner.
24. In this case, if the Department's appeal before the Tribunal (ITAT) in ITA.No.161/Chny/2019 is accepted, the petitioner will not only be liable to pay the amount of differential tax but also the interest paid to the petitioner under Section 244-A of the Income Tax Act, 1961. Hence, there is no merit in the submission of the petitioner.
25. Therefore, this writ petition is liable to be dismissed. This writ petition thus stands dismissed. No costs. Consequently, connected miscellaneous petition is closed.
02.01.2025
arb/nst/mrr
Index : Yes/No
Neutral Citation: Yes/No
Speaking Order (or) Non-Speaking Order
15/17
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W.P.No.25404 of 2021
To
The Principle Commissioner of Income Tax,
Chennai – 3,
121 MG Road, Nungambakkam,
Chennai – 600 034.
16/17
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W.P.No.25404 of 2021
C.SARAVANAN, J.
arb/nst/mrr
Pre-Delivery Order in
W.P.No.25404 of 2021
02.01.2025
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